10 Driving Principles of the New Economy

1. 10 Driving Principlesof the New Economy (Source: Business 2.0, June 1999, pp.129)

2. 1. MATTER 2. SPACE 3. TIME 4. PEOPLE 5. GROWTH 6. VALUE 7. EFFICIENCY 8. MARKETS 9. TRANSACTIONS 10. IMPULSE 10 Driving Principles

3. 1. MATTER Matter. It matters less. • Processing information is dramatically more powerful and cost-effective than moving physical products. • Increasingly, the value of a company is to be found not in its tangible assets, but in intangibles: people, ideas, and the strategic aggregation of key info-driven assets.

4. 2. SPACE Space. Distance has vanished. The world is your customer --and your competitor. • Geography has always played a key role in determining who competed with whom. Now your business can connect instantly with customers all over the globe. • Flipside: You’re exposed to worldwide competitors as well. The opportunity -- and the threat-- has never been greater!

5. 3. TIME Time. It’s collapsing. Instant interactivity is critical, and is breeding accelerated change. • There is a huge premium on instant response and the ability to learn from and adapt to the marketplace in real time. • Winning companies accept a culture of constant change and are willing to constantly break down and reconstruct their products and processes -- even the most successful ones.

6. 4. PEOPLE People. They’re the crown jewels…and they know it. • Brain power is the prime factor driving the New Economy. Huge value is being leveraged from smart ideas --and the winning techniques and business models they create. • People that can deliver those ideas are becoming invaluable, and methods of employing and managing them are being transformed.

7. 5. GROWTH Growth. It’s accelerated by the network. • The Internet can dramatically boost the adoption of a product or service by “viral marketing,” network-enhanced word of mouth. • Once a company reaches critical mass, it can experience increasing returns leading to explosive growth. In the New Economy, first-mover advantages are greater than ever.

8. 6. VALUE Value. It rises exponentially with market share. • For products that help establish a platform or a standard, the network effect is even more pronounced… • Some companies give away their products to establish market share, then sell linked services later on.

9. 7. EFFICIENCY Efficiency. The middleman lives. “Infomediaries” replace intermediaries. • Traditional distributors and agents are seriously challenged in the networked economy. • Infomediaries offer aggregated services, or intelligent customer assistance, or powerful technology-based buying aids, or an attractive, community-based buying environment.

10. 8. MARKETS Markets. Buyers are gaining dramatic new power -- and sellers new opportunity. • Competitors may just be a mouse-click away. Intelligent software will help buyers find the best deal. • Businesses that genuinely offer unique services or lower costs will flourish. • Those that rely on physical barriers to competition will fail.

11. 9. TRANSACTIONS Transactions. It’s a one-on-one game. • Information is easier to customize than hardgoods. The information portion of any good or service is becoming a larger part of its total value. • Suppliers will be able to customize products and customers will demand it!

12. 10. IMPULSE Impulse. Every product is available everywhere. The gap between desire and purchase has closed. • Very few artificial constraints to purchase… • Consequence: The processes for marketing, sales, and fulfillment are merging.

13. 10 “Traditional” Principlesthat Still Apply

14. 10 “Old” Principles in the New Economy 1. Customers matter. 2. One day, revenue needs to exceed cost. 3. Trust is the basis of business relationships. 4. There are only 24 hours in a day. 5. There will always be value in brands. 6. There will always be competition. 7. People are self-interested. (So are companies). 8. People need a powerful incentive to change their behavior. 9. Sex sells. 10. No one really wants a relationship with a phone (or cable) company!