Joel Horton's review of Kevin Kelly's New Rules for the New Economy

To: Richard Johnson

From: Joel Horton

Re: New Rules for the New Economy Review

Kevin Kelly’s New Rules for the New Economy highlights revolutionary developments in our modern economy and charts a path for future survival and prosperity. He convincingly explains how communication, connectivity and networks form the foundation of the new economy and illustrates how companies that understand this have succeeded. From this foundation, he presents the new rules for the new economy.

The New Rules:

Embrace the Swarm – those who can embrace decentralized points of control gain competitive advantage
Increasing Returns – initial successes aren’t self-limiting, but self-feeding
Plenitude, Not Scarcity – value is carried by abundance, rather than scarcity
Follow the Free – generosity begets wealth
Feed the Web First – maximize the network’s value over the firm’s value
Let Go at the Top – abandon the highly successful in order to escape from its eventual obsolescence
From Places to Spaces – opportunities for intermediaries, middlemen, and mid-sized niches expand greatly
No Harmony, All Flux – innovation is the most effective survival tool
Relationship Tech – the most powerful technologies enhance all relationships
Opportunities Before Efficiencies – new opportunities create far greater wealth

The importance of New Rules for the New Economy is that Kelly applies these principles to companies in all industries, not just high technology and related industries. Interestingly, he shows how some of these laws have been at work for decades.

For example[1], Feed the Web First is already in practice. Standards for automobiles—axle width, fuel mixtures, turn signal placement—have developed over time and have made manufacturers, suppliers, even oil companies much more efficient and profitable. With networks’ exponential growth potential around the world and communication occurring through several different media, consensus and standards is paramount for survival and success.

Kelly also challenges widely held views about the new economy and illustrates how the opposite may actually be true, as with From Places to Spaces[2]. Many believe that greater technology and the shift towards information disintermediates the value chain. He argues that this is only half true.

While industries such as banking (ATMs vs. branch locations) and retailing (direct ordering) have seen this, the potential for widespread disintermediation across the new economy has been overstated. Conversely, the new network economy suggests that the potential for intermediaries to add value is unlimited. Every node in a network is an intermediary, adding value. It sorts information, provides advice to an end user or searches for other end users. Thus, as more people become connected and networks expand, the potential for intermediaries expands as well.

New Rules for the New Economy offers a concise, sensible look at what it will take to survive and prosper in the coming network-based economy. Its value is that these rules are not just limited to those in certain industries, but all industries. Additionally, these rules are not just made up by Kevin Kelly; some have existed since the Industrial Revolution.

1 page 69

2 page 98-99