Clever Geek Handbook
1 August 2025

Dance Lessons

Recommendation

Chip R. Bell and Heather Shea take a crack at a much overlooked business skill: partnering. While many management gurus espouse the growing importance of partnerships and alliances to modern business, advice on how to actually implement and manage these relationships is much harder to find. Dance Lessons uses simple, emotional language in mapping out guidelines for successful partnering. These guidelines tend more toward general, interpersonal relationships than specific business cases. In fact, much of the book’s content could be re-titled "How to Have a Successful Marriage" without changing so much as one word. Despite this lack of hard business focus, BooksInShort recommends this book on the strength of the intelligent exercises that the authors suggest for use in each stage of the partnering process. While Dance Lessons might be light on the numbers and factual examples that business readers have come to expect, the passion that the authors bring to the subject will leave you highly conscious of the critical, but often neglected, personal aspects of business partnerships.

Take-Aways

  • Partnering is the essential skill for success in business.
  • Partnerships succeed or fail because of interpersonal skills, not business skills.
  • Great partnerships require commitment, honesty and generosity.
  • Learning to be a partner in business and life mirrors the process of learning to dance with a partner.
  • Determine at the outset exactly what kind of partnership you want and how involved with your partner you want to be.
  • Make sure that you and your partner share attitudes, values and goals.
  • To prepare for inevitable challenges you will face, rehearse partnership skills early in the partnership.
  • Exchange feedback and evaluate your partnership often, to keep it growing even while it is well under way.
  • When there is pain in a partnership, take the opportunity to learn and grow.
  • Ending partnerships is as important as beginning them.

Summary

The Partnership Dance

Success in today’s world depends on the ability to develop and maintain partnerships. Yet partnering is an art, not a science. Learning how to form an effective partnership resembles learning a great dance. In both, the learning and mastery occur in stages.

Partnership is a deliberate blending of capacities for the continuous mutual benefit of involved parties. That can mean a business partnership or a personal relationship. The principles are the same. A partnership is a process, not a single event. Great partners also spend a surprising amount of time preparing before they actually join together.

Like dance partners, great personal or business partners and partnerships go through six stages: focusing, auditioning, rehearsing, dancing, hurting and bowing out.

Step One: Preparing for Partnership

Different kinds of partnerships exist. The type of partnership that is appropriate depends on how involved the partners want to become. Choose your kind of partnership according to your purpose, and find someone who wants the same kind of partnership.

“Partnerships generally do not end in conflict. They vanilla to death. They end far more often because of neglect than strife, so the most important lesson is to keep partnerships healthy along the way.”

The highest level of partnership is The Tango. Tango partners symbolically complete each other. They move almost as one. Tango partnerships are deeply personal. They require great emotional investment and a high level of trust and loyalty. This partnership requires intense preparation and works best when each partner wants a great deal of interdependence and when the partners cannot afford the costs of failure.

“Great partners know that they are not perfect, nor do they expect anyone else to be perfect. But they have faith that they can become better and that their partners and others they deal with share their desire.”

The Waltz is a partnership in which the participants work closely together, but have far less emotional investment. Waltzers are easily distracted by outside issues, and they often look outside the partnership for solutions to problems. Waltzes are good for partners who need the security of an alliance but who also want some freedom.

Square Dances are moderate partnerships. Square dancers carry out some moves with their partners, but they also dance with others. Square dances are high-risk alliances, because the partners are ambivalent. They must work hard to focus themselves on the partnership.

The Twist consists of two people dancing separately in front of each other. This is the right relationship for partners who will work separately from one another most of the time, but who must come together for one key task. Supplier-vendor relationships are typically "twist" partnerships.

“Keep in mind that if your partner says there is imbalance, there is imbalance. In relationships, perception is more important than reality.”

Finally, partners can join in a Line Dance, which is more like an emotional support group than an interdependent coupling. The dancers are together only because it is more fun to dance in a group. These partnerships provide assistance and support without emotional entanglement. This is the right partnership when partners gain value from the alliance, but neither one is dependent on its success.

Finding Your Partnership’s Focus

When you are thinking about a partnership, focus on two main factors: the purpose of the partnership, and the personal or commercial compatibility of the partners.

“Congruent values make a partnership last. Differences make it rich.”

Six questions can help you focus: Can this partnership bring out the best in all involved? Can the partners engage totally when the partnership demands it? Can the partnership withstand total honesty? Can it bring respect and honor to the partners? Will it have reliability and loyalty? Have the partners made the commitment to stay in the partnership when there’s trouble?

The partners in great partnerships show a giving attitude, far beyond the basic requirements. Partners must trust each other, be honest and keep their word. Their mutual vision must support the partnership. They must balance their rewards fairly over the long term.

Step Two: Selecting Great Partners

To dance your best, you need a partner who fits you. In great partnerships, each partner has capacities and capabilities the other lacks. They fill each other’s gaps. Great partners are ready for passion. They are committed to seeking the best. They bounce back from trouble and are pragmatic. They love the energy of their encounters. They make sure their dance makes sense.

“The continual cycle of failing, learning and succeeding teaches great partners to be flexible, to be hardy and to persevere.”

Be certain that you and your partner have complementary strategies. Your values should, at least, be compatible. You need similar views on communication, on how long the partnership will last and on monitoring and control practices. From a business point of view, you should make sure your organizations are structured to support the partnership.

“Partnerships are greatness in the making. They are hopeful pursuits of magic, not efforts valued only at the finale.”

Partners need common goals. Begin with compatible current intellectual capital and make provisions for acquiring more as you need it later. Agree on how to divide rewards, profits and benefits. Partners must respect each other’s privacy and agree upon internal leadership and control.

To make sure you and your partner match each other well, ask yourselves the following questions: How important is being the best to you? How would your previous partners describe your attitude? Do you believe partners should be totally honest about every aspect of the their dealings? What would help you stay in the partnership when things get tough?

Step Three: Getting the Partnership in Shape

You may be tempted to rush through rehearsal, but this is the key to great partnerships. In great partnerships, five things happen:

  1. All partners have the skills, competence and wisdom to perform their roles.
  2. They challenge themselves with a clearly defined, shared goal.
  3. They rely on cues or pacts that keep them on track.
  4. They provide effective feedback that nurtures the partnership.
  5. They honor a set of protocols, standards of behavior, that they can rely on in difficult situations.

Rehearsing is a conscious act. Work on specific skills with your partner. Set up a hypothetical situation and work through it. This will allow you to discover traps or likely errors and to build confidence for real challenges. Exaggerate problems in rehearsal so real problems will seem easy.

Practice listening. In effective listening, always give the other person your full attention. Practice having productive dialogue. This means starting with a shared agenda for the conversation, asking productive questions and working toward an achievable outcome.

“Partnerships diminish the protection of anonymity. They are poor associations in which to hide.”

Practice giving advice. State a clear issue or problem - make sure you and your partner both want to address the problem - and ask permission to give advice. Always give advice in the first person singular. Say "I find that" or "What’s worked for me," not "You ought to."

Step Four: Keeping the Motion

Great partnerships feel "on" in a very special way. Skill and attitude must work in harmony to reach the level. Bring these gifts to your partnership:

  • Generosity - Adopt a giver mentality. Remember important dates, like your partner’s birthday, and show your generosity by surprising your partner with personal gifts.
  • Faith - People with faith are happier and more optimistic. They worry less. Adopt a deep-rooted confidence and belief in what you cannot prove.
  • Passion - Partnerships need passion, because business relationships come filled with rationality, order and sanity. Sane partners must bring some "insane" passion.
  • Inclusion - Involve your partner. Ask your partner for help when you need it. Help your partner see the partnership as a collective effort.
“Before asking for feedback, volunteer a brief, honest summary of areas in which you know you need to improve. This tells your partner you are seriously interested in input and not just fishing for compliments.”

A great partnership needs rational discipline. Use your head. Initiate phone or e-mail contact. See your partner in person. Offer ideas and recommendations. Use direct language. Keep differences and conflict in the open. Never "bad-mouth" your partner. Use problems as opportunities to learn. Praise without criticizing. Get support from people outside the partnership. Don’t focus so much on each other that you miss information that could improve your performance.

Step Five: Managing Pain

Pain is a normal part of any relationship. It helps signal areas where improvement is needed. First, you must see the signal. Then, you must choose the right action. When you are uncomfortable or hurt, look inward. Reflect on the state of the partnership. Assess the partnership’s communications.

You may choose among three options for pain management: stop, seize or scrutinize. Stopping the hurt is best when the pain threatens to injure you or the partnership. If the pain appears to lead toward growth, seize the opportunity. If the origin of the pain is uncertain, scrutinize it.

When you make a mistake in the partnership, be humble. Express sincere empathy with your partner. Show your loyalty. Stop the pain. If you make a mistake out of fear of success, or out of guilt, seize the chance to overcome these obstacles. If you violate a core protocol, you can threaten the future of the partnership. Scrutinize your actions and motives.

“Part of the partnership challenge is being very clear on what is expected of each partner. Should expectations change, partners need instant clarity to make the appropriate adjustments.”

When your partner makes a mistake, look for the motives underneath the mistake. If your partner is angry, look for the frustrated need under the anger. If your partner is arrogant or overconfident, look for the reason. If your partner breaches a core protocol, it will take great effort to recover. Be patient.

Step Five: Calling It Curtains

Great partnerships are ended as deliberately as they are begun. Partnerships sometimes end in animosity because the partners try to keep dancing after the music is over.

“Lace your final meeting or two with opportunities to remember, reflect and refocus.”

Sometimes, a partnership simply fails. If one partner wants to end it and the other does not, the situation is awkward. If you want the partnership to continue, re-state your commitment to the partnership and focus on the rational benefits of continuing. In business, any show of sentiment or hint of blame probably will end the partnership on the spot.

If you want to exit, show the same sensitivity you displayed at the outset of the relationship. If the partnership ends in animosity, review your agreements carefully. You may need the help of a professional mediator.

If you both want to end your partnership, or if outside forces demand an end, do not let the experience sour you about future partnerships. Instead, view it as a chance to understand what went wrong and what could have gone better.

Sometimes, even successful partnerships must end. Take the ending as a chance to educate, evaluate, anticipate and celebrate. Learn what was missing in the relationship. Look for lessons. Use "what ifs?" to imagine what you could have done differently. Evaluate the partnership to see what actually happened. Do a thorough critique. Anticipate your next partnership by imagining how this one could have been more successful. Do more "what ifs?" At the end, take time to celebrate what you accomplished. This can be as simple as a special dinner or a drink after work. Acknowledge your partner’s contribution. Show your gratitude.

About the Authors

Chip Bell is a senior partner at Performance Research Associates in Dallas. He has been a trainer or consultant to companies including IBM, Microsoft, Cadillac, Motorola, Sprint and Harley-Davidson. He is author of 11 books, including three bestsellers. Heather Shea is CEO of Inspiritrix, Inc., a training and consulting firm in Orlando, Florida. She has been a speaker, trainer or consultant for many firms, including 3M, Ford, Hewlett Packard and Walt Disney World.

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Dance Lessons

Book Dance Lessons

Six Steps to Great Partnerships in Business and Life

Berrett-Koehler,
 


1 August 2025

Secrets of Power Negotiating

Recommendation

As you read Roger Dawson’s now-classic book, you’ll find yourself nodding your head saying, "Those guys used that gambit against me last week." And then you will say, "Never again!" This book is a rarity: A "Secrets of" book that actually provides you with useful tactics that you can employ in daily life and business. In fact, the knowledge you gain from this book will come in just as handy in everyday situations, like buying a car or setting your kid’s allowance, as it will when your business’ survival is at stake. While the secrets themselves can be reduced to common-sense approaches, many are intuitively brilliant, like the advice to flinch when you hear the other side’s first offer. BooksInShort recommends Dawson’s insights to all readers, because everyone can benefit from negotiating a better deal.

Take-Aways

  • Win-win solutions are not reality.
  • The key to success in power negotiations is making people on the other side feel that they have won.
  • Power negotiation is governed by a set of rules called gambits.
  • Power negotiation is like playing chess, except the other side doesn’t know the rules.
  • Always ask for your MPP (maximum plausible position) at a start of a negotiation.
  • Always appear shocked by the other side’s initial proposal.
  • Nibbling is an effective technique to get a little extra after an agreement is reached.
  • When desperate to sell something, try playing the reluctant-seller gambit.
  • Use the appeal-to-higher-authority gambit to control the pace of a negotiation.
  • Never offer to split the difference when you are close to an agreement.

Summary

The Win-Win Myth

You have probably heard that the objective of a negotiation is to create a win-win solution. The problem with win-win negotiation is that it just doesn’t happen enough in the real world to make the concept meaningful.

In most negotiations, chances are that the other side is out for the same things as you. "Power Negotiators" understand this reality and use it to their advantage. Power negotiators use every ethical tactic at their disposal to win, but they respect the other side’s feelings. A power negotiator’s objective is to make the other side permanently feel that they have won.

“Flinch at proposals.”

When the negotiation is over, the power negotiator can say confidently that a relationship has been established or improved with the other side. You can only call yourself a power negotiator when this is your objective.

The Power Negotiating Game

Power negotiating is like playing chess. You play according to a set of rules. The difference is that, in power negotiating, the other side doesn’t know the rules. You can use this knowledge advantage to make the other side respond in a predictable manner. In this respect, a skilled power negotiator understands that the outcome is more a function of science than of art.

“All serious buyers complain about the price.”

Strategic moves in the power negotiating game involve risk. They are similar to chess moves and therefore, they are called by the same name: gambits.

There are:

  • Six beginning negotiating gambits.
  • Seven middle negotiating gambits.
  • Five ending negotiating gambits.

Beginning Negotiating Gambits

There are six beginning negotiating gambits:

  1. Ask for more than you expect to get - This gambit gives you some negotiating room. If you are selling, you can always come down, but you can never go up in price. If you are buying, you can always go up, but you can never come down. Your asking price should be your maximum plausible position (MPP). Your MPP is the intersection of two factors, the most you can ask and the other side’s belief in the plausibility of your position. In some instances your MPP should be higher than you would otherwise prefer. Your MPP should be higher when you know less about the other side for two reasons:
  • First, you may be off in your assumptions about them.
  • Second, if this is a new relationship, you will appear more cooperative if you make larger concessions.
  1. Never say "yes" to the first offer - Psychology supports this gambit. Saying "yes" to the first offer triggers two responses in the other person’s mind: "I could have done better" and "Something must be wrong." The reaction that "I could have done better" is based upon the way the other person views your quick, easy agreement to the proposal. Price is not the issue. "Something must be wrong" is a reaction based upon your knowledge that the offer should have been rejected. You immediately start asking why such a low offer was accepted.
  2. Flinch at proposals - You should appear shocked by the other side’s proposal. The other side is watching you for your reaction. Body language is critical here because most people believe what they see more than what they hear. If you do not flinch, then the other side will assume that what they offered is a possibility. Conversely, a concession often follows a flinch because it is a sign that you are negotiating. Even if you are on the telephone, you can still use shock and surprise as a means of flinching at the opposition’s proposal.
  3. Avoid confrontational negotiation - Arguing in the early stages of negotiation creates confrontation. Confrontation tends to lead to early deadlock. Instead of arguing, try the "feel, felt, found" formula whenever your counterparts throw unexpected hostitilty your way during a negotiating session:
  • The first step is to acknowledge how the other side feels about the situation.
  • The second step is to state that many others have felt the same way.
  • The final step is to state, "We have found that..."
  1. The reluctant seller and the reluctant buyer - The reluctant seller is the person who says, "I never considered selling this boat." The reluctant buyer is doing the same thing, only in reverse. This gambit squeezes the other side’s negotiating range before the negotiation even starts. This is a particularly powerful tool when you are desperate to sell.
  2. The vise technique - This technique is deployed with the expression, "You have to do better than that." The technique is then followed by silence. Inexperienced negotiators will give away a significant portion of their negotiating range when they are confronted with the vise technique. Look for negotiated dollar concessions here, instead of percentages or gross amounts. Remember, a negotiated dollar is a bottom-line dollar. If you find that this technique is being used on you, respond with the counter gambit, "How much better do I need to do?"

Middle Negotiating Gambits

There are seven middle negotiating gambits:

  1. Countering the authority dodge - The most frustrating experience you will have as a power negotiator is negotiating with people who claim that they don’t have the authority to make a final decision. This tactic is designed to pressure you to commit to better terms because of your insecurity about the veto power of the "higher authority." This gives people using the dodge more breathing space because it delays a decision for as long as it takes to review the negotiations. You can counter this with the following gambits:
  • First, remove the person’s ability to use higher authority before you make your proposal. Car dealers do this all the time when they say, "Is there any reason we can’t do business today?"
  • If you cannot remove the higher authority, then appeal to the egos of the people you are facing. Ask them to agree to take it to the higher authority with a positive recommendation. Either they will agree or they will say no. In the latter case, you will learn what the potential objections are to your proposal. Either way you will be closer to acceptance than if you don't do anything to counteract their claims regarding an absent decision-maker.
  1. The declining value of services - The key to this gambit is that the value of services goes down with time. Therefore, never make a concession and trust that the other side will make it up to you later. Negotiate the value of the concession today.
  2. Never offer to split the difference - Splitting the difference is perceived as being the fair thing to do. It is not. Remember that a dollar earned in a negotiation is a bottom-line dollar. Instead, encourage the other person to offer to split the difference. This will move the other person’s range higher. For instance, if you offered to do a remodeling job for $30,000 and the buyer offered to pay you $26,000 for the job, by getting the buyer to offer to split the difference you have moved the range for the job from $26,000-$30,000 to $28,000-$30,000. At this point, you can appeal to your higher authority and try to get them to split the difference for the new range or you can reluctantly agree to split the difference of the old range.
  3. The set-aside gambit - Use this to handle an impasse, a point at which both sides are in complete disagreement over one issue. Ask the other side to set this issue aside while the negotiations continue on remaining issues. An example is a buyer says to you, "We are willing to talk to you, but you must have a prototype ready by the first of the month or let’s not waste time talking." You can respond by saying, "I understand how important that is to you, but let’s set it aside for a minute and talk about other issues."
  4. Change an element of the negotiation - Use this to handle a stalemate, when both sides are still talking but no progress is being made. The most important thing you can do under these circumstances is to change one of the elements of the negotiation. For instance, change the people on the negotiating team.
  5. Go for help - In a deadlock, both sides are so frustrated that further discussion appears pointless. True deadlocks require third-party intervention to get the negotiations going again. If you have a deadlock, you need to bring in a mediator or an impartial arbitrator.
  6. Always ask for a trade-off - This gambit applies to all concessions no matter how large or small. By asking for something in return, you accomplish two very important objectives:
  • First, "You elevate the value of the concession."
  • Second, you stop the grinding away process used by some negotiators.

Ending Negotiating Gambits

There are five ending negotiating gambits:

  1. Good guy / bad guy - This is one of the best-known ending negotiation gambits. You’ve seen it on countless TV police shows. One police officer is rough on the suspect and then leaves the room; the other police officer tells the suspect that he cares about him and can help if he would only tell him what happened. Of course, the suspect must cooperate before the bad police officer comes back. Whenever there are two or more negotiators on one side, be aware of this gambit. The best defense to it is to let the players know you are aware they are using it.
  2. Nibbling - The bit-by-bit nibble is a very prevalent gambit used after you have agreed on everything. The nibbler asks for something more, usually something that could not be gotten during the negotiations. Great salespeople are great nibblers. To stop nibbling, demonstrate the cost of the additional features, services or extended terms being requested. Making nibblers feel cheap, in a good-natured way, stops them in their tracks. Finally, negotiate details up-front so that you don't open the door to nibbling.
  3. Tapering concessions - Never create a pattern of expectations in the other person’s mind. Never make equal-sized concessions because the other side will keep on pushing. And never concede your negotiating range because the other person calls for a "last and final" proposal or claims that they don’t like to negotiate.
  4. Withdrawing an offer - When the other side is grinding the last penny out of you, consider this gambit. You accomplish it by backing off your last price concession or by withdrawing an offer to include freight, installation, training or extended terms. Use a higher authority as a bad guy to avoid direct confrontation when using this gambit.
  5. Positioning for easy acceptance - When negotiating with someone who has experience, you may need to use this gambit. Employ it by making a small concession before the other person requests it. For example, offer a new employee a salary with a 90-day review to avoid confrontation over the amount of the salary. Remember that the timing of this gambit, not the concession, is the key.

Negotiating Principles

These negotiating principles are ethical and build success. Use them during all negotiations.

  • Get the other side to commit first.
  • Acting dumb is smart to obtain useful information.
  • Don’t let the other side write the contract
  • Read the contract every time is it revised.
  • Beware of funny money (look at actual dollars per year, not cents per day).
  • People believe what they see in writing.
  • Concentrate on the issues.
“Make the final concession a big one.”

Always congratulate the other side.

About the Author

Roger Dawson was born in England, immigrated to California in 1962 and became a United States citizen 10 years later. Formerly the president of one of California’s largest real estate companies, he became a full-time author and professional speaker in 1982. His cassette program, Secrets of Power Negotiating, is the largest-selling business cassette program ever published. Several of his books have been main selections of major book clubs.

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Secrets of Power Negotiating

Book Secrets of Power Negotiating

Inside Secrets from a Master Negotiator

Career Press,
 


1 August 2025

The Digital Economy

Recommendation

Don Tapscott provides an overview of the way the digitalization of information is transforming the economy and projects the likely changes ahead from his perspective in 1996. The book suggests ways to exercise leadership effectively in this transformed, networked world. However, since this thoughtful, well-organized book was written several years ago, it is mainly of historical interest now, because of the rapid changes in the digital world. Still, it is useful to apply some of the themes Tapscott developed when you consider how the digital economy is continuing to evolve. BooksInShort recommends this well-written book for a general audience as well executives and managers who are interested in the unfolding of the new economy.

Take-Aways

  • The Age of Networked Intelligence is dawning.
  • This new world is giving rise to a new economy, politics, and society.
  • This might be called the "age of sand," since it is based on particles of silicon and glass fibers made from sand.
  • The new age is molecular, since old corporations are disaggregating into smaller units, like molecules.
  • New technologies make it not only possible, but also efficient, to eliminate the middleman between consumers and producers.
  • Immediacy is more important than ever for business success.
  • Information is now digitized into bits that can be stored in computers or sent across the globe at the speed of light.
  • This transformation offers much promise, but creates many potential dangers, including increased social stratification, a threat to privacy, unemployment of displaced workers, and social upheaval.
  • The new economy is networked; individuals and organizations are linked together.
  • With networking, small companies can get better access to resources and economies of scale, thus can compete better against larger companies.

Summary

The Rise of the Age of Networked Intelligence

The new "Age of Networked Intelligence" is giving rise to a new economy, politics, and society based on digitalization. As it leads to the transformation of business and the renewal of government, it also enables individuals to "reinvent" themselves. While this transformation offers much promise, it also has many potential perils, such as increased social stratification, the invasion of privacy, unemployment of displaced workers, and social upheaval. The outcome will depend on the way businesses and society act in response to the new technology.

“A new medium of human communication is emerging, one that may prove to surpass all previous revolutions. The computer is expanding from a tool for information management to a tool for communication.”

Businesses will find their operations transformed much more by the new technology than they ever were by the Business Process Re-engineering (BPR) trend of the early 1990s. Those efforts to make processes more streamlined and reduce costs generally failed. BPR provoked both open and passive resistance, particularly when it led to downsizing. By contrast, the changes provoked by the digital economy will be even more massive, and involve far more than just changing processes to control costs. Companies must commit to using information technology to improve customer service, to become more responsive, and to increase innovation.

“In the new economy the gap between consumers and producers blurs.”

This new economy is based on digitizing information. In the old economy, information flow was based on physical objects or relationships: cash or checks, face to face meetings, displays of blueprints and maps. However, now all information can be transformed into digital form. This digital information can be "reduced to bits" which can be either stored in computers or sent at light speed through networks across the world. This change is extremely dramatic, "as significant as the invention of language itself." This transforms global business into a "knowledge economy." An increasing amount of the economy’s added value will come through brainpower rather than muscle power.

“In an economy based on bits, immediacy becomes a key driver and variable in economic activity and business success.”

While it is not yet clear who will build this new information highway, the growing consensus advocates encouraging more competition and less regulation to stimulate private sector innovation and investment. According to this view, national governments should act more as referees to protect the public interest rather than trying to control directly the way the technology develops. The evolution of technology should be left to the private sector.

The Major Themes or Characteristics of the New Economy

You can better take advantage of the new economy if you understand the major overlapping themes that distinguish it from the old one. These are:

  1. The new economy is a "knowledge economy." Expect an increasing shift to knowledge work. More and more, the key assets of your company will be "intellectual assets". Take steps to measure and manage this intellectual capital more effectively. Anticipate new, smart products, which contain chips that store information. For instance, chips in clothes and or hardware items can contain information on where and when the item was manufactured, who produced it, and who purchased it. Industry will develop smart houses, roads, cars, tires, radios, TVs, telephones, and other products.
  2. The new economy is a "digital economy," in which information is put in digital form as bits. Thus, a great deal of information can be compressed and transmitted at the speed of light. The transmission quality far exceeds that of an analog system.
  3. Physical things become increasingly virtual with this shift from analog to digital information. This changes the very "metabolism" of the economy, the types of institutions people develop, and business relationships. For instance, expect the development of virtual business parks, corporations, coupons, government agencies, jobs, malls, offices, stores, and even virtual water coolers, where people participate in on-line chats.
  4. The new economy is a "molecular economy." The old corporation is being "disaggregated" and replaced by "dynamic molecules and clusters of individuals and entities." This will happen in many different industries. For instance, the mass media has become "molecularized" into millions of channels.
  5. The new economy is a "networked economy," in which molecules are further integrated into networks. Small companies can now overcome the main advantages of large companies: economies of scale and better access to resources. As larger companies disaggregate into smaller more effective molecules, smaller companies will have the advantage of being more agile, independent, and flexible.
  6. Middlemen will be eliminated. This disintermediation will occur because consumers and producers can easily communicate directly, without intermediaries.
  7. The computer, communications, and content industries are converging to provide the new economy’s infrastructure. This combination will be a $1.5 trillion industry by 2005.
  8. Innovation is characteristic of this new economy. As change becomes more rapid, products become obsolete quickly. Companies may need to make some products obsolete so they can introduce new, improved products. Often you will find that customers can’t express their own needs, so you must be able to imagine what they might want. You must now "innovate beyond what your markets can imagine."
  9. Another theme is "prosumption," in which the gap between consumers and producers is blurring. This happens as consumers provide more input into the production process about what they want. Thus, you must establish procedures to learn more about the needs and tastes of your customers, so you can respond accordingly.
  10. Immediacy is critical because the new economy is based on "real time enterprise." The economy can now continuously and immediately adjust to changing business conditions based on new information. You can make use of this by setting up an electronic data interchange (or EDI) with your suppliers or those you supply. Be prepared to change what you produce almost continually. For instance, consumer electronics products typically have a two-month life span.
  11. The new economy is global. More and more, you need to develop alliances with other individuals and companies, conceivably anywhere in the world, since old boundaries are becoming obsolete. Information technology greatly expands the possibilities for collaboration.
  12. Discordance is unfortunate but inevitable, since these revolutionary technological and economic changes are beginning to create great conflict and upheavals. The split between haves and have-nots is growing, in that only those workers who have access to the new infrastructure can participate fully in today’s social and economic life. By contrast, those who lack knowledge or access will be left out, leading to increased social stratification which could destabilize society.

Adapting to the Growing Digital World

You can adapt your company to this digital, knowledge-based world. You need to create an inter-networked business based on five levels of development. In this new "hierarchy of promise," all five levels work together to succeed based on developing "enabling technologies that improve performance at each level. The levels are:

  1. The individual - The individual needs to be committed to performing and learning effectively, perhaps with the help of personal multimedia.
  2. The high-performance team - Make your teams more effective through improved business processes and job redesign, and the use of competing work groups.
  3. The integrated enterprise level - Achieve organizational transformation by creating an "enterprise info-structure" that permits improved communication.
  4. The extended enterprise level - Consider "recasting external relationships" using "inter-enterprise computing" to improve your expanded operations.
  5. The inter-networked business - Build on the previous levels to create wealth and improve social development, using the entire "net" to help.

The Growth of Businesses and the Role of the Government

In this inter-networked world, more and more businesses are going digital and more and more networking opportunities are possible. For example, health care might be transformed on the individual level by using personal multimedia, including 3D visualization tools, to permit doctors to diagnose illnesses. At the work group level, new possibilities have developed for high-performance health care teams, with access to better information so they can better provide health care. On the integrated enterprise networks, integrated health care delivery systems can be developed, and at the extended enterprise level, community and regional networks can link hospitals. While this may be a prototype, health care could put this program into immediate action to offer better quality care and better managed costs.

“In the new economy the key assets of the organization are intellectual assets, and they focus on the knowledge worker.”

Inter-networking is already happening. For instance, Federal Express has used the power of networking to create a tracking system that its employees and its customers can use to follow the progress of a package. Customers can also use their networks and enter their own data to request a pick-up, create their own shipping label, and arrange billing. This approach not only contributes to customer satisfaction, but reduces costs by cutting the time FedEx employees have to spend doing the work.

“The new age could be aptly dubbed the ’age of sand.’ The affairs of commerce, business transactions, human communications, and the insights of science are all reduced to charges on particles of silicon or racing through glass fibers - both derived from sand.”

Still other digital businesses are based on creating ideas, designing new products, setting up new sales systems, and manufacturing customized components for products. This endless potential is made possible by the power of connectedness and computing in the digital age.

In turn, governments around the world will have to adapt. A growing number of people are calling for "better, cheaper government," and are showing a deep lack of trust in government. Increasingly, people feel that "government doesn’t work" and want government to be reinvented, to offer better controls, accountability, and responsiveness. Government itself can use electronic systems to become more cost-effective and to respond more quickly to citizens. The government can also provide more information on-line, so citizens can be better informed about what their government is doing.

Exercising Leadership in a Digital World

To succeed in this digital world, be more of a leader than a manager. This means being responsive to change. Be ready to develop a vision of how your organization will respond to this transformation. Such leadership doesn’t necessarily have to come from one individual or one corporate entity, in line with the more traditional way of thinking of leadership. Rather, in the future, expect vision to become increasingly "achieved and transmitted collectively." Technology is creating "whole networks of human intelligence and new knowledge power" within corporations as people work together in new ways to transform both themselves and their organizations.

“Middleman functions between producers and consumers are being eliminated through digital networks. Middle businesses, functions, and people need to move up the food chain to create new value, or they face being disintermediated.”

Exercise leadership in this new environment six key ways:

  1. Look for paths to "take control of your own destiny" and shape your own future.
  2. Become a leader for learning; help others learn.
  3. Participate in collective leadership activities; develop strategies collectively.
  4. Use digital technologies and computer networks to communicate with and guide others.
  5. Involve your CEO. Inter-networked leadership is incomplete unless the CEO is involved.
  6. Learn to use the new technologies yourself, including getting on the Net.

About the Author

Don Tapscott chairs the Alliance for Converging Technologies, which conducted a multimillion-dollar investigation into the information highway and its impact on business. He consults, speaks, and writes on information technology. He is the author of the best-selling Paradigm Shift and three other widely read books. He is also president of the New Paradigm Learning Corporation, a consulting firm specializing in helping organizations manage the transition to the digital economy.

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The Digital Economy

Book The Digital Economy

Promise and Peril in the Age of Networked Intelligence

McGraw-Hill,
 



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