Even if I’d like to, I can’t sleep and keep an eye on the threshing floor at the same time

The hangover caused by the so-called “New Economy Crisis” is manifesting itself in all sorts of strange ways. At a series of conferences and forums over the last three months, many of them crawling with representatives from the “brick and mortar” industry, financial bodies and/or consultants with novice experience in the field of the Internet, the prevailing attitude could be summed up as: “Now you’re going to get your comeuppance, we’re back: Back with a Vengeance”. What one senses at these meetings is a false sense of relief mixed with that feeling of unease which always accompanies the bewilderment that, despite all that has happened, the Internet still inspires in people. Something like, “Uff, thank goodness that’s all over and things can go back to the way they were, but, wait a minute, where exactly were we?” Nonetheless, there is general agreement that the time has come to modify the business criteria which, in most cases, they themselves put into practice: “The time has come to put tried and true, sensible business practice back into operation again — the kind that guarantees the industry’s profitability”.

At the moment in business schools, conferences and debate forums, in what is a sort of exercise in catharsis, and an attempt to find their way again after all the recent stock market upheavals, there is a prevailing feeling that everything that has happened so far is complete anathema. A good example of this, amongst others, was the Technology, Society and Development Conference (Conferencia sobre Tecnología, Sociedad y Desarrollo) held in Madrid on the 5/6 April. Among those attending were some –not many– representatives of the Internet economy from such well-known companies as Terra or Oracle, as well as directors from traditional industries like Endesa or Mercedes Benz

A lot of self-congratulatory backslapping went on at the disappearance of the “tie-less” brigade – the casual uniform of sorts that characterised the spokespeople of the New Economy – (generally preceded by a declaration of faith in the future of the Internet given the industrial diversity the networks injected into the economy). After expounding on these two principles and admitting the growing importance of the consumer (without going into much detail as to how to relate to the latter in a networked era), a basic confusion began to surface which one could only sum up as, “What are we going to do with the Internet?”.

The good thing about the present crisis is that it has not only highlighted bad business practice within the New Economy, but also the fearful reverence that traditional industry still feels for the Internet. There is the suspicion, of course, that relationships are not quite the same on the Net, that information considered strategic so far cannot be contained within the four walls where it was previously kept safe and sound from prying eyes and that, amongst other crucial factors, systems for social control have been diluted and taken on other forms on the Net. All of which implies a cultural paradigm shift which it is not easy to adapt to and which is reflected, to a large extent, in the two-speed model: the speed of the mind and the speed of technology. While the latter operates at practically the speed of light, the mind requires different timing and environments which cannot easily be overlooked. Given this state of affairs, attempts to reduce everything to economic exchange become an advanced admission of defeat as far as understanding the new environment created by the Internet is concerned.

At the conference in Madrid, it was the audience that brought up this kind of dilemma. “How are you thinking of taking advantage of the social capital generated by a networked society?” someone from the public asked during one of the round tables. A deathly silence followed. Kevin Kelly, of Wired magazine, was the only person to put the debate back on track by pointing out that the New Economy was not what the dotcoms have been doing, have stopped doing or wanted to do, and how all this was reflected on the stock markets. The key issue, he said, was “networking”, the construction of networks which would enable the cultural basis of our society to be modified (and I’m not sure that what he said really sunk in because, as he was speaking, the hall began to fill up with secret servicemen accompanying President Aznar who came in to close the conference a few minutes later).

One thing for certain is that, five years after the Internet came out of its shell thanks to the Web, traditional industry and many of the companies that were to provide services to Net companies, such as consultancy companies for instance, still don’t have a clear grasp of the situation. There is still a very obvious disparity in perception between industry and what the Internet represents. This tool, a product of research which no-one in the market place had ever requested, which grew and matured in an academic environment and wasn’t reflected in the US’ Gross Domestic Product, suddenly appeared on the scene, as though magician David Copperfield had pulled it out of a hat. It shook the very foundations of the economy obliging presidents of countries, companies and industries to talk about the Net as though it were a fundamental goal, it became the star of the show at very high-brow meetings –such as Davos– and Stock Exchanges paid homage to it by siphoning off thousands of millions of dollars towards its virtual environment. A mystery.

The lack of knowledge of –as well as fascination for– this virtual space meant that established business criteria for financial investment went completely by the board. The vertiginous rate of information flows dazzled investors. Overnight the notion that one good idea was enough to make you a millionaire became part of the culture of the times. Somewhere along the way people lost sight of the fact that the Net encourages users to do more than just follow the instructions of others with good ideas. They could build their own networks, for example. Now, curiously enough there is much ranting and raving at forums against this “good idea” policy which has wasted the savings of so many small investors as well as vast quantities of financial resources from well-known companies, without anybody taking the blame for what happened. So, these days it is easy to come across people at conferences who were pouring large sums of money into dubious projects until very recently but who now assure you that all that has come to an end, as though someone else had been doing it.

Venture capital companies, and many traditional companies too, part of whose business is aimed at the Internet, need to reevaluate their criteria not only as regards these sacred “good business practices” (they should never have abandoned them anyway), but also as regards the new opportunities the Net affords. Good business practice only guarantees sensible management, but it is not enough to ensure development in the Knowledge Society. When knowledge and information become strategic market commodities based on the networks that create and distribute them, the key factor emerging then is the capacity for social mobilisation aimed at putting individuals, collectives, companies and/or other organisations in contact with each other. Groups who would otherwise never have met now come face to face thanks to the networks and are able to undertake joint projects and create new sectors of economic activity, with their corresponding new business models as well.

If this is accompanied by good business practice as well, then all the better.

Translation: Bridget King