Meta-Capitalism (Hardcover)

In Opinion

If the authors of the new book "MetaCapitalism" are correct, the world will undergo a business revolution before 2003.

Companies will become more effective and efficient by decreasing their capital expenses and increasing the number of functions they outsource. And the value of the global market could increase tenfold, from $20 trillion this year to as high as $200 trillion within 10 years.

Sounds pretty good, huh?

Unfortunately, that growth isn′t gratis.

A company can′t just utilize the Internet; it must immerse itself in it. Or as PricewaterhouseCoopers CEO James J. Schiro says in the book′s foreword, "Companies must either adapt or perish."

B–to–B the key

Authors Grady Means and David Schneider,consultants for PricewaterhouseCoopers,
present their case concisely, though the ever–present charts and graphs detract from the readability, which is average to begin with.

But their message comes across. The companies who embraced the Net five years ago by anticipating the b–to–b concept lead their sectors.

In light of this, it′s no wonder that the authors express approval for companies like Cisco (CSCO) and Nortel (NT), which are well on their way to containing their businesses within the scope of the Internet. That is, they are reducing their capital expenses (such as factories, equipment and personnel) and increasing their presence and reliance on the Web.

More surprisingly, traditionally capital–heavy companies like General Electric (GE), Honeywell International (HON) and Wal–Mart (WMT) have begun allocating available resources toward creating a larger Internet presence.

The authors call this transformation away from a reliance on physical capital and toward more flexibility in the supply chain "MetaCapitalism."

But Means and Schneider readily admit, "The more compatible the existing business model with the emerging b–to–b e–business model, the less the organization must change to succeed in the "New Economy".

Read: If your competitors are far from conducting their companies entirely online, you might have more time than the strict two–year period offered by "MetaCapitalism."

Playing catch up

But the opposite is also true: In many industries, the laggards must now play an exhausting game of catch up.

What must they do? The authors say: Utilize the Internet by outsourcing departments not directly related to the product (accounting, human resources, customer service) or by moving those departments online; create a single information system that ties together each division of the company with customers and suppliers; concentrate on establishing your brand; and stop relying on physical capital.

And if you bathroom soap dispenser manufacturers think this book wasn′t written for you, surprise. Means and Schneider say you better get in the game, too. Because once your competitors create a b–to–b division or exchange that tackles the supply chain and fills its orders faster, it′s probably too late.

However difficult it might be for a factory or retail store to alter the way it′s been organized for 50 years or more, the companies who are really going to have a hard time meeting Means and Schneider′s extreme schedule are the foreign manufacturing
companies.

According to the authors, the United States is well on its way to being prepared for "the e–commerce revolution," but Germany, Japan, China, Indonesia and Malaysia will have a difficult transition to the new model.

In short, it will be much easier for the largest and most flexible of the b–to–b companies to dominate in the next several years. All others better start running.

Candice McFarland is a copy editor at UpsideToday. If you would like to submit a letter to the editor regarding this story, email online@upside.com.

"...Important issues and a valuable starting point..." (Long Range Planning, Vol. 34, 2001)