Beyond the hype of the new economy

Much has been made of the new economy, how to define and how to turn a profit in it. Theories and postulations have come and gone but two truisms remain: solid business practices are still needed for a company to succeed in any economic environment and, as sad as it seems, the dot-com party has come to a end.

At a recent PricewaterhouseCoopers talk, two of its e-commerce strategists spoke about moving beyond the hype surrounding the new economy and getting back to running businesses in a sound fashion, albeit one with a new mindset.

Running a business embracing aspects of the new economy, such as e-procurement, is not so much a technology issue as it is a behavioural – a new way of thinking, said John Simke, Canadian e-business leader with PricewaterhouseCoopers in Toronto. He added that there are not more than 20 businesses with successful e-procurement processes in place in Canada.

The problem is that using all this new technology in an old business model won’t work, Simke said. Though sound business practices are required, there is a need to create clear strategies and objectives for specific industries in order to reach out to prospective customers and deliver product, he added.

“Unfortunately e-procurement has turned out to be a tougher implementation than people thought,” he said.

Once again the media is partially to blame. The media over-hyped the new economy on the way up and the gloom and doom on the way down, Simke explained.

Saul Berman, global e-business strategy leader for PricewaterhouseCoopers entertainment and media practice in Los Angles, agreed. He joked that Wall Street will eventually wake up and find religion and at some point discover equilibrium between unrealistic optimism about the new economy and the gloom and doom that is prevalent today.

on the horizon

“The real story is yet to come,” Simke predicted. We are only two per cent of the way to truly implementing the opportunities of the new economy, he added. PwC sessions held across Canada have gathered some interesting information from dozens of interviews with executives, he said.

They are comfortable with e-business but are likely to proceed with caution, not betting the farm on any one solution, Simke said. Though Canadian companies lag about a year behind the Americans in e-commerce implementation, they are in no danger of losing their competitive ability in the new economy, he added.

Berman said e-business is the business of the future. It will be part of all business and not operate separately, as it does in many cases today.

“We have to change traditional thinking with new revenue models,” he said.

Drawing from his area of expertise, he explained how the usually staid music industry needs to change its approach to address the influence of technology.

“The industry has to look at the opportunity, not the threat,” he said in a veiled reference to Napster’s influence.

Music companies need to look into new solutions such as subscription services instead of selling CDs to customers, he explained.

“Your ROI may not come from where you planned it,” he added.

Berman said companies should spend more capital investing in brand and human assets than in products. Not only is it advantageous from a consumer relationship perspective, it also reduces the effects of market swings since the company is not hugely capitalized, he said.