Business in the New Economy isn't just an easy electronic step away from business as it exists today. It isn't just building an electronic interface and selling online, it means whole new electronic infrastructures and interchanges. It isn't just more efficient operations linked by an electronic substrate, it's new vendor and market capabilities. Most important, New Business revolves more and more around customers, not producers.

Get ready: Business 1.0 is in for an overhaul — be it in pricing, competition, or value proposition — that will revolve around the power of digital networks. The profusion of Websites in recent years is merely a drop in the bucket: The profound — and hard — changes that businesses must make will unfold in three primary stages — in storefronts, infrastructures, and markets.


E-stage 1 is the standard Website — an electronic interface layered over existing business systems. While ecommerce is a good start, in other ways, it can be counterproductive. For one thing, a Website perpetuates the notion that a vendor's place is where customers come. As the proliferation of Web portals proves, though, customers no longer come to vendors; vendors are coming to them in droves. Vendor Websites also perpetuate closed environments with barriers to information and decisions, whereas customer expectations now call for open forums where information from all vendors is readily available.


Second-stage ecommerce ratchets up the core business with digitally powered operations, from selection to fulfillment and everything in between. Customers can order custom-designed products via build-to-order systems, and deal directly with producers, not intermediaries.

Customer interaction is no longer tolerated as a necessary evil to be handled by an isolated support group but rather embraced and integrated into merchandising, marketing, competitive intelligence, and management. Whereas first-stage ecommerce tantalizes customers with interactive Websites and little else, second-stage formulations empower the organization with knock-your-socks-off customer contact. Plants are formulated for build-to-order; billing and logistics systems are deployed for high volumes of small transactions; and customer-interface staffing is expanded to support the tidal wave of customer interaction unleashed by the Internet.