Whatever their future holds, the year 2000 will be remembered for the rise and fall of countless dotcom start-ups. If they were the stuff of dreams – in many cases broken – do they matter now that we have all woken to the reality that all businesses require skilful managers to sustain and build for the future?
In practice the dotcoms shook established businesses and in many instances exerted downward pricing pressure and challenged the status quo. The information connectivity of the internet improved across many different sectors and trimmed margins accordingly. An early assessment might be that internet activities have reduced corporate profitability and have been a foe to future prosperity.
The start to 2001 is more uncertain than for many years with the US slowdown beginning to bite, stock markets going sideways and national financial stability being questioned.
Technology too is being seen as a very cyclical activity and so much more risky for investors.
This is an environment when decisions are easily deferred and that in turn could talk us all into even flatter growth or worse.
Thankfully many aggressive management teams thrive in such economic climates and scheme how to gain greater competitive advantage. This is where the internet and its power can be used offensively.
Multi-channel retailers – clicks and mortar enterprises – are becoming commonplace. These have traditional advantages as well as the web enabled activities that can give enormous scalability for a young company with a proven business model.
If this can be properly harnessed the bravado of last year’s dot.coms may not have been wasted, if existing and more traditional companies can copy or buy such know-how for their own purposes.
Venture capital disciplines are often required if companies aim to grow at three or four times the average the rate of growth.
Such growth rarely happens by accident, so that competitive advantage the internet can provide will often be an important ingredient. Venture capitalists are looking perpetually for creating shareholder value in two/three years’ time and so like ambitious managers will want to contribute their expertise towards achieving fast growth.
Is the internet friend or foe? This can only be answered by looking the future in the face and embracing the challenge.
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