By: Ronald D. Struck
January 2001
There have been three distinct periods in the market since 1970 – the old economy,
the dot-com economy, and the new economy.
In the old economy, it was very difficult and time-consuming for businesses to gather
market, product or operating information and data. The businesses that could best
utilize old technology, often consisting of nothing more than telephones, faxes, or
special-delivery mailings; to get timely information were the kings. The higher a
business was in the information loop hierarchy, the greater the advantage they had.
Then, the dot-com economy came along, where temporarily the Internet was
king. Anyone with a computer and modem had instant access to great quantities of data and
information on virtually any subject. In the dot-come world, the only thing that mattered
was speed - to launch yourself, get yourself to an IPO, and cash out. But, the
Internet doesn’t come with instructions about how to utilize the capabilities to
exchange and obtain enormous amounts of information. This created an environment of
"information overload" - so much information but limited experience in how to
use it.
Enter the new economy, where experience is the king. The profile of the most
desirable CEO looks dramatically different today than it did in the dot-com days.
Today, it’s someone who spends 15 years in senior general management positions in old
economy companies and made the successful transition to incorporate Internet-related
capacity. Companies are looking for people who understand the fundamentals of
managing a business, growing a business, not just how to come up with a strategy or
product. What the markets are saying today is - build a sustainable business, show
topline growth and a real path to profitability, not something that’s made up.
Many Silicon Valley CEOs are perceived as thin on the kind of experience old economy
companies expect of top managers.
Professionals with old economy experience, who can efficiently utilize the Internet as
a technologically advanced "tool," are now very much in demand because he who
has the experience to know what to do with the information has the advantage.
It is no longer sufficient to track economic indicators weekly or even daily when such
data are available on a minute-by-minute basis. To take advantage of sudden drops in
raw material prices or a sudden uptick in orders in one part of the globe that can offset
a decline in another, managers must track data continually and then be quick to change
strategies when needed.
Managers have to ask themselves what kinds of pressures they are likely to face as
fluctuations occur in their stock price, interest rates, and capital spending, and whether
they have the financial resources to weather the storm. They should monitor the
performances of their most valued customers, who may need special payment terms or other
incentives. Don’t ignore the pain of contractions. Stay visible.
Seize opportunities. Slowdowns are the time when perceptive executives can gain
market share from weaker rivals. Whether it is product quality or employee loyalty,
companies that stick to their deepest values through turbulent changing times are likely
to emerge stronger than those that compromise values to boost short-term profits.
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