New Economy has no barriers

By Matthias Yao, The Straits Times, 20 July 2000

The New Economy is different from the Old Economy in three ways.

First, knowledge has become the key source of wealth, rather than natural resources and manual labour.

Second, globalisation brings a free flow of investments and trade across international boundaries as barriers come down.

Third, technology allows instantaneous communications and transactions to be made, speeding up business and shrinking the world.

Old rules are turned upside down. New paradigms apply.

The New Economy moves at electronic speed. Business is done globally, virtually, 24 hours a day, seven days a week.

Intellectual property is worth many times more than physical property. Knowledge is inexhaustible and scarce at the same time. Old ways of doing business will become unprofitable, and old ways of doing work will become obsolete.

A simple example, an American company wanted to set up a website.

It advertised on the Internet. A designer from Surabaya responded, and won the job. The manager in the United States and the designer in Indonesia never met.

Nothing physical was passed from one hand to another, only a design idea.

Yet business was done and value was created. And knowledge, globalisation and IT all play a part in this relationship.

The effect on labour is that physical labour is no longer as highly valued as before.

In the old days, machines were expensive and people were cheap. So people were hired to behave like machines on the production lines.

The best workers were the ones who could do a simple task repetitively, quickly and with few mistakes.

Nowadays, machines are cheap, and people are expensive. So companies will hire people only if they can provide an added advantage to the company that no machine can provide.

Work in the future will involve managing an entire process, and not just repeating a task. That means having to exercise judgement, use discretion, and make decisions without reference to supervisors.

Many workers are not used to working that way. Their jobs are often very prescribed, with hardly any room for variation.

They may feel uncomfortable when the process is open-ended, and may be afraid of penalties when a decision they make goes wrong.

At the same time, as more judgement is exercised at junior levels, management too must learn to differentiate between honest mistakes and poor performance, and not penalise those who are trying to do their best for the company.”