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National healthcare expenditures were expected to hit more than $1.3 trillion in the year 2000. That's a 7.1% increase from 1999, and a compound increase of 6% per year from 1996 to 2000. These numbers are expected to come under increasing upward pressure as a significant portion of the U.S. population, the "baby-boom" generation, continues to move into middle age. These baby-boomers, who were all born during the years of 1946 through 1964, are just reaching their fifties with those born during the peak of the birthrate explosion, 1961, reaching age 40 this year.
With sweeping cost-cutting initiatives and the rise of health maintenance organizations our healthcare industry has already degenerated into a battle to see how many patients a Doctor is able to set eyes on at the lowest average cost per visit. This has given rise to a disturbing dynamic where Doctors as a whole have ceased to be healers and have instead been reduced to a role as sales representatives for the pharmaceutical industry as they dispense drugs at such an alarming pace as to actually endanger our health as a whole. Increasing numbers of studies continue to warn that due to over-medication and the over-prescription of antibiotics, the conventional medical community is threatening to unleash escalating numbers of super-resistant strains of disease while simultaneously creating weaker and weaker immune systems. This dynamic is unlikely to abate any time soon as the gentrification of the baby-boom generation increases the pressure to control costs while ensuring that the pressure to rely on short-term, profit-based decisions will continue to mount.
A shift has begun away from the thinking that healthcare is merely the treatment of disease toward a more holistic approach to health and how it affects and is related to everything in one's life. In fact, according to the American Medical Association, alternative medicine and treatments is already a $27 billion industry in the U.S. alone. And as traditional healthcare continues its focus on cost efficiency rather than patient health and well-being, the real changes the healthcare industry are likely to experience won't be its transition to an internet-based industry, but its transformation into a holistic lifestyle industry.
Historically, people have sought alternative medicines and treatments because these disciplines have offered less invasive procedures with fewer side effects, and are often as effective and in some instances even more effective than traditional treatments typically because these holistic disciplines act to correct the underlying cause of a malady rather than simply treating its symptoms. But because holistic principles are also often more cost-effective than traditional treatments, we will see a renewed focus on these ideals even from the more traditional medical providers and insurers as cost concerns continue to plague the healthcare industry. For example, Medicare currently does not cover the cost of purchasing a $300 treadmill, but will pay $50,000 seven months later when that same person has heart bypass surgery. With our society's obsession over money and what our government does with it, this kind of thinking will soon precipitate a crisis wherein our politicians and the big business they represent will be forced to choose between cutting healthcare coverage for millions or accepting holistic ideals and perhaps gaining the ability to cover millions more. The companies best able to bring these cost-effective alternative ideals to a wider audience will be best positioned to reap the benefits of the potentially explosive growth these markets are poised to experience.
Shopping
The trend toward healthier living is also giving rise to the popularity of organic foods, household products free of perfumes, plastics and man-made chemicals, and other household goods that promote rather than degrade the environment. As the online grocery industry grows rapidly to an expected $27.1 billion by 2004 an increasingly important component will be healthier alternatives to traditional household goods especially as women who currently make up 50.4% of those connected online increasingly seek convenient, cost-effective ways to make the world around them safer for themselves and for their children. The enterprise that can offer cost-effective convenience and increased quality and safety will be poised to grow as this market grows.
This coming year more than $150 billion is expected to be spent on advertising in the U.S. and more than $350 billion globally, but perhaps the most important figure for consumers everywhere is that the amount spent on advertising is expected to increase as a percentage of gross domestic product again this year as it has every year since 1994. That means that an increasing percentage of the price we pay for the products and services we use everyday is not for product improvement or increased quality, but for advertising! Advertising that at its BEST can build brand or product awareness, create perceived value, and differentiate a product or company from its competitors. And at its WORST is only temporary in its effect when and if it is effective at all, is imprecise reaching thousands of people who cannot use the product or service while perhaps not even reaching its target market at all, adds no actual value to the product or service it represents, and is increasingly expensive. While in certain limited situations traditional advertising does have its place, the increasing avalanche of advertising from television, radio, billboards and other outdoor sources, the Internet, and soon wireless devices, and more will continue to diminish its value and effectiveness.
As such, a new approach to advertising and marketing or a different approach used in new ways is in order if we are to be able to deliver an effective message at an acceptable cost. For some their idea of accomplishing this goal means resorting to high-tech disciplines that allow the targeting of an ever narrower audience such as data-mining or the development of technologies that extend and hone the ability to target consumers at the point of decision-making regarding a specific purchase, but as privacy concerns create a backlash and the avalanche of advertising begins to desensitize the target market to these efforts, these ideals will begin to lose their luster.
There is, however, a methodology that has long been used to deliver an effective message at a reasonably low cost-in the past it has been referred to as word-of-mouth advertising or network-marketing. It has long been known that one of the most effective forms of advertising is enthusiastic word-of-mouth praise from someone you know and trust, but in the past it was typically more difficult than traditional advertising to effectively cultivate and often very slow to develop. With the promise of the Internet this is no longer necessarily so. And in fact can be quite the opposite. For example, utilizing an involuntary word-of-mouth technique dubbed "viral-marketing", the web-based e-mail service, Hotmail, quickly became the largest provider of its kind in the world, out-distancing its traditionally advertised competitors while reaching millions of subscribers in only a matter of months. A model utilizing an efficient and effective word-of-mouth campaign aimed at innovators and early adopters of new technology and new ideas will be increasingly important in the Internet age as companies struggle to gain awareness and acceptance in an increasingly crowded market.
Today, however, many of the companies in our "new economy" lack vision and insight. They merely seek to clothe old economy industries in new economy technology. They can be recognized by the way they describe themselves using new economy terms that are devoid of new ideas, and in the way they seek new employees using job descriptions from the old economy that use a very narrow range of technical experience or skills as a determining factor for employment, all in an effort to fill out their organizational chart as quickly as possible believing that merely ramping up quickly to mirror larger competitors brings them the trust and respectability of one. But instead they find that their nimble start-up has swiftly become just a smaller version of the slower moving operation they were attempting to replace.
As the pace of innovation accelerates, it will be increasingly important that the nimble start-up remains nimble through ALL phases of growth in order to maintain its competitive advantage. This means it has become even more important in the new economy to foster creativity, openness and entrepreneurial spirit. To that end it is imperative that every new economy enterprise create an open, expandable work space with few walls and doors because physical barriers can and do lead to psychological ones. It is also imperative to construct an open organizational structure made up of a team of equals. This not only facilitates open communication and the sharing of ideas, but encourages the use of all one's skills toward the organization's goals rather than merely utilizing a narrow range of each individual's skills that so often is the result of the departmentalization that occurs in a hierarchical structure that emphasizes a system of subordinates and separate classifications of employees while it erects barriers to interaction, blunts ideas, and stunts growth through its inherently divisive nature.
In the new economy the ability to focus on core efficiencies without distraction also becomes paramount because it is leadership and creative problem-solving in these core abilities and efficiencies where an enterprise has the greatest advantage, and therefore the greatest opportunity for profit and growth. It is therefore wise not only to allow, but to encourage the outsourcing of non-core obligations to firms who have core abilities and efficiencies in these non-core areas. This will facilitate the start-up's ability to leverage the Internet to its fullest while acting to keep fixed overhead low, and maneuverability high.
As the Internet continues to grow it will allow a small group aligned toward a common goal working with focus and purpose to be able to do the work of a much larger group that is not so aligned. The quantity and the quality of their achievements may even surpass those of much larger enterprises which often experience infighting among departments and disciplines causing management to allocate time to "baby-sitting" and adjudicating rather than leading. A group utilizing an open organizational structure is more likely to avoid the pressures that cause breakdowns in communication that a hierarchical structure experiences as it grows. Breakdowns that lead to wasted and unnecessary work, work that does not advance the goal, and even work that runs counter to the goal as employees lose touch with the greater goal. And as communication lapses continue, managers begin to feel out of control and out of touch with their subordinates creating a dynamic where they feel the need to micro-manage and set up time consuming reporting procedures so they can get a handle on what their subordinates are doing, which ultimately leads to the erection of personal kingdoms within the company in a vain effort to feel like they have some control over their lives and their destiny. And employees who feel they aren't being heard begin to grow disgruntled and begin to complain about being worked too hard because they have become disconnected with the value of their work, and begin to actively block change. Put bluntly, people in large hierarchical groups often feel less significant and tend to do less significant work.
Dynamic results in the constantly changing environment that promises to be our new economy demands fluid thinking and a fluid structure. It demands being open to new ideas and old ideas used in new ways. It requires that we shift our thinking to a new paradigm. Changing the way we do business and perhaps the way we do everything in our lives. The organization that can effectively function without the hierarchical divisions common in most if not all old economy companies will find itself able to continue to maintain a competitive advantage no matter the changes that take place in the markets and the new economy because they will be flowing with the tide of change rather than suddenly finding themselves swimming against it.
But the path to that new era is already a rocky one. During the early part of last century, the automobile industry experienced a shakeout similar to the one recently experienced by the Internet and e-commerce industry as it too stood on the cusp of changing the way we lived, but there is one fundamental difference between then and now. Early last century it was the innovation of one of the auto-makers introducing a process that revolutionized the industry, as Henry Ford did with mass production, that precipitated the shake out, but this time the shake out was precipitated instead by a lack of innovation.
According to Forrester Research online sales will reach $3.2 trillion by 2004, but that number still represents less than 9% of all transactions! If the Internet and e-commerce is so powerful, how can this be? What is the resistance? The reality is that to date the Internet and e-commerce have offered only marginal gains in knowledge and convenience. These gains, however, have been unable to outstrip privacy fears, fraud concerns and the whole annoyance of changing one's lifestyle to learn a new behavior especially when for most of us that lifestyle is already too full with demands on our time. We are going to need more to move people. Something that will motivate people to see and believe the gains they make by switching to the Internet and e-commerce far outstrip the pains of change they may experience.
At one time in America everyone wanted to get a good paying job so that they could earn enough money to enable them to buy a house. They wanted to be the masters of their own universe-"masters of their own kingdom". They wanted to take control of their lives and their money. They wanted to stop "throwing that money away" on rent, and begin investing in themselves and their families by building equity while gaining important tax advantages. That was the American dream.
As the fits and starts of the "new economy" displace thousands each month, the litany of complaints from ex-dot com workers has made one trend increasingly clear-today people want even more. It isn't enough to have a good paying job. People are tired of pouring their life into an enterprise only to get a pay-check in return. They are tired of trading their hours for dollars. They are tired of having money and being miserable, or suddenly finding themselves out of work and being miserable. They have begun to seek the advantages of ownership, but without the risk. They still want to be "masters of their own kingdom", but they want it to extend outside the home and into their work life as well. And perhaps most of all they are tired of watching their most productive years go by in a seemingly never-ending hurry to create money, to be a success, to get approval, to be loved, and to someday "get ahead". These people are beginning to ask themselves why? What is it that we want to "get ahead" of? Who is it that we are really in competition with? And is it really our goal to trade hard work today for no work at some future retirement age? What if that future never comes? Was the sacrifice made now worth it? Or what if the future does come? But as happens so often, the world has changed, and the amounts we thought we would be comfortable with in retirement aren't nearly enough to live the lifestyle with which we had become accustomed? Or what if we decide we don't want to worry about money once we retire? What if we decide we don't want to live on a fixed retirement income? Was spending our precious youth, our freedom, our time, and even our health and well-being worth it all? Is that the way life really has to be? Do we really have to give up so much to have money, or success, or approval in our lives? Or could it be that the idea of trading hours for dollars is a belief whose time is gone? A belief born out of the beginning of our civilization as a means through which the ones who "had" could control the ones who "had-not"? A belief our parents, grandparents, great-grandparents, etc. unwittingly passed down generation to generation without examining its validity, without questioning its value, and without ever asking if It is true?
Currently 80% of women age 25 to 35 work outside the home. And as an increasing number of these women find their lives disrupted, find their lives completely different from what they had once imagined it would be, they are increasingly motivated to ask themselves if It is true. And as they have made greater strides into what was once a male dominated work force, and have come into greater and greater positions of influence, they have begun to believe there could be more. Often driven by child-bearing or other sociological factors, they have become increasingly willing to change their thinking, and to be open to more than they have allowed before. They have begun to ask what they can do to go beyond their current thinking. And some have even gone further. They have begun to look for ways to create the financial freedom to do what they love to do. They have begun to seek their purpose in life, and what they can do to fulfill it and men have increasingly said, "Me too."
An organization that can create and execute a model that provides the advantages of ownership, but without the risk, that empowers people to take charge of their own lives, that helps others help themselves to better health, a greater sense of well-being and increased abundance of everything they want, and is able to deliver their message effectively, efficiently and at an acceptable cost shall be able to deliver that compelling value proposition that can move people to the Internet in greater and greater numbers and deliver on the new economy's promise of fulfillment and growth.
