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MONDAY -- MARCH 1, 1999
Trudel chronicles the engines in a changing business world
WHO: John D. Trudel
WHAT HE DOES: A business consultant, trade magazine columnist and thinker of big themes. Most recently co-wrote "Engines of Prosperity: Templates for the Information Age," with Gerardo R. Ungson. The book is published by Imperial College Press of London.
DEAREST CRUSADE: The federal government has proposed weakening the U.S. patent system. "This needs extensive debate." The U.S. patent system is a "tremendous asset" to this country.
Question: Why write "Engines of Prosperity"?
Answer: Our belief is that we're going through really major changes in the world. It's more fundamental than most people think. The old business models are about managing the routine. You would build the same basic product year in and year out and you would make incremental adjustments to control the cost or improve the quality.
Q: And now that's changing?
A: Anything that is standard and routine pretty quickly falls to Third World wages and certainly thin, or usually negative, profit margins. So Machine Age models are out of date. It's about the Information Age now.
That means the value added is knowledge. What makes money is knowledge-based products. It isn't just what you think of as high-tech. In many, many other companies in any industry you pick, there will be a small segment doing knowledge-based products.
Q: Are the traditional ways of gauging companies, such as their financial fundamentals, out of date, too?
A: Clearly the old models are breaking down. One of the signal events last year was when (Sunbeam Corp. CEO) "Chainsaw" Al Dunlap was fired. A lot of the things that are happening is that people don't know what to do, so you had this reflexive approach that said, "Let's do something operational; let's do something intensive."
Q: And it doesn't always work?
A: Consider how John Sculley must have felt when he was fired from Apple. He did exactly the same things they did when they introduced the very successful Mac. He used some of the same people, he used some of the same marketing techniques and did all the hype and all the infrastructure, he did it for the Newton, and it didn't work out.
He did the same experiment, and he got a different result. That's what they mean when they say the markets of the world have gone chaotic.
So in "Engines of Prosperity," we try to come up with a set of rules that apply across industries. It's scary that you can wake up one day, and what you used to do is irrelevant.
Q: Is it troubling that entertainment, such as watching a movie in your house, is driving such large changes in the economy?
A: I think it's encouraging. This MP3 stuff that you can download off the Internet is a wonderful opportunity for new (recording) artists to get published. They don't have to be managed by a studio. You don't need Hollywood. It scares them to death. To me, this is a freedom.
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