The networked business

I think business is going to become cleverer, more elegant. What we`ve seen in the past decade is the rise of the high-tech industry (Microsoft, Intel). This has at once brought about America`s surprising re-affirmation of its economic world dominance, and a whole lot of new, different and exciting business forms.

Thinking about it now: telephone or no telephone, Internet or no Internet, I prefer the town square to the high-rise. How about you?

I`m not going to dwell on what this kind of digital Big Business has done for the US... suffice it to say that I think companies like Microsoft are very much like industrial companies, even though they treat their staff better (and employ cleverer staff). Still, it`s about shareholder value, cash reserves in the billions, market dominance and a big (nay, huge) brand.

In other words, while we all think of Microsoft and Intel as the apex of smart, geeky, engineered, rational-yet-humane companihood, I think they`re just a trope, an iteration of the same thing all over again. Maybe they`re a little smarter, a little more aggressive, perhaps a bit more generous to their staff - but they still get slapped with anti-trust suits and will probably be broken up sometime. (I`m not really sure that that`s a good thing. But then again, I, much like many people, continue to fall into the "Microsoft trap": they seem to be such nice people, doing such useful things.)

But while the digital industry has spawned its own version of the Big Corporation, it has also brought forth some really interesting new forms of doing business.

In a recent column in the Sunday Times Business Times, Ronnie Apteker from the Internet Solution went on about how the telephone was the thing that enabled us to move from trading in a town square into high-rise buildings.

I ask, "What`s so great about high-rise buildings?" Especially in a country where we have a lot of space? Ronnie appears to be a little stuck on his notion of business - Big Business, Big Corporations, Big High-Rises. And I think he`s misunderstanding the real significance of the telephone.

I think that the really cool (read: really functional and future-oriented) businesses are going to be powerful but loose networks of specialists, problem-solvers and project managers. Is market share in an industry (especially in high-tech) really going to remain the sole deciding factor in a company`s relative success rate?

Not really. Because it`s really no longer about assets and sellings things.

The world is moving, rapidly and irrevocably, toward a scenario where it won`t be things any longer that determine performance, but brains and creativity. In the high-tech industry, we grapple with this every day: there`s a strange incongruence between the fact that our main, key business ingredient is people and the fact that our balance sheets only reflect people as an expenditure. Sad, isn`t it? You and I, as long as we work as employees, are an expense. Perhaps that makes us expendable, too.

Human Networks, the new type of business association that I`m discussing here, value people above everything else. There are several types of this new kind of business. A typical one is a franchise organisation. A group of entrepreneurs, all of whom care about their own pockets first and foremost, but who recognise that strength lies in numbers, especially where marketing and purchasing power is concerned.

Or the "Functional Association" (you`ll note that I`m making up the names as I go along). This is a group of people or little companies (CC`s, sole proprietorships) that organise themselves around a common theme and interest. For instance, imagine a design, printing, and below-the-line advertising business. A lot of talented people in that arena prefer working for themselves, yet they need each other`s strengths in order to deliver `complete solutions` to customers.

This is at once quite archaic and very elegant at the same time. It`s archaic in the sense that a traditional market place is: there is a mode of free association among like-minded people and groups, there is an assumption of trust outside of traditional contracts and nothing is necessarily formalised beyond a handshake. Drinking a beer with a new networking partner is more important than signing 12 pages of legalese non-disclosure agreements. Yet, you`ll know that you can trust this person like your own brother.

I believe that the Internet (you were waiting for me to get to this point, weren`t you?) has a lot to do with the success of these new and exciting business models. Ironically, big business thinks of the Internet as a convenient new medium for mass-marketing its products at consumers. I hold that it`s rather more of an environment, and that its structure and thrust will eventually cause Big Business to crumble. (I don`t say this in some `revolutionary` sense, it`s just what I honestly think will happen.)

I`ll give you two arguments in support of this claim. The first one is that I think the Internet provides us with a mechanism to conduct most business online. The business of brains is the business of communicating effectively, and what better environment for this could there be than the Internet, especially if business partners and associates are in different cities? There are a lot of figures regarding "electronic commerce". I personally suspect that they only reflect about 20% of the actual economic value produced using the Internet. The other 80% lies in communication, deals done, ideas discussed, key people contacted, etc. You can`t count that on a balance sheet.

The second argument is that there is now a generation of people who have, for all intents and purposes, grown up with the Internet. Its behaviour, what it does and how it does it, is deeply engrained in our brains. Perhaps our minds work a bit like the Internet. We follow links and paths that are obvious to us and not so obvious to those for whom the Internet, or the town square, aren`t as familiar.

Thinking about it now: telephone or no telephone, Internet or no Internet, I prefer the town square to the high-rise. How about you?