If you think your business day is already hectic, fasten your
seat belt--it's about to speed up considerably. That's the
contention of Ernst & Young LLP's visionary business gurus
Chris Meyer and Stan Davis, who have outlined how entrepreneurs can
cope in Blur: The Speed of Change in the Connected Economy
(Addison Wesley).
According to the duo, the driving force behind this acceleration
is the Internet, which has already changed the speed at which
business is conducted.
This new faster economy will put an even greater premium on
companies' intangible assets, such as intellectual capital,
brand loyalty and employee relationships. Meyer and Davis'
often radical insights have been described as "a decoder
ring . . . to make sense of the turbulence in
the world of work today."
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As director of the Ernst & Young Center for Business
Innovation in Cambridge, Massachusetts, Meyer researches emerging
business issues and is an authority on the evolution of the
information economy.
Davis is an independent writer, speaker and senior research
fellow at the Ernst & Young Center for Business Innovation.
He's also a consultant for leading companies worldwide and the
author of 2020 Vision (Addison Wesley) and the bestselling
Future Perfect (Simon & Schuster), the recipient of Tom
Peters' "Book of the Decade" award.
We asked Meyer and Davis to share their secrets on how to avoid
perishing in this brave new world--and how to prosper from the
accelerated pace of business.
Entrepreneur:How do entrepreneurs fit into the blur
economy?
Stan Davis: Entrepreneurs are the wave of the future
because power is migrating to organizations where the employee and
customer are in touch with each other. The computer infrastructure
enables this. You need small, adaptive companies to respond
quickly, and those are most often entrepreneurial businesses.
Large organizations are simultaneously downsizing and
outsourcing, and the real job growth is coming from entrepreneurs
filling these needs. This allows someone in a home office with a
couple of employees to operate in a global economy. Large companies
have to learn how to act small and large at the same time, while
small companies can now act as if they're large. Over the Net,
you don't necessarily know if a company is small or large, just
how well it provides a product or service.
Entrepreneur:Your book describes a world that
promises to be much more dependent on computers. With all the
computer hardware, software, internet connection and service
problems many businesses already experience, won't this vision
get bogged down by the daily realities of technology?
Davis: If you consider how far we've come in becoming
interconnected even with all these problems, imagine what will
happen when these things get debugged. There will be a quantum leap
in the speed of doing business.
Entrepreneur:Won't the increasing speed only
exacerbate the standard problems of doing business?
Davis: Any change of the magnitude we're talking
about will have advantages and disadvantages. Our ability to get
supplies overnight and letters instantaneously now has a bright
side as much as it has a dark side.
Entrepreneur:Overworked entrepreneurs might find it
alarming that you foresee business survival as being dependent on
companies being able to deliver 24-hour service, seven days a week,
with home and work life blurring together. Don't people need
downtime?
Chris Meyer: Technologies like e-mail and voice mail have
raised expectations about availability. For a customer, the next
best thing to [talking to someone] is to be able to leave a
message. And better than a message machine is the ability to leave
a message and have a software program [respond] that the message
was received and that you will get back to them within a certain
time frame.
Entrepreneur:We're already overloaded with
information. How can we cope with an increase?
Meyer: There has always been too much information flowing
in, but recently the offense has had more of an edge. More than
anyone else, entrepreneurs have to be concerned about how this
affects them, because time is their most precious resource. They
need to use the techniques that are available, such as e-mail
filters and caller ID, to filter out time-wasters.
There will also be more entrepreneurial opportunities as
managing attention becomes critical. Imagine a whole set of
mechanisms and players that will appear to help us invest our
attention optimally and provide reports on the return we've
gained. There will be a shift from managing transactions to
managing relationships.
Ways for sellers to get around the information overload are also
emerging, such as permission marketing, in which information is
sent only to individuals who indicate they want it.
Entrepreneur:You argue that the old theories of
economics are dead. If that's true, how does that affect the
creation of a business plan?
Davis: Traditional planning for a product was part of the
old economy, in which you planned something, it was enacted, you
evaluated how it went, and you adjusted your strategies
accordingly. When it becomes instantaneous, that cycle is no longer
relevant. Connectivity gives you constant feedback in real time
from customers, suppliers and employees, and the flexibility to
adapt and respond becomes more critical than planning, although
obviously you still have to do some.
Entrepreneur:You say that business decisions should
be "made on the edge of chaos." Shouldn't
entrepreneurs be in possession of all the facts and in
control?
Meyer: If you remember the familiar phrases "the
perfect is the enemy of the good" and "analysis
paralysis," it's easier to swallow. You can never been in
possession of all the information you supposedly need. Striving for
the old comfort zone of a slower world in the blur economy
isn't realistic.
Entrepreneur:Your book advises entrepreneurs to
concentrate on their core competencies and outsource the rest, and
even avoid owning their infrastructure. Doesn't that put
business owners at the mercy of others?
Meyer: You are equally at the mercy of the capabilities
of your own company if it can't produce [enough] or when
someone is out sick. At a small company, this is particularly
acute. The best thing you can do is put tasks that are not part of
your expertise in the hands of someone whose business it is. They
know how to do it best, offer the lowest cost, and have the
greatest incentive to do it right.
Entrepreneur:"Minimize the lifetime of consumer
and durable goods" is another assertion of yours that goes
against the competitive rule that business owners should want to
make products that last.
Meyer: When you think of building something to last, you
should be thinking about building something to accommodate change.
When you design a product, be conscious of what is durable and what
a customer may want to reconfigure or upgrade over time. For
example, there is a European dishwasher manufacturer that says its
cabinets and motors are durable, but if environmental regulations
or other factors change, the company will [modify the] software
that governs the wash cycle.
Entrepreneur:You argue that business owners should
share information with competitors and tear down firewalls that are
barriers to the flow of information. This goes against the policy
of secrecy that most companies feel is essential to maintain an
edge.
Davis: If I asked you to draw a firm in relation to the
environment, you could draw a circle with everything inside
representing the firm, and everything outside representing the
market and the external environment. There is a boundary that
separates the two, and that is where businesses establish firewalls
of secrecy.
With connectivity, companies are less freestanding and more
interdependent. Among large companies in core industries,
competitors are making strategic alliances. So what you have is a
permeable boundary. With firewalls, it's very hard to
discriminate who should get in and who should be kept out.
You're better off erring on the side of making information
public because the speed with which competitors can get your
information is so fast and too much time is devoted to keeping the
information secret, even from those who ought to have it. You gain
less than you lose.
Entrepreneur:You suggest that companies encourage
employees to build relationships with competitors. Doesn't that
mean you risk losing them to the other companies?
Davis: You can't isolate your employees and still get
the benefits of learning from other companies. You may ultimately
lose some employees, but you'll still benefit from your contact
with competitors.
The old business model involved trying to retain employees, but
the reality today is that most people aren't going to stay with
you for their entire career; adjusting to that fact is a better
idea.
Turnover is actually good because it gives you a chance to hire
people who have learned from competitors. The areas like Silicon
Valley that have the greatest turnover also have the highest wage
structures, the highest number of new jobs and the best local
economies. There is a quicker and quicker sifting to find what
works.
Entrepreneur:You discuss the importance of diversity
in a large company, but what about diversity in an entrepreneurial
business?
Meyer: Diversity means a lot of ways of looking at the
world. The risk a small-business owner has is in getting too
focused on your own idea and not hearing customers and innovative
ideas that the market may throw back to you. Diversity among
personnel makes it possible to hear those ideas.
Entrepreneur:How are the roles of buyers and sellers
changing in the blur economy?
Davis: The key idea is that every buyer will become a
seller and every seller, a buyer. The difference [between the two]
is blurring. The old relationship was a purely economic,
arms-length relationship. The provider offered a product and, in
exchange, got money back. But buying has also become an information
exchange. Sellers need to see the value in compensating customers
who give feedback.
Entrepreneur:Your book talks about "organizing
your customers." Why and how does that work?
Meyer: Because customers know the most about how their
needs are being fulfilled. For example, Netscape offered money to
customers who helped it improve its product. Customers can make you
better faster than anything you can do yourself, and in the blur
economy, close relationships with your customers will become more
critical to having the flexibility to respond quickly.
Scott S. Smith writes full time from his Los Angeles home,
covering business, health and animal topics.