The more things change, the more they stay the same. That old cliche is of remarkably little use today, at least when it’s applied to the American economy. Now, it’s more appropriate to say: the more things change, the more they change.
You can blame technology, you can blame global trade, with its implications for worldwide competition on prices and wages. You can blame whomever you want. The fact is that change is the only constant left in business, and businesses small and large are left with the stark choices of adapting or ceasing to exist. There’s no more resting on your laurels. No more following the same manufacturing procedure year after year. No more downtime. It’s pretty exhausting just reading about all this change.
It’s not Kansas anymore; it’s Oz. So writes Kevin Kelly in New Rules for the New Economy: 10 Radical Strategies for a Connected World (Viking, $19.95, 0670881112). Author Kelly, executive editor of Wired magazine, delivers on the radical in the book’s subtitle. He provides an intriguing look at how seemingly eternal business verities are being turned on their heads by advances in computer technology.
One of Mr. Kelly’s new rules is to embrace the swarm. With computer networks and the Internet itself key symbols for the just-about-to-hit-us economy, the author makes a strong case that centralized and hierarchical decision-making isn’t going to cut it very well anymore. The swarm represents all those people, companies, potential customers at various points on interconnected networks. Straight lines are out, decentralization is in. Mr. Kelly writes: Numerous small things connected together into a network generate enormous power. Another radical aspect of the new economy is the downward path of prices, especially for technology and information and services available via the Internet. It’s a trend already in evidence that’s led to a fierce debate about the appropriate business model for successful commerce on the Internet. Mr. Kelly’s point of view is contained in a chapter titled Follow the Free. In it, he writes, Giving stuff away captures human attention, or mind share, which then leads to market share. At some point, you’ve got to charge for something to stay in business, but you have to be flexible and selective. More and more services will head toward commoditization and near-free pricing. The saving grace, as Mr. Kelly sees it, is demand for new ideas and services limited only by human imagination. It still seems like a tough way to make a living.
Richard W. Oliver is another gazer into the economic future, which is fun as well as important work. In The Shape of Things to Come: Seven Imperatives for Winning in the New World of Business (McGraw-Hill, $24.95, 0070482632), the professor at Vanderbilt University’s Owen Graduate School of Management presents a broad, bold, and generally optimistic view of a future just about on top of us.
I, for one, am just getting use to the Information Age, that post-industrial era that’s given us worldwide, real-time information flows, but Mr. Oliver maintains that it’s just about over (although key aspects of different eras, including the old Industrial Age, can continue even when a new phase takes over). He says we’re already moving into the Bio-Materials Age. We’ve seen evidence of it already in the engineering of crops and in other aspects of agriculture. Mr. Oliver predicts wider biological applications even for manufacturing and technology.
Mr. Oliver’s view of the future, while admittedly a busy place, is optimistic because, among other things, he sees a worldwide class of consumer emerging in the next century who demands high standards and good prices and gets them. He sees increased economic power for people of developing nations and for members of minority groups. And he says that no monopoly will be able to last very long. He writes: Information moves too quickly, technology changes too fast, and competitors are too aggressive to leave any idea, market, or profits to a single organization. Mr. Oliver’s broad menu for successful businesses in the new era is not for the faint of heart. He talks about daily reinvention and a close relationship with customers that includes direct communication and distribution, personalization, and putting customers in charge of marketing. One of Mr. Oliver’s most interesting concepts for the new era of business is electronic keiretsu. The keiretsu is a Japanese way of doing business in which companies linked by mutual interest, such as a manufacturer and its suppliers, act as a truly interdependent group, or a business family. The author’s idea here is that companies will have to form alliances, permanent or temporary, which meet mutual needs in a sharply competitive world.
Just as in Mr. Kelly’s New Rules for the New Economy, Mr. Oliver envisions the increased commoditization of many goods and services. In fact, Mr. Oliver says even high quality isn’t enough to differentiate one company’s products from another over the long run. So what’s a company to do to make itself heard above the din of competition? Mr. Oliver’s answer in a word: logistics. The ability to get exactly what a customer wants in front of him first (high quality is assumed) may be the key competitive advantage of the near future.
The concepts of electronic keiretsu of allied companies and logistics as a competitive edge bring us to the ideas of Charles H. Fine, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. The subtitle of his new book indicates how competitive we’ve already become, that we’ve already reached a place where no advantage is permanent. The book is called Clockspeed: Winning Industry Control in the Age of Temporary Advantage. To grossly oversimplify, Mr. Fine posits that as companies think about how to reshape themselves, the biggest advantage a company may have is the ability to determine which of its functions will continue to hold value. The author puts it this way: In this age of temporary advantage, the ultimate core competency is the ability to choose capabilities well. It’s more complicated than choosing which functions to continue in-house and which to outsource to others.
This is a complex book by a knowledgeable observer who uses specific, up-to-date corporate case histories to support his points. He focuses on the need for a company to properly design its supply chain in order to prosper. He writes: Properly viewed, the company and its supply chain are joined at the hip, a single organic unit engaged in a joint enterprise. The term clockspeed itself seems particularly apt for our constantly changing, technologically driven economy. To me, it creates the image of old-fashioned clock hands (pre-digital) spinning wildly out of control. It’s left to us mere mortals to find ways to keep up. Mr. Fine acknowledges the potential for disorientation from conducting business in a world of rapid technological change. He says slow-clockspeed social institutions may take on added importance as stability flees from our commercial lives.
No matter the pace at which the clock is turning in the industry in which you are employed, a manager’s life still involves dealing with people. That much, at least, hasn’t yet changed. So, for the real people who happen to be managers, international management consultant Lisa Davis has written Shortcuts for Smart Managers: Checklists, Worksheets and Action Plans for Managers with No Time to Waste (Amacom, $24.95, 08114404324).
The book consists of practical, here-and-now advice on the wide range of a manager’s duties, from budgets to business ethics, from delegating to project planning. In addition to common-sensical advice on each topic, Ms. Davis presents a plethora of checklists to use in the office.
Oh yes, Ms. Davis even has a chapter on change management. In a passage on change that can serve as a window on the entirety of this useful book, she writes: As a manager, you have to get used to the idea that it’s a lonely job and tough at the top. You may not, for whatever reason, be wholeheartedly committed to the upcoming change. Even so, you have to remain calm, steady, firm, and consistent. The team takes its lead from you. Neal Lipschutz is managing editor of Dow Jones News Service.
