The new rules for the next economy …. and the role of IT

Over the next several weeks, I will be speaking at a series of events sponsored by Microsoft related to their Windows 7 launch. The audience includes key executives (CIO’s, CFO’s, CTO’s and IT managers) from a wide variety of industries.

While much of the news coverage of Microsoft focuses around the “consumer” side of the Windows 7 launch, of equal significance is the release of several new server infrastructure upgrades that permit large and small business to take their business into the next level of operational innovation.

In Toronto the other day, Steve Ballmer was speaking to this aspect of innovation. I find that some media gave the message short shift, because their planned story spin didn’t fit his message.

That’s too bad, because the reality is that having an infrastructure that provides for a lot of business flexibility is going to be critical as we transition into the “next economy.” Clearly, there’s a lot of business turmoil out there, and organizations need to be able to change quickly to deal with new circumstances.

Given that, part of my message at these events will focus on what I’ve come to call the “new rules for the next economy.” What are those rules?

• structure for growth: In many industries, the painful process of contraction is either over, or coming to an end. Once you’ve done the cost cutting, you only grow the profit line through new revenue. New revenue means new products and services; that comes from insight, collaboration, and thinking. Smart companies are ensuring they have a razor-sharp growth oriented culture, and technology enablers that help them get there.
• focus on “chameleon revenue”: in many industries, the revenue stream five years from now won’t come from the products or services offered today. You have to keep a product/service innovation pipeline full in order to generate these new revenue sources — and do it faster and better than before. Crayola has two supply chains: one for existing revenue, and one for innovation-based revenue. Interesting concept!
• speed up: I spoke at a global travel conference a few weeks ago, and noted that 1/3 of all leisure travel is now last-minute; the average time frame for planning now down to just 15 days; 36% of last minute vacations are 3-4 nights; and 30% are 1-2 nights. Smart travel companies have in place an infrastructure that allows them to rapidly change their product lineup, marketing message, brand image, and the flexibility to communicate a new message to a massive client base quickly.
• ingest new technology faster. There’s going to be a huge amount of business model change as the tsunami of technology continues unabated. Anyone in retail will be hammered by the rapid transition to cellphone based payment technology. Winners will be able to transition at the speed of Silicon Valley — with the result that leaders are those who will continue to find operational innovation in ways they hadn’t thought of before
• shake up methodology: think Manufacturing 2.0, and a blog post I wrote here some time ago. The future is all about Honda’s thinking: “how quickly can I change” is the defining question in terms of market flexibility. Manufacturing models are undergoing a huge shakeup, and those who transition them for maximum agility and flexibility will dominate the next marketplace.
• be offensively defensive: no matter what industry you are in, there is someone out there who wants to mess up your business model. Before that happens, you should mess it up yourself, so that you better control the end game. Technology has and will play a huge role in business model transformation, and your infrastructure has to be up to the task.

Bottom line: business will continue to get faster, more complicated, and far more challenging.

Will you be able to ahead with a creaky, finger-in-the-dyke infrastructure?