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Bonfiglio reviews . . .
New Rules for the New Economy
(by Kevin Kelly) Kevin Kelly is the editor of Wired
magazine and at the center of what's happening in technology. In his book he explains how the new rules of the "network economy" operate and how they are different from the rules of the industrial economy. For example, the character of the industrial economy was a mechanistic, hierarchical, centrally-controlled model of organization. It was run like the military: an individual was able to survive in the organization—and could climb the ladder to more responsibility if s/he produced efficiently. As a reward, the company provided lifetime employment and a high degree of certainty about life in society and one's place in it. The character of our new network economy is that it is an organic, ever-growing, ever-connecting entity—that no one controls. As a result, this new economy is disruptive and out of balance, but it encourages innovation for those who participate in it. Everyone else, however, is left behind.
While many people realize that technology makes the network economy possible and that the computer is the essential tool for everyone, Kelly is quick to point out that the nature of networking and the driving force
behind the network economy is communication: communication among the employees of a company, among companies themselves, and even among customers. This new economy has three distinguishing
characteristics: It is global. It favors intangible things—ideas, information, and relationships. And, it is intensely interlinked. These three attributes produce a new type of marketplace and society, one that is
rooted in ubiquitous electronic networks. (p. 2) As a result, the network economy has been undoing the industrial economy—company by company and industry by industry. For example, manufacturing now accounts
for only 18 percent of U.S. employment. But, about three-quarters of the employees in manufacturing perform network economy jobs: accounting, research, design, marketing, sales, and legal work. For citizens trying to
understand the 21st century and where we are headed, this book describes not only how the new economy works, but how the reader should be thinking about the kind of world that is unfolding. For example, Kelly says that
because the network economy is so pervasive, it is influencing our thinking, our economy, and our society by replacing the assumptions and practices of the industrial society. This is an astonishing idea if we consider
that in order to survive in the new network economy, our workers and our children will all need to be trained and educated in these new ways. Actually, Kelly's book explains the logic of the network economy so that
businesses can understand how to survive and profit from the intense economic transformations that are now under way. He explains how the network economy works in his "10 Rules for the New Economy." Below is a
summary of the 10 rules: A Summary of the 10 Rules for the New Economy
- Embrace the Swarm.
As power flows away from the center, the competitive advantage belongs to those who learn how to embrace decentralized points of control.
Increasing Returns. As the number of connections between people and things add up, the consequences of those connections multiply out even faster, so that initial successes aren't self-limiting, but
self-feeding.
Plentitude, Not Scarcity. As manufacturing techniques perfect the art of making copies plentiful, value is carried by abundance, rather than scarcity, inverting traditional businesses propositions.
Follow the Free. As resource scarcity gives way to abundance, generosity begets wealth. Following the free rehearses the inevitable fall of prices, and takes advantage of the only true scarcity: human
attention.
Feed the Web First. As networks entangle all commerce, a firm's primary focus shifts from maximizing the firm's value to maximizing the network's value. Unless the net survives, the firm perishes.
Let Go at the Top. As innovation accelerates, abandoning the highly successful in order to escape from its eventual obsolescence becomes the most difficult and yet most essential task.
From Places to Spaces. As physical proximity (place) is replaced by multiple interactions with anything, anytime, anywhere (space), the opportunities for intermediaries, middlemen, and mid-size niches expand
greatly.
No Harmony, All Flux. As turbulence and instability become the norm in business, the most effective survival stance is a constant but highly selective disruption that we call innovation.
Relationship Tech. As the soft trumps the hard, the most powerful technologies are those that enhance, amplify, extend, augment, distill, recall, expand, and develop soft relationships of all types.
Opportunities Before Efficiencies. As fortunes are made by training machines to be ever more efficient, there is yet far greater wealth to be had by unleashing the inefficient discovery and creation of new
opportunities.
One disturbing notion that Kelly does not touch on in his book is whether we have any choice in adapting to this economy. He takes it for granted that we must adapt to it—or lose out. This may be hard medicine to
take. Nonetheless, the book makes for good reading because the reader will be able to learn where our society is headed—and plan accordingly. |
Bonfiglio Brief:"The new economy is disruptive and out of balance, but it encourages innovation for those who
participate in it. Everyone else, however, is left behind." |
