Well into the 20th century, we were confronted with companies with production processes that had not changed for decades. Certain crafts and trades were—and are—proud that their processes for making certain products have remained unchanged for extended periods of time. Things are still the same today as they were a century ago. Many might hope that things will remain the same in the future. Then that would mean they do not have to adjust, do not have to demonstrate innovative powers and can simply remain in the same old production rut as before. And they can sell their products at high prices and, if possible, without unpleasant competition.
Were it not for globalization, that is, the much-discussed process whereby the world is growing closer together economically. It serves as a prosperity generator and has freed entire regions—large parts of Asia, for instance—from poverty and dependence. However, it does have the unpleasant side-effect of globalized competition. Competitors can pop up from anywhere with the same products or better ones. Most importantly, they can charge much more favorable prices for the same products or even for better ones. This new globalized situation with competition offers new opportunities yet also creates uncertainty for businesses. They can no longer be certain that things will be the same tomorrow as they are today.
There is one factor we can always rely on in our fast-paced economically centered world: change. It has become a fixed companion. A lot of business is generated by the fear of change. The media and politicians profit the most from this fear. However, change is not necessarily something negative. We all live from the business of change. Without ongoing change and without innovations our economic system could not exist. Without new products and services there would be neither growth nor prosperity. We rely existentially on change and on continual competition to arrive at the better solution. Anyone who opposes change has lost the contest for the future. That is a fundamental precept of economic life.
The forecasts in the 1970s by the Club of Rome about the limits to growth failed to materialize, as did the end of work that Jeremy Rifkin and others predicted in numerous books in recent years. We have changes in technology and in the economy to thank for continued growth being possible–albeit at a more modest pace in the years ahead—and for still having work.
Innovation as a Fuel for the Future
Only innovations ensure value creation and value creation, in turn, ensures work and prosperity. If you analyze this development on the microeconomic level, technological change and the related change of business processes play a key role in businesses. They are the driving forces of change and their joint effect triggers further dynamics.
The Internet, for instance, enabled chains of production across the time zones and 24-hour marketplaces that did not exist before. New technologies paved the way for the restructuring of value chains and business processes. This new structural and organizational situation, in turn, imposes new requirements on technological solutions. For instance, faster, bigger and more comprehensive solutions are needed or also ones that are more specialized.