Emergent Business Networks
I have been groping around this story, like a blind man around an elephant. Prodding, pushing and pulling on the beast, it has seemed very different depending on the point of view:
- New networks for buying and selling. What used to be done within a company needs to done across companies. We will see more platforms and networks that create trust, aggregate demand and enable transaction efficiency.
- Leveling of the playing field between big and small companies. This is a golden age of start-ups. 50 years ago, small businesses accounted for 2/3 of economic activity. Today it is 1/3. That trend maybe reversing.
- The end of information arbitrage. This makes the end consumer more savvy and hard to sell to. The buyer is king. This forces innovation by suppliers who collaborate faster and more efficiently to deliver what is needed.
- Reduction in transaction cost. Vertically integrated firms arose because it was usually more efficient to transact internally than externally. The Internet changes that calculation.
- New markets for investing/raising capital. As more start-ups get created in more places, the capital markets need to adapt with new ways to raise and to get liquidity.
- Globalization. This opens up new opportunities to source and sell but also reduces barriers to entry and ratchets up competitive intensity.
I first tried to define this in a post on Read Write Web in September 2007. A year later when the financial markets went into meltdown, it became apparent that the pace of change was accelerating. The meltdown looked like a symptom of a deeper wave of change.
This is what I am trying to chronicle.
Here are some other posts around this theme: