Progress to the Next Economy

(Editor’s note:  This is the last installment of the Next Economy Series. Next week we will be premiering something new. )

The Theme

There is an underlying theme to the massive change that is happening all around us – Imaginepeople are recognizing their interconnectedness. The Next Economy is mostly about how this is showing up in physical reality.

  • Local and linear thinking is being replaced by a global and exponential focus
  • Expanded responsibility, not  limited liability
  • Taking back responsibility for education, health care and so forth that has been ceded to Large Institutions (I will have a lot to say about these topics later this year)
  • An end to busy-ness: no more polishing cannon balls

 Business

New forms of business with a new style of leadership are rising with the Next Economy.

  • The new business organizations are more agile, forming alliances to gain key capabilities instead of growing them “in house”. Limited liability is giving way to social responsibility.
  • Stakeholders – Everyone and every entity involved in producing value has a stake in the full input and output of production.  This ranges from the true cost of inputs, the well-being of those actually creating the products and finally the end users of those products.  The accounting system that truly measures all this is still in development.
  • Smaller doesn’t mean separate, it means focus on value creation with an eye on what that creation really costs. Businesses must learn to cooperate and collaborate with each other. High Tech companies are engaging in what is called Coopetition.  Competitors agree to work together in specific areas – like the IEEE defining common standards for technology platforms or sharing research efforts that are too expensive for any single entity.
  • The new leaders are not empire builders that dream of some new version of the Roman Empire. They hold a vision of profiting through service to their markets, communities and families. Some of the new leaders are working inside the old economy companies to restructure them into Next Economy businesses.
  • Don’t assume that all large bureaucratic organizations are beyond hope and must simply be destroyed. Some of them produce real value and can be “tweaked” into the Next Economy.
  • Technology allows smaller groups to “scale” as markets grow exponentially. This is different from the Industrial Age when business size had to grow at nearly the same speed as market expansion.

New approaches to energy, living and politics

  • Much of what made the Industrial Age work is/was cheap energy. Non-renewable energy is getting more expensive since we have now consumed all it that is cheap to produce. Renewable energy is being developed but there simply isn’t yet enough capacity.
  • The Industrial Age was characterized by separation and scarcity.  Some of it was real scarcity, some of it is local scarcity and most of it was a perception of scarcity caused by advertising (buy now, before the deal is gone)! I will focus on Abundance and how to overcome scarcity in July.
  • The strong boundaries of the old economy (political and legal) defined separation, primarily for the purpose of controlling resources and creating local scarcity on the other side of the boundary. The bigger the entity, the stronger the boundary.
  • Governance is more effective on a smaller scale. The countries with the highest per capita GDP are mostly city-states and mini-states like Monaco, Macau, Qatar and Luxembourg.
  • Interpersonal relationships – The industrial age family was nuclear (2 parents, 2.8 children) and communities were bound by geography with little in the way of strong bonds.  The definition of what constitutes a family is changing into many variations. Communities based on collaborative creation will need to get stronger in the new climate.

Getting there does not have to be violent.  William Gladstone (1809-1898) led a peaceful revolution in Great Brittan.

This post has a lot of ideas. Which ones resonated with you?


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