Tuesday, 21 May 2013

the internet economy Part IV and the new gold rush; economic production in an information economy

[This is a re-post (originally posted on 16 Nov 2012) with minor edits, deleted the original post by mistake.]

From productivity (see Part III), there is its close cousin efficiency to be re-considered.  In the 20th century, when we can’t find use of something, they are left to waste.  In the 21st century, some of these ‘waste’ are turned to productive use and monetised.  eBay popularised it, re-using personal leftovers.  Internet business models work in strange or rather yet to be familiar ways.

Companies now use online exchange sites such as yet2.com to find buyers for underutilised patents.  With large global companies like GE spending large sums on R&D and yet internally only using a fraction of the patents generated, licensing of their output brings in additional revenue, value which would otherwise languish in their labs.   Then sometimes difficult engineering challenges delay completion of new products.  They may use online exchanges to look for specialists to assist, making the assumption that even if they have 10,000 researchers in-house, they cannot match the global supply of millions which will throw out the few with the requisite expertise required.  Many of these works in small specialist firms they would otherwise never be able to locate.  Even retired scientists are not spared!  YourEncore is a site specifically targeting them, matching retired specialists to paid scientific work. 

There are numerous other similar virtual marketplaces that can only be good for global business, all drawing on the connectivity ability to bring matching interest together, itself not a new idea but reinforced greatly with the internet.  It is this ability, expanded use in sites like Wikipedia and peer-to-peer technology that draw on the masses or their under-used PC resources in the case of Napster, directly and indirectly to produce ‘goods’ and services more efficiently.  Expect more re-inventions. 
{probably for the book only …..This may make a case for economists to re-examine the Adam Smith’s “invisible hand”, an economic model that says ‘leave it to the market’.  Now the masses has a sizeable input to the equation of the market.   Free market…the market decides….mkt based economy… More extreme xxx of this in laissez-faire…Could this also mean that Adam Smith’s “invisible hand” economics model needs also to be re-invented?….re-write…there is a case for re-examining mkt economy.  Previously efficiency of the mkt, the invisible hand decides implying a free competitive mkt, now efficiencies of mkt have a new factor….p163 wikinomics on uman genome project & cooperation among big pharma.}
Without the web and open progressive methods applied in sites like eBay, most of our unused items, patents and retirees will end up in landfills. 

The internet re-invents and exaggerates business models that may not work in the 20th century but thrives in the 21st.  It may be time to dust off and re-visit shelved ideas with an open mind by sieving them through funnels of internet rules, like re-distilling to produce fine whisky.  One may find some hidden gems.  Traditional businesses could also try to re-invent themselves in this new economic age, lest they end up like Borders.

All these means there are now new way of conceptualising value creation, whether it is data or information related to data.  Apply methods ie. internet business rules used by the early adopters.  {With information being the new commodity, the nations that will have an edge are those with knowledge and skills with a focus on developing humans as a resource.  Mine your people, not those you find underground. [versus those you find underground]}
As we wind down this topic on the information economy, it is interesting, thinking back, that we have been talking about the information age for a long time and while we really only have a vague idea of what it really is, tampered with looking at it through outdated lenses, it is the advent of the internet that has made it clear.

This concludes this topic.  Tech firms operate differently from the conventional and the reason for industry disruptions.  The next few posts discuss the internet business model, the rules they use.  Conventional firms could adopt them to partake in the digital industry.

©Chen Thet Ngian, InternetBusinessModelAsia.blogspot.com (2012, 2013).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chen Thet Ngian and InternetBusinessModelAsia.blogspot.com with appropriate and specific direction to the original content.

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