We are in a new economy governed by the prevalent and vast spread of technology and social networks. Money is changing hands in an entirely different way from the old as currencies in some cases are hard to track and measure. The new economy is governed by technological innovation.
‘We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before’, weforum stated.
China’s economy two decades ago was just a tenth of the size of the United States which presently is two-third as big. It has been projected that in 2039, it would increase by more than 10%.
Economists have also referred to the new economy as a ‘collaboration economy’ where connections and partnerships are the emphases. It is more about learning with access to the myriad of information available on the internet. Competition is replaced with cooperation as coexisting does not impede business growth, rather it can be profitable if well utilized.
When considering the competition in today’s economy, one would discover how dynamic it has become. Companies can ease input-cost disadvantages through global sourcing, thereby making the old notion of comparative advantage obsolete. Competitive advantage is centered on input productivity, that is, continual innovation.
The new economy is well cut into different segments and networks of people handling various units. Companies don’t regard it a necessity to handle every aspect and department of their business, rather they would prefer an alliance with other companies that deals with such specific service. This brings together a network of companies with their distinct niche.
The uniqueness of this new economy is probably the fact that big corporation can create realistic opportunities and goals that enables change. The new economy strongly emphasizes quality and has more impact on consumers. The massive businesses of our day and time are the ones who can bring to their client’s satisfactory goods and services that will improve their overall quality of life.
This is made possible by learning and understanding their customers. Consumers in this age are well enlightened, inquisitive, and connected with a sense of value. Every service or goods advertised to customers would lead to an inquiry and research on the necessity and the advantage of procurement over time. Most big companies are already adopting corporate social responsibility as a marketing tool.
Customers’ preference has also become diversified as there is now concentration on specific niches which was not the case in the old economy. TV channels are well split to entertain various classes of people, while some are known for politics, others culture and lifestyle, food and so much more.
Also, TV is no longer the major channel to run ads with the presence of various platforms such as Youtube, Instagram, and other social media sites. YouTube has a million channels to advertise whatever kind of business.
Another major block that allows for cooperation between businesses is the assertion of blockchain technology. Experts have stated that the future of information is decentralized. The new economy also provides an advantage for blockchain technology due to its security against information alteration.
Companies must embrace and understand the importance of digital transformation and build their businesses accordingly, or suffer the risk of losing touch with the new world. The new economy ‘is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres, says weforum.
In addition to technology, part of digital transformation is changing employee’s way of thinking. If support for human resources is not added, even the presence of the most sophisticated technological tools would be unprofitable. Hence the need to emphasize behavioral change and collaboration within employees to foster digital transformation.
When considering the location in a global economy, it is more about how companies steadily create competitive advantage. Although what takes place inside companies is crucial, the business environment outside is also a vital necessity that must be considered. This role of location which was long despised is now embraced as evidence has shown that innovation and competitive success in various fields are geographically concentrated.
Let us make a brief comparison of the old and new economy. In the old, employees were satisfied with a stable job and it was not considered strange to invest your whole life and profession with one employer. Moving from one job to the other was considered unprofessional. There was also a clear outline for working hours and a difference between work life and personal life. It was not a norm to bring work back home as people left their jobs at their desks.
However, in the new, employees welcome flexibility and when the opportunity comes to switch companies for a better option available, it is embraced. The workday also provides a break for a little fun like playing games or taking a stroll to ease the mind. Working hours can be moved even to a Sunday morning as getting the job done is far more important than just showing up every workday.
In the old economy, knowing the right people helped but was not considered outrightly essential. In the new economy, success would never be reached if you are not acquainted with the right people.
In the new business world, companies that are not in tune with the latest trend will discover that they are left behind and soon become obsolete.
Weforum stated that ‘the speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.
The new economy is a fast-paced economy that requires being up to date with new developments. Information is key and every business that would survive and stand out in this age is the one consistently updating and redefining trends.