We’re in the Information Economy – Act Like It!

Is the economic downturn over? Is America poised to grow again? The tried-and-true practices of American industrialism just aren't turning out gains like the once did. And they won't. The world has shifted. Entrepreneurs in India, Malaysia and China – places many Americans like to think of as poor and "Third World" – are building fortunes in the Information Economy. American businesses have to shift.

If you make posts to install on highway sides, well, lots of people can do that and competition is intense. Everyone now has “low cost” in post making. To make profits today you need to make products that help move more people on the highway faster and safer. Create a post that can provide traffic information to Web sites and aid people to look for alternate routes. Posts aren't what people want; they want better traffic flow and today that ties to more information about the highway, who's using it, and what's happening on it. Post making will never again be very profitable. But those who make “smart posts” can create significant profit.

Economic growth will return when businesspeople move toward supplying the shifted market with what it wants – like Apple with new solutions for digital music or mobile communication that have nothing to do with your old business. Or Amazon with a solution for digitally obtaining books, magazines and newspapers, storing them, presenting them and even reading them to you – even if you’re not a “tech” company. These companies, and products, appeal to a changed market – a marketplace that values the music or the words, and not the vinyl/tape/CD or the ink-on-paper. Customers want the information, not necessarily the tangible item we used to produce to get the information. Focus on giving people what they want, not what you used to make.

Is the legacy of Starbucks about coffee? Or was it about supplying an ambiance and a meeting place and a brand that people wanted – along with many products which included coffee? When leaders thought Starbucks was about information they moved into liquor, music recording, providing agency services for musicians and actors, producing movies and adding new products to the store. Starbucks was a model of growth.

Then the “founding” CEO returned and said Starbucks is about coffee. His actions became his results. Closing 570 stores, which were a big part of the value, led to layoffs and revenue reductions. Stores long attracted people for a lot more than just coffee. Stores became virtual offices. People met at the stores, and buying coffee was just one activity they undertook. As stores were shuttered, and non-coffee businesses and products discontinued, people started staying away. Mr. Schultz created a vicious cycle which fed on itself, and even sales in remaining stores declined 8 percent.

For the economy to grow, all businesses must recognize that this market shift away from industrial production and toward information value is permanent, and adjust. If you try to do what you always did, and you blame the lousy economy for your troubles, you'll see results worsen. The recession was due to a market shift – from an Industrial to an Information Economy.

So be more like Steve Jobs or Jeff Bezos and less like Howard Schultz. Look into the future to figure out what people want, and that competitors aren't giving them. Be willing to Disrupt your business in order to discover new solutions. Get your ideas into White Space tests where you can develop them into profitable businesses. Don't wait for someone else to turn the economy around. If you do, you’ll find out its too late for you to compete.

Adam Hartung is managing partner at Spark Partners, and author of the recently published book from Financial Times Press, “Create Marketplace Disruption: How to Stay Ahead of the Competition.” He previously has worked as a corporate executive, leading business development for both PepsiCo and DuPont. And he has been an international consultant with the Boston Consulting Group, Coopers & Lybrand and Computer Sciences Corp.