Preservation of the past is no strategy for the future. - Jeff Jarvis
I’ve recently become interested in how existing industries are grappling with the very transformative time we’re living in. Some organizations, or industries as a whole, have been unaffected by this change, others have adjusted and embraced change and numerous others just try to fight it. Take the newspaper industry, for example.
Jeff Jarvis was interviewed on TechCrunch (original post) and spoke about his new book, “What Would Google Do” where Jeff discusses how existing industries would operate if they adopted Google-inspired business models. I haven’t read the book, and am not particularly fond of the idea of crowd-sourced restaurants (see video below) but his main point is that businesses run by seemingly smart people have completely misunderstood the new economy. Jarvis calls it, among other things, the post-industrial economy and sites newspapers as a prime example of an industry that has fundamentally misunderstood the new rules.
What struck me the most was that this is just the beginning. The record industry and newspapers are the most obvious examples of industries that have faced this new economy head on. But how many times have you made an investment because “Company X has generated enough cash flow to pay dividends since 1929″ or how “Company Y has the largest market share in its industry since inception”? How many times have you made an investment decision based on how well or how consistently a company has performed in an industry under the “old rules”? How will these companies perform under new rules, under a new economy? Will they become entirely obsolete, will they have a fighting chance? Does management have the foresight to embrace the changing economy, and profit from it?
These are important questions to think about, especially when making long-term investment decisions. Previous track records are just about all we have to go with in making investment decisions because we can’t predict the future. But what happens when the new economy makes those previous track records under the “old economy” obsolete?
