Esteem power drives ebusiness

At first glance, 'Old Economy' companies such as supermarket chain Iceland and the Co-operative Bank seem unlikely web powerhouses. Yet Iceland, which operates out of a trading estate in north-east Wales, and the Manchester-based bank are prime movers in cyberspace.

Iceland was the first supermarket to deliver web orders across the UK, and Co-operative, through Smile.co.uk, was the first bank to offer a current account specifically for the web. Both companies have surprising similarities.

Their heads of IT - Martin Chatwin at Iceland and Keith Girling at Co-operative - are old enough to be the dads of any 26-year-old internet startup boss. Both have a measured enthusiasm for the web, but were conservative enough to launch quietly, test and debug their services before shouting about them.

Iceland started advertising only after a six-month pilot and four months of live operation. The Co-op first offered customers web access to accounts in April 1998, before setting up Smile.co.uk which admittedly has employed the kind of media blitz you'd expect from a net startup.

Business based on more than money
There is another link between these firms, which may initially seem somewhat irrelevant. Iceland could rename itself Greenland, considering its views on environmental issues. For example, it was the first supermarket to remove genetically modified crops from its products.

Likewise, Co-operative vets the ethics of potential business customers, and it campaigns to forgive Third World debt. The staff seem quite proud that their companies stand for more than making tons of cash.

Both have remained loyal to their roots. Iceland's Deeside home is where the company started 29 years ago. Smile.co.uk is based in Stockport, within the same conurbation in which Co-operative Bank was founded, more than 125 years ago.

All well and good, but what does that have to do with the web? Consider the many companies in which staff have dreamt up ideas, only to leave to make a fortune. Martha Lane Fox, for example, left media firm Carlton to set up Lastminute.com with Brent Hoberman.

If your perception of your employer is that it exists to squeeze every penny out of you and your customers, why waste your big idea on the suits? But if you feel the organisation stands for something more, you are more likely to stay.

It helps even more if customers feel this loyalty. Both Iceland and Smile pass on some of the lower costs of their web operations to users. Order £40 or more of goods on the web and Iceland delivers them free. Smile's current account pays 4.85 per cent gross interest because the lower transaction costs make such a rate sustainable. Compare this with Barclays, whose internet-accessible current account pays just 0.1 per cent.

Mixing the old and the new
A tenet of ecommerce is that old-fashioned qualities such as trust, service and what the company stands for can be forgotten because customers have no loyalty and your competitor is just a click away. Nevertheless, companies that have built up brand equity and customer loyalty may enjoy the benefits of porting these qualities to the web.

With physical distance increasingly irrelevant, both employees and increasingly assertive consumers will take their web custom to firms they trust to see them right. These could well be the forward-looking organisations that treat their staff, communities and customers with respect.