Over the past decade there has been a stark realisation that globalisation means increasingly tough competition and in many cases a fight for survival. But unlike in any previous period in our history, businesses face a world that is becoming increasingly fast, counterintuitive and commercially more dangerous. Moreover the perception of what actually constitutes value is increasingly confused.
Are today's investments in the dot-com world any less credulous and long lasting than the purchase of an old master – just paint on canvas with no intrinsic value of any kind and certainly of no direct benefit to society as a whole - or indeed antique furniture, which is just a few sticks of wood. Here we have items fundamentally worth nothing but valued in millions.
In comparison, our world of bits looks ever more solidly founded, with real customers, a service base, knowledge and a growing influence over the lives of everyone. The only uncertainty hinges on real value and that comes down to what people are prepared to spend.
Today we have an absolute focus on measuring everything in terms of money but a wiser choice of metric may turn out to be time. The key to calculating the value of an online business may be how many people are attracted to a website or service and how much time they are prepared to devote it.
Richard Feynman, one of the greatest physicists that ever lived, once said: "I think we can safely assume that no one understands quantum mechanics."
This is probably even more likely to be correct today. Unfortunately there has never been a Richard Feynman of economics or indeed any theories that come remotely close to explaining what is happening within markets. Nevertheless: "I think we can safely assume that no one understands the internet and the dotcom world."
Why is it we lack any models or theories of economics that are worth a dime? My guess is the dynamic nature of relationships and that the involvement of human emotions, creativity and greed result in a high level of unpredictability. But when a Feynman of economic theory does turn up I suspect the key formulae for value will include knowledge, information, access, reach, relationships, time, products and customer base as wholly stronger parameters than raw money.
If we could understand all of this it would be far easier to predict/guess the future. But just looking at the recent history of dot-com stocks, their rapid rate of growth and even faster fall, followed by their steady rise, it is clear that they are not only here to stay, they are here to dominate. Banks, insurers, telcos and many more have already been transformed by the internet but I
Peter Cochrane is an engineer, scientist, entrepreneur, futurist and consultant. He is the former CTO and head of research at BT, with a career in telecoms and IT spanning more than 40 years.