EMERGING TECHONOMIC CONCLUSIONS

Time is money! Successful businesses use technology and strategic relationships to
maximize free cash flow for their operations. Several factors contribute to structuring
a business to maximize free cash flow. These include minimizing the time between
obtaining an order and receiving payment from buyers, negotiating long-payment
terms with suppliers for reimbursement of goods, minimizing or eliminating cost of
goods, minimizing or eliminating inventory for supplies, minimizing or eliminating
warehousing of finished goods, and using other people’s capital for manufacturing
and retailing facilities. Techonomic metrics like free cash flow per share or the
number of transactions per employee allow the myriad of system advancements to
be measured in the aggregate by a simple value. System adjustments that improve
the metric advance the organization toward its operational goal.
Technology has changed the speed, complexity, and coordination with which
commerce can be performed. Money now travels at the speed of light from buyer
to seller, although due to negotiated relationships the money often does not travel
as fast from seller to supplier. The buyer can now accomplish complex transactions,
like the personal configuration of a personal computer. User-friendly, interactive
Web pages eliminate the need for human salespeople to consummate every sale with
a buyer. This significant sales labor savings is made possible by the ubiquitous
availability of personal computers and the interconnected network of networks, the
Internet. Next, the data handling capabilities of the network convert the buyer’s
desires into orders for the seller.
eBay has proven that the Web is capable of effectively matching hundreds of
millions of buyers and sellers for the exchange of billions of items. Dell has shown
that scores of suppliers can be coordinated to fulfill the desires of the buyer without
human administrative intervention. Apple has created an automated information
delivery system and infrastructure to match music producers with the desires of
millions of music aficionados. Essentially, the iPod delivers the musical experience
with convenience, selection, and economy superior to any previous system in history.
This section would be incomplete without mention of Google and its advancement
gained from riding the twenty-first-century techonomic trends. By matching
information seekers with the vast Internet reservoir of information, Google produces
strong free cash flow by selling pass-thru links on its automatically generated virtual
pages. Google epitomizes of the finder of “perfect information”: free, instant, all
encompassing. The only drawback is the overwhelming amount and the validity of some of the sources. Revenues are generated from sites that seek interested eyes for
their materials. Prequalified viewers are passed to these sites based on the active
inquiries that the viewers make to the Google search engines, a virtual, all-knowing
finder for a small fee per transaction performing billions of information transactions
a year (a month? a day?).
Today’s fittest companies are also raising the value of annual revenue per
employee. A decade ago, $100,000 in annual revenue per employee indicated healthy
performance for a range of companies. Now, with outsourcing, vast supplier networks,
and virtual relationships, the emerging techonomic companies are entering
the range of 500,000 to $1,000,000 in annual revenue per employee. Even the best
older companies, saddled with less agile corporate structures and remnants of the
old economy, struggle to reach revenue per employee levels of half that value.
Twenty-first-century techonomic businesses treat the time value of information
as one of their greatest opportunities for cash management. By shifting transaction
costs and operational support to both the customer and the supplier, these companies
manage their operating cash assets in such a way as to create positive cash flow as
revenues increase. This allows lower margins by minimizing the cost of capital to
fund operations. These companies also rely heavily on a network of outsourcing to
provide mass customized customer service, just-in-time manufacturing, and ondemand
distribution. Result: a larger-revenue-per-employee operational model than
has typically been possible in the past. Availability of computers in the consumer’s
home (Techonomic Law 1), combined with the interconnectivity of customers,
businesses, suppliers, and distributors (Techonomic Law 2), has resulted in efficiencies
(Techonomic Law 3) and purchasing options that are reshaping the rules
of commerce. Competitive pressures in the free market requiring the adoption of
best practices for improved productivity have never been so great.