What's So New About the New Economy? -- Brian Silverman -- Rotman School -- Lifelong Learning, June 7, 2002, 11:20 a.m.

What's So New about the New Economy? Waves of Innovation and Their Effect on Strategy, Organization and Competitive Advantage

Brian Silverman, Rotman School

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi ).

Introduction by Sridhar Moorthy

3 apologies:

Transaction costs: costs of exchange, frictions in the marketplace

Transaction costs can influence other ways

Never quite persuaded by irrational exuberance, nor pessimism.

Idea was: new opportunities, "blown to bits", old rules don't work anymore.

Then dot-com bust

Silverman view: The new economy isn't new

Roadmap for today:

Kondratieff, 250 years of history

Schumpeter: named as the most radical economist of the century.

Silverman view:

Beating the dead horse slide

Comment: What about the crash of 1929?


Railroads 1790 - 1840

Railroads: Innovations of steam-powered locomotives, robust rails and telegraphs (to tell you a train is coming, stop!)

From book: Eugene White, Crises and panics (1990)

Look at a different part of railroads

Chandler: railroad moves more products, but users also get benefits.

Impact on transaction costs?

Comment: Economies of speed?

Silverman story:


Comment: need an major investment in infrastructure in waves, or will they create dividends that have to wait for? Do we need to invest, and then invest again?

Comment: Transaction costs, and the number of transactions, as the costs go down and the network increases.

Comment: Technology and price/benefits?

[Skip over slides to last slide]

Implications for managers:

Implications for business schools

Good news: fall of the dot-coms is not the fall of the new economy


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