The past economic models of business have focused on “silos of capital and expense allocation” called the proverbial “budgets”. Every year the “budgeting cycle” creates activity centric to projecting what the new years cost will be then finding new sales, new markets etc. to generate revenue that exceeds the projected cost.
The traditional business has to fund “overhead” in the form of accounting, legal, administration, management, human resources, technology, rent etc.with each vying for more money to fund their initiatives and their silos of “perceived power“.
This model has been the accepted model of business for decades with each new management theory creating new sets of accounting definitions including cost, process and activity accounting with each attempting to find better ways to measure productivity, efficiency and cost. Much of the theories behind these “systems” stem from inherited thinking that followed the industrial era where the emphasis was on mass production, distribution, and selling goods to hungry consumers.
Throughout and at the end of each cycle of measurement the all consuming focus was on “hitting the budget” so the collective organization could meet the expected and defined end results. The end results were aimed at financial gains for shareholders, public markets and the organization as a whole. Whether “fudging or factual” business has been consumed with the game of numbers and how leveraging numbers creates perceived wealth, both private and public.
Will Money Follow Free?
Kevin Kelly writes “Success in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, there are eight generatives that demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can’t be replicated with a click of the mouse.”
In the old business models markets were chased and developed based on “relationships”. The old business models served the markets with a mindset of “capture and contain” rather than “attract and give“. In the old business models the predominant influence was from sales and marketing divisions because they had or created the relationships. If the top sales and marketing people left one firm for another the relationships typically followed. The old system tried to contain relationships by putting “non-compete” agreements on people and heavy handed legal agreements with customers and suppliers, people. You can institutionalize processes but the choice about relations has always been and will continue to be free.
The new business models are created and facilitated by the impact of new dynamics created by the virtual world. Technology has fueled connectivity and creativity feely. What an individual or organization creates from all this “free” that enhances value for the relationships is the foundation of transactions that always have and always will follow relationships, with people and markets, existing and those to be created from “free”. Free is the new input into a developing “system” of relationship connectivity, capital and exchange. The related process that lead to the results, output, are part of the new business models where the focus is no longer on budgets rather the focus is on how to maximize the use of “free” to create unique value to relations that fuel new transactions.
All of this starts with a new mindset and ends with new economic gains. The new business model and the subsequent thinking is what is and will continue to fuel new markets and significant economic gains for those that get it and losses for those that don’t. That is why we call it “The Relationship Economy“. More on this later.
What say you?