It has been a year since the NASDAQ crash. Many of last year’s darlings, such as Kibu.com and Pets.com, have gone out of business; others, such as Priceline and Webvan, may be dead by the time you read this. Even long-standing companies, such as Cisco, that merely increased their profits as a result of the Internet boom have seen their growth horizons pulled back.

The reasons for the crash are multifarious. For the past year, McKinsey has focused on the problem of how businesses can move forward despite the wreckage of killer apps and the submersion of stock options. Capital is still tight, but companies can take steps to create sustainable value on-line. The first is to shift focus from the stock market to the stockroom.

A featured section of this special edition is devoted to business-to-business (B2B) marketplaces. By now, it was thought, they would have proved themselves; instead, many B2Bs that concentrated solely on improving purchasing efficiency are mired in failure. Authors from McKinsey’s Silicon Valley office and from the Firm’s operations and B2B marketing practices share perspectives on where the value really lies for buyers, sellers, and the exchanges themselves. No matter what the size of a company, the integration of information and of on- and off-line operations are important competitive differentiators. But ways of achieving such differentiation and of using it to increase value vary from segment to segment.

An interview with Stephen Winterhalder, the chief operating officer of BigboXX.com, a company carved out of the Hong Kong conglomerate Hutchison Whampoa, illuminates the complexities of building new e-businesses within traditional ones, as well as the difficulty of moving traditional customers on-line. His experience explains why transactional efficiency and discounts do not provide long-term value: it is order histories and instant inventory updates that draw in customers.

As business becomes truly global, competition will increase for all companies, and so will the importance of gaining an edge in marketing to and serving customers around the clock, wherever they happen to be. Winning companies will use tools such as continuous-relationship-management systems to discover what customers really want. At the same time, Internet business tools will be increasingly integrated with traditional business tools: for instance, companies must get their delivery logistics right.

Such integration of on- and off-line operations will allow companies to reinvent their value chains, thus opening up new sources of revenue and spawning new businesses. But pure-play and bricks-and-clicks companies alike will have to determine which options can create the most value for their customers and then use that information to decide where on-line applications should—and should not—enter their strategic and operational thinking. "Magazines’ home companion," for instance, envisages integration of a purely internal kind: between the printed journal and a supplementary World Wide Web site or a site that offers applications beyond the capabilities of print. "Late edition: Another chance for newspapers on the Web" goes further, arguing that this most traditional and local mass medium can win new readers and users by creating new ways of providing information to customers and by allying with wireless service providers.

Alliances, however, haven’t been received wholly with favor since the crash. A McKinsey study analyzed more than 700 of them to determine which strategies really work. The authors of "A future for e-alliances" proffer advice on crafting agreements at Internet speed. Deals between on- and off-line companies have turned out better for their partners than those between portals and pure plays or those that formed B2B marketplaces. The latter, we’ve learned, can earn their keep by offering their participants knowledge about one another’s positions and moves, and this kind of e-enabled knowledge about customers, say the authors of "Getting prices right on the Web," will help Internet businesses end their self-destructive practice of driving traffic by offering deep discounts or free content. Now that the stock market cares once again about basic business metrics such as profits, precision in pricing is an important step on the path to salvation.

In the end, companies can create sustainable value on-line. Wishing didn’t make it so, but hard work will.