Old Economy companies can learn from New Economy firms and adopt similar business models, as the two types of organisations do not need to exist in isolation of one another.
In his keynote address at the Computer Faire today, Rudi Kr"uger, chairman of Espial Consulting, stressed that the polarity between the Old Economy and the New Economy business models has been artificially created.
The global economy is just as reliant on the New Economy as it is on the Old Economy, said Kr"uger. Criticising Alan Greenspan and other old school economists who have described the markets` reaction to the Internet economy as "irrational exuberance", Kr"uger said nothing could be further from the truth.
He explained that the fundamental difference between the two economic models is the radical power shift away from the supplier into the hands of the consumer.
Kr"uger noted that traditional manufacturing and services companies are experiencing difficulty in translating their old value propositions into a new value proposition.
"Old economy businesses dealt with basic concepts of supply and demand, stock was held and then sold. New Economy businesses work in an ethereal market space, dealing with intangibles."
A solution, said Kr"uger, would be a transformational model incorporating both Old and New Economy activities.
He explained the phenomenon of social "tribalism", where social networks need to be lured into supporting a brand or product, and enticed to remain loyal.
"Businesses today have to take a network and plug in a social network."
Companies should, according to Kr"uger, focus on getting to know everything they can about their customers. Using Amazon.com as an example, he encouraged bricks-and-mortar companies to offer free products in exchange for customer information. In this way, companies can react to the changing needs of clients and hold onto their business.
"Value right now is in the migration from old business models to new business models, in the forging of new relationships, in the introduction of new measurements and in the adoption and leveraging of new technologies."
The keynote address was sponsored by ITWeb.
Share
