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There was a time when markets were relatively isolated. However, the increase in communication has made the media an open marketplace for everyone and the Internet is now the go to platform for business communication. It has replaced the telex, lowered the use of the telephone and is in the process of eliminating the courier. And, perhaps more importantly, it has placed businesses on relatively equal footing and made even small businesses global in scope.
Digital technology has now blended into every corner our lives. It not only creates new ways of selling, it remakes everyday products all the time and constantly modifies the way businesses are run. The old way of balancing business models just doesn’t work anymore.
The traditional way society dealt with business models was to find some compromise between business and government and then incorporate that compromise into “the way we do things” as policy. The old fashioned monopolistic phone company was perhaps the best example of this sort of thinking. The hard wired phone system of the past was just too expensive and maintenance intensive for a number of different companies to compete within a limited area. The profit margins were too small. Yet, telephones were necessary and desired. And so, the only alternative was for government to grant a monopoly to one company within a given geographical region. This worked fine around the world, but it did cause problems. In America, for example, the Reagan Administration decided to deregulate the industry, without determining how the high cost infrastructure would be maintained. Costs and charges then shot up as service and infrastructure went down. It’s not that deregulation was bad, it was simply too early to deregulate. The technology wasn’t there to take up the slack. Fortunately, digital technology did arrive and an entirely different and non-monopolistic phone system eventually developed. However, that new system could only develop by disrupting the old.
These days, digital is fast becoming the most important part of infrastructure. In fact, digital technology actually determines how other elements of infrastructure, like transportation or energy production, will function. Digital has become so integrated that its density within a country is an important consideration when it comes to new investment. Companies who want to improve their reach with digital technology should favor investing in countries that give digital density a high importance.
Government, for its part, should not look at digital technology and the new markets it opens up as something in need of compromise, like the old analog phone company. Instead, they should embrace digital technology as a way of improving society and general productivity. Governments need to become digital friendly. Those countries that lay the basic foundation of digital infrastructure and allow business to build on that foundation are engaged in the process of making markets. These new markets naturally occur as digital technology changes the way things are done and attracts cutting edge companies who incorporate IT into their operations.
Digital technology making new markets is the best guarantee of future prosperity.
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