economy | Paul Wallbank - Communications Professional

The echo chamber

cave-mouth Nobel Prize winner and New York Times columnist Paul Krugman worries about the insularity of America’s economic leaders.

He’s right to worry. The economic downturn is going to be longer and deeper than it otherwise would have been because our business, political and economic leaders steadfastly refused to acknowledge the levels of debt our societies were being burdened with and now they refuse to deal with the fact that debt is being unwound.

The challenge for business owners now is not to fall for the orthodoxies and slogans but to take a realistic view of what’s happening in the world and the effects on customers, staff and suppliers.

Just listening to your mates repeating your own beliefs is not good enough. The politicians have their pensions, the executives their golden parachutes and the economists tenured positions. You probably don’t.

Read widely, listen and be sceptical of those with special interests to protect. Most of all don’t act on the advice of those who think it will be business as usual next year.

Business as usual is going to be very different from today onwards to what it was two, ten or twenty years ago. It’s time to reinvent and look for the opportunities those too deep in the echo chamber are unable to see.

Does IT kill competition?

Andrew Mcafee’s article of the effects of IT on competition and businesses raises some interesting points .

http://blog.hbs.edu/faculty/amcafee/index.php/faculty_amcafee_v3/curiouser_and_curiouser/

His conclusion is technology isn’t a leveller between businesses – instead it creats a greater concentration of market power.

I wonder if those results Andrew cites are biased because of the economic boom and easy credit we recently been through; start ups were bought out by cashed up bigger players and that’s why we saw a concentration of businesses.

Regardless of the reasons, there’s a caveat for the bigger players; Andrew’s view is this because “good ideas and good execution separate winners from losers” and technology is what allows these good ideas to spread in a well run company.

This week’s collapse of Wedgwood is a good example of when a company’s culture stifles ideas and innovation. The New York Times has an excellent description of what went wrong and Seth Godin has some wise comments on the NYT strory.

IT for the future

CNET’s Matt Asay looks at a Goldman Sachs report forcasting IT spending for 2009. To say the predictions are dire is an understatement.

Mark’s comments are interesting. He takes issue with Goldman’s view that open source and Software As A Service (SAAS) spending will fall as corporates focus on known vendors such as Microsoft and Symantec.

I tend to agree with Goldman’s analysts that the big corporates will turn conservative for the next few years as they focus on their core operations. As long as their IT infrastructure is good enough, that’s where they will stay.

The real action for open source and SAAS will be in the SME sector. Small businesses will be under more competitive and cash pressures as the global depression bites. The who survive the next three to five years will be the ones who do things smarter, quicker and cheaper than their opposition.

This is where open source, and more important, SAAS come into their own as they give smaller enterprises flexibility and cost advantages.

Some of today’s small businesses will the giants of the next economic boom and many of them will be giants because they embraced the new tools and technology available to them.