The digital economy, enabled by networked computers and communication technologies, has the power to transform consumer and business activities. It forces organizations to rethink competition, wealth creation, and even the nature of the firm. The digital economy changes all business assumptions and allows new commercial entities like e-business communities to thrive as never before, facilitating partnerships between disparate entities. Common digital economy themes include increased knowledge content in all products and services, real-time commerce, exploiting new markets, a sector-less economy, disintermediation of traditional providers, lifelong learning, parallel logistical networks, and morphing the internet into a robust, reliable, and easy-to-use system. In short, while the digital economy presents enormous possibilities, the challenge is turning potential into reality.
The emergence of the internet and information technology is profoundly impacting and transforming business in several key ways. First, online communities are forming where companies, suppliers, and customers collaborate to generate additional value. These "e-business communities" (EBCs) take different forms, but share the goal of leveraging technology to optimize operations and better meet customer needs. Second, rather than simply reacting to market changes, forward-thinking companies are utilizing the internet for strategic envisioning of future opportunities and challenges. By developing scenarios depicting different potential futures, businesses can catalog necessary steps from the present, evaluate risks and rewards, and proactively adapt their strategies. This enhances organizational agility and resilience. Third, immediacy - rapidly combining specialized expertise with execution - drives internet-fueled performance gains. Knowledge and speed enable dramatic improvements when working in tandem. Leading firms develop systems to facilitate information-sharing, manage intellectual capital, and promote ongoing employee education. The goal is using technology to amplify human judgment and accelerate strategic capacities. However, balance is mandatory - neither knowledge nor speed alone enables sustainable competitive advantages. Fourth, partnering among organizations making complementary adaptations lies at the heart of digital-era wealth creation. Conventionally, companies establish divisions targeting core markets. However, overlooking emergent sectors, this approach is outdated. Today, an ecosystem mentality is imperative. Instead of concentrating internally, progressive companies collect external data, participate in shaping new market environments, and collaborate with other stakeholders. Rather than limiting involvement, leading firms simultaneously support multiple evolving business ecosystems. Lastly, more than short-term valuations, organizational design and human capital determine sustainable internet business models. Transitioning from an informal startup to durable enterprise demands crossing an organizational chasm via seven leverage points. One, the company must have a values-driven vision setting performance metrics. Two, quickly developing and scaling innovative prototypes responds to market needs. Three, strategies, systems and tools must align with the vision and environment. Four, despite staff turnover, the technology framework must preserve institutional learning. Five, outsource non-core functions to enable mutually beneficial partnerships. Six, leadership fit for the firm's scale provides direction amid ambiguity. Seven, terminology and design signal a dynamic digital orientation. Underpinning these transformations are flexible, distributed, cross-functional attributes. Appreciating constant learning and evolution is imperative. Core assumptions require continual reevaluation, or companies risk irrelevance. New technologies enable unprecedented coordination, information-sharing and value creation. Knowledge - contextualized data - is the most precious asset. Customers increasingly demand sensitivity and responsiveness. Leading executives understand economic ecosystems transcending traditional corporate divisions. Scanning for embryonic opportunities and nurturing complementary relationships fosters innovation. The ability to rapidly sense and adapt to changing consumer preferences, combine specialized expertise, and collaborate with partners on shared visions determines success. Legacy hierarchies must give way to fluid networks. Technology amplifies possibilities for producing and embedding knowledge in goods. Lower coordination expenses permit adding value at each stage. But technique is only half the equation - realizing digital promise requires strategy, leadership and organizational transformation. The future remains unwritten, but companies can actively compose it by embracing uncertainty, flexibility and co-evolution across old boundaries. Fresh cognitive frameworks and terminologies signal readiness. The message for executives is unambiguous - reinvent your business premise or slide into irrelevance.
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