THIS NEW ECONOMY

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.

Networks have existed in every economy. What’s different now is that networks, enhanced and multiplied by technology, penetrate our lives so deeply that “network” has become the central metaphor around which our thinking and our economy are organized. Unless we can understand the distinctive logic of networks, we can’t profit from the economic transformation now under way.

New Rules for the New Economy lays out ten essential dynamics of this emerging financial order. These rules are fundamental principles that are hardwired into this new territory, and that apply to all businesses and industries, not just high-tech ones. Think of the principles outlined in this book as rules of thumb.

Like any rules of thumb they aren’t infallible. Instead, they act as beacons charting out general directions. They are designed to illuminate deep-rooted forces that will persist into the first half of the next century. These ten laws attempt to capture the underlying principles that shape our new economic environment, rather than chase current short-term business trends.

The key premise of this book is that the principles governing the world of the soft–the world of intangibles, of media, of software, and of services–will soon command the world of the hard–the world of reality, of atoms, of objects, of steel and oil, and the hard work done by the sweat of brows. Iron and lumber will obey the laws of software, automobiles will follow the rules of networks, smokestacks will comply with the decrees of knowledge. If you want to envision where the future of your industry will be, imagine it as a business built entirely around the soft, even if at this point you see it based in the hard.

Of course, all the mouse clicks in the world can’t move atoms in real space without tapping real energy, so there are limits to how far the soft will infiltrate the hard. But the evidence everywhere indicates that the hard world is irreversibly softening. Therefore one can gain a huge advantage simply by riding this conversion. To stay ahead, you chiefly need to understand how the soft world works–how networks prosper and grow, how interfaces control attention, how plentitude drives value–and then apply those principles to the hard world of now.

 

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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK