The phrase "New Economy" doesn't have a hard-and-fast definition. You can decide for yourself what it means. When most people speak of the New Economy, they're usually referring to the Information Age, the Internet or something digital. The phrase also conjures up a vision of roller-coaster capital markets, speed, breathlessness and exuberant spending.
But some new business principles are emerging out of this melange of economic and technological change. Their practitioners declare them as ultimate truths, handed down to business mortals by some higher-powered e-gods.
Don't believe everything you hear. There are some new business principles that the so-called New Economy enables. Yet there are some old, almost counterintuitive principles that we shouldn't forget. Here are three examples.
New principle: Speed is of the essence.
Counterprinciple: You may have to slow down to speed up.
There's no doubt that the ubiquity of technology has contributed to the acceleration of almost all business processes. What's more, customers have become accustomed to fast - fast response, fast delivery, fast service.
There's also a developing business belief that, in the digital world, putting out a service or product first is critical to claiming a market, establishing a brand and raising capital.
But the digital world also confounds managers with critical questions that pop up like ducks in a shooting gallery: Should we be global, now that we can? How big should we grow, since the Internet removes some of the boundaries of scale?
What's our optimal service and product scope? These are life-and-death questions.
We must all stop and think about the answers and not let the urgent issues force out the important ones.
New principle: A company's most important assets are intangible.
Counterprinciple: The world still runs on bricks and mortar.
Proper value is now being placed on a company's knowledge, information and intellectual property. What you know about products, markets and customers may lead you to your ultimate differentiator. The Internet also allows you to trade in what you know, like selling advice or providing more information content with products.
But very few companies will survive by selling information or ideas alone. Most companies still make their money from selling tangible products. The future will belong to those companies that know how to make tangible and intangible assets work together for customers in unique and innovative ways.
New principle: If you take your company public, you'll have all the money to buy any capability that you haven't built.
Counterprinciple: Great companies grow organically over time.
Too much money can cloud your mind. For a couple of years, the capital markets were willing to provide lots of money to start-ups, many of which had little more than ideas. Although that phenomena has slowed down, there are still lots of venture dollars chasing ideas. The availability of money has made it appear a lot easier to buy parts of a company and put them together than it is to build a company from scratch. But putting a company together doesn't always work, as demonstrated by the poor performance of companies that have been assembled from parts of others - so-called "roll-ups." I believe that building a company organically develops a longer-lasting culture with a high sense of purpose and strong values. It's fine to grow a company through acquisitions, but all companies still need a set of core beliefs about things like customers, quality, innovation and respect for people. These elements must grow from within. You can't buy them.
The New Economy - however you define it - offers lots of opportunity and new ways for companies to operate. Experiment with them. Experience them. Debate them. But be prepared to find the real truths somewhere between the new and old ideas.
Champy is chairman of consulting at Perot Systems Corp. in Cambridge, Mass. He can be reached at JimChampy@ps.net.