- What Is Business Process Virtualization?
- What Is Incrementalization?
- What Is Technology's Impact on Business Models?
- Technology and BPV
- Summary
- References
This chapter is from the book
This chapter is from the book
This chapter is from the book
What Is Technology's Impact on Business Models?
The technology that was the enabler of the dot-com bubble is the most profound development in the business world in the last 100 years. In response to the needs of dot-com companies, networked computing technology achieved a quantum leap of improvement as well as implementation.
Why Alan Greenspan Was Only Partially Correct with "Irrational Exuberance"
Near the pinnacle of the dot-com era, Alan Greenspan made what was to become a famous speech at the Annual Dinner and Francis Boyer Lecture of the American Enterprise Institute for Public Policy Research in Washington, D.C., on December 5, 1996. He made headlines with his comment that the stock market's exponential increase was because of "irrational exuberance." From a current perspective, it is easy to say that he was correct. However, this is only partially true, and Mr. Greenspan was only partially correct.
As to whether the market valuation was based on uninformed enthusiasm on the part of investors, we can hardly debate this notion. If any proof were required, it would be the depressed state of affairs that followed the dot-com bust, where even highly rated companies having significant current and projected cash flow were trading just above junk bond status. If investors were uninformed on the upturn, it is clear that they are grossly uninformed on the downturn. Mr. Greenspan was correct about the psychological basis for market overvaluation. However, he was incorrect in his implication that the impetus for that psychology was unwarranted.
Network technology, from the Internet to advanced telecommunications capabilities such as unified messaging and video teleconferencing, was perfected during the dot-com bubble. Network technology was perfected to the point where it is widely available today to apply to conventional businesses of all sizes and markets. However, where many of the dot-coms were built on poor business models, with few to no customers, conventional business has an established customer base, revenues, and existing competition. Applied intelligently, network technology can reduce the cost structure and improve the speed of operation of these conventional businesses. Where Mr. Greenspan saw only irrational exuberance and poor business models, we see the enabling technologies for the next big expansion, and complete transformation, of the American economy.