Scient's Near-Death Experience

Global free trade, Komlofske and Rheinfrank proposed, would speed the blurring of corporate boundaries. Distinctions between subsidiaries and partners would diminish -- and less rigidly defined enterprises would extend their reach to the customers of their allies. Business, Rheinfrank says, would have to consider new organizational forms in order to "make this new, porous thing as mobile as you could make the old, traditional companies."

The work environment would change dramatically, moving even further toward less-controlled employees and free agents working flexibly in dispersed networks. Education would become both cheaper and more available, enabling both a truly global workforce as well as a homogenization of cultures.

Finally, a new sort of economic unit would emerge, based not on countries but on companies. National borders still would exist, but the new, extended enterprise would link regions around the world to focus on industry specializations -- a sort of transglobal value chain. Regional strengths would be tied closely to organizational strengths.

Komlofske and Rheinfrank knew they were on a roll, so they took their analysis a step further. If they were right about this new economic environment, they asked, what sorts of business organizations would succeed? Who would prove the winners?

The winners, the two decided, would be businesses that continually and accurately predicted fleeting market opportunities, and then mobilized their capabilities to take advantage of those opportunities. This wasn't about siting new factories or building specific brands; given hyperefficient capital markets, such decisions could no longer be the basis for competitive advantage. Rather, for a company to have an edge, it would have be able to target a range of possibilities for how technologies would evolve and for how consumers and markets would behave. Since an optimal strategy would prove elusive in such a hyperdynamic environment, executives would have to prepare for multiple possibilities -- aiming, say, for an arc of 30 degrees within a circle of 360 degrees. Successful organizations not only would be prescient enough to identify which 30-degree arc to target but also would be flexible enough to maneuver quickly to counter the shifts within that arc.

Winners would win because they had the closest relationships with their customers. Since pricing would become transparent and structural advantages would be arbitraged away, competitive advantage would stem more and more from identifying and satisfying customer needs. That meant that over the next decade, "the whole idea of the competitive landscape would change considerably," says Komlofske. As customer relationships became paramount, any company that enjoyed access to your customers would become a potential competitor. Banks and supermarkets could, conceivably, compete for intimacy with the same consumers.

Since operational inefficiencies would be identified and punished immediately, enterprises that didn't "optimally digitize" their operations and processes would suffer. Moreover, real-time management would become essential: Systems that allowed continuous sensing and decision making, as well as capacity mobilization, would replace quarterly reporting and periodic strategy assessments. And companies would have to find ways to manage dispersed networks of people and skills, allowing those networks to interact seamlessly across the globe.

All of this would favor large organizations. "This is bone-crunchingly hard work," says Komlofske. Such work requires both capital and scale. Adds Rheinfrank: "This isn't two guys and their dogs sitting in their Palo Alto garage and thinking of a great idea anymore." As the economy moved onto "land," big companies would reemerge as the guys who made the rules -- and as the guys who won.

As Komlofske and Rheinfrank refined their still half-baked vision, Lochhead set out to sell it. At 32, Lochhead is a shrewd veteran of four technology startups. Loud, brash, and funny, head shaved clean, prone to Prada and Gucci, Lochhead is a human exclamation point, a jarring foil to the staid style of Scient's other top executives. "Sometimes I'm amazed that I haven't been fired yet," he says half-jokingly. He embodies Scient's edge, its cool.

Much of the language that permeates Scient is, for better or worse, Lochhead's doing. "When we were just starting, something amazing would happen, and I would run around and scream, 'We're on fire! Yeah, we're on fire! This is fucking great!' And that expression just totally stuck." So it was that Lochhead identified the phrase that would describe whatever the hell it was that Komlofske and Rheinfrank were ginning up in Chicago. It wasn't fancy. It wasn't especially creative. It simply answered the question "What's next after the new economy?"

The next economy.