End Of Competition, The: The Impact Of The Network Economy. C N A Molenaar
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the creation of more services that would help and relieve companies and individuals in this work. Services were developed that would help to interpret the information to allow for better decisions. Although these changes did lead to adaptations, the old structures remained intact in many cases. Changes require time, acceptance and vision.
All three factors (computerisation, communication and efficiency applications) needed time, but small changes had major consequences.2 IT helped in gaining greater knowledge and insight into what was happening, and the mobility broadened the perspectives of private individuals, businesses and leaders. Old boundaries (mental and physical) came under pressure. There were also major consequences on the political front. The Eastern bloc could not hold up, and the wall fell. China (Asia) emerged as a world power and America profited maximally from its head start (America did not suffer any economic damage from the Second World War; this actually resulted in an economic revival with America becoming the world leader). Increasingly more capital became available for investments, a reinforcing process, which led to greater prosperity and new applications in the area of technology. The emergence of the Internet as an information and communication medium, in the early 1990s, was the last step in a change process from limits (restrictive) to no limits. Physical limitations became virtual challenges. In the Netherlands, the rank and file of the political parties continued to remain faithful to this for quite some time. It was only at the start of the 21st century that the old electoral structure was breached, in particular by the new 18-year-old (and older) electorate.
America became increasingly important as a world leader and undisputedly led the way when it came to technology. Companies such as GE (General Electric) and IBM, as well as the automobile industry and particularly large companies in the telecommunication and automation sectors, developed a new infrastructure that was led by America. This was considerably more extensive and far-reaching than ever before and affected all facets of daily life. Due to this development, the American lifestyle became the norm, and American prosperity the aspiration.
The most important changes are as follows:
• the use of computer technology in industry and in durable and consumable products;
• mass production and marketing for mass markets;
• greater efficiency and increased internationalisation.
We now hear about the Fourth Industrial Revolution based on Internet applications. Barriers of time, location, information, timeliness and communication are disappearing rapidly. These developments are leading to changes, often disruptions, and are no longer limited to a particular area. They are interconnected. The applications and changes in a geographical area, in society or in the applications of the technology are interchangeable. They can be applied directly in many areas. It is no longer possible to isolate a particular application (whether per application area or geographical area). Thanks to the Internet, everything is interconnected, and there is insight into the consequences and the possibilities of changes. The accessibility of information is helping to empower everyone more than ever before. Knowledge and power are being devolved to anyone who wants it. This is the basis of the network economy. The development from an agricultural society to an industrial society, then to a society based on IT, will eventually lead to a network economy that connects everything with everyone. This Fourth Industrial Revolution is much more far-reaching than all other previous industrial revolutions. The rules of play will have to be discovered and determined all over again. This period of transformation will of course lead to frictions, tensions and new balances of power (Figure 1).
Figure 1. From Industry 1.0 to Industry 4.0 (engineersjournal.com).
Important changes are the following:
• unparalleled speed and extent of the changes;
• disruption of all markets and industries, as well as consumer behaviour;
• a structural change of systems, production, society and markets.
What has the Past Taught Us?
The first two industrial revolutions were primarily focused on the transition from human production capacity to machine production capacity, as well as on the automation and optimisation of processes. During the Third Industrial Revolution, the emerging possibilities of IT and electronics made a shift possible from a (mass) focus on products to a focus on product adaptations for a particular target group. This allowed more individualised options to be offered that could meet a specific demand. The Fourth Industrial Revolution makes use of the ubiquitous availability of data and communication, which allows customers (and consumers) full control of the production processes.
The customers and consumers are able to remotely control the production processes by sending data that are based on their individual wishes. In this way, a customer-oriented (specific) product can be generated in a series with a batch size of one.
• The old rules of competition were based on the old structures, the application of which is now an outdated technology.
• It is a battle between ‘doing digital’, whereby traditional processes are made more efficient through digital possibilities, and ‘being digital’, whereby the technology forms the basis for new structures and applications.
• The new businesses mentioned earlier are based on digital technology and make optimal use of the new possibilities of the network economy.
• It is a battle between traditional structures and new structures, a battle between old technological applications and new possibilities. This is similar to the battle we saw in the past between swords and gunpowder, between the horse and the train, then later the bicycle and the car.
• The old structures and technologies will increasingly lose strength and power. But what are the new structures and competitive relationships?
The changes to traditional systems, whereby the customers lead the way, are happening on the basis of these insights. Old physical boundaries are disappearing due to the possibilities offered by networks. A worldwide market is being created where businesses have to compete and customers are able to buy. You could compare this to a site that was initially enclosed by a fence, with a locked gate. Suddenly the lock disappeared, then the gate, and eventually the fence. The site is now freely accessible and merged with the surrounding area. So why would visitors still come to this particular site?
Join In or Wait?
The old structures are stubborn, as the old decision-makers continue to hold on to them. Often, the knowledge to identify the consequences of new developments and respond to them is unavailable. Although online sales have been growing in double figures year-on-year for the last two decades, retailers and interest groups have refused to recognise the impact on the shops on the high street. In addition, others look for other causes for the problems in the retail sector: the recession, increased mobility. The true causes of the changes, however, were not recognised.
• The new Internet-based applications, such as webshops, smartphones and a different buying behaviour, were dismissed for too long.
• Reduced budgets and young people having other choices led to a different buying behaviour and decreased expenditure on physical products in particular.
• It was only once the number of empty shop premises in shopping centres reached a certain point that action was taken, but mainly within traditional structures without really responding to the different choices and buying behaviour. External factors continued being blamed. In other words, there is nothing we can do about it!
First of all, the old structures were made more efficient, such as lower parking costs, longer shop opening hours, Sunday openings and lower prices. In the Dutch town of Drachten, shops are allowed