What Is the State of the New Economy?

There is a battle under way to define the past, present, and future of the new economy. As you try to make sense of this battle and to reach your own conclusions, you can listen to many voices. You can find conservative business leaders breathing sighs of relief, convinced that this new-economy nonsense has run its course. They never understood what all the fuss was about: New business models? New ways of working? Finally, they tell themselves, they can go back to business as usual.

You can read trend-spotting journalists busily assigning blame, writing the hyped-up downside to the previously hyped-up upside of the new world of business. They don't care which way the story moves -- as long as it keeps moving, and as long as they can create new heroes and villains.

You can listen to confounded economic analysts who are anxiously trying to make sense of conflicting data, perplexed by their own efforts to use traditional tools to track the course of business in uncharted territory. They are truly strangers in a strange land, tasked with a responsibility for which nothing in their past has remotely prepared them.

Or you can spend time with this issue of Fast Company -- our third annual report on the State of the New Economy -- in which we answer four questions that we believe define where business stands and where it is heading. Because, for the record, we are not happily relieved, busily blaming, or anxiously perplexed. Yes, the carnage in the financial markets has been nothing short of brutal. And the setbacks at high-profile companies such as Cisco, Dell, and Intel have been painful. But we are more convinced than ever that the spirit of innovation and disruption that has characterized the past five years will inspire business over the next five years. And we're convinced that you will agree. Ask yourself: Can you think of a time when work was so compelling and engaging? When business was subject to such unpredictable change? When technology was so ubiquitous and so frustrating? When there were so many ways to have so much impact in so short a time?

First, the Answer

So what is the state of the new economy? It is alive. It is well. It has been released from its kidnapping by the get-big-fast, get-rich-quick, built-to-flip crowd.

The good news is that the new economy -- the real new economy -- is back. The bad news, of course, is that the overall performance of the U.S. economy is in a slump. But while we may be going slower, we are not going backward in time. There is no returning to the old days of Father Knows Best corporatism, of top-down command-and-control leadership, of low-road, zero-sum competition.

Let's be clear, then, about what the new economy is not, and then what it is. The new economy is not -- and never was -- just about dotcoms. It is not and never was just about IPOs, venture capitalists, or irrationally exuberant stock markets. It never did belong to just one industry or one part of the country.

So what is the new economy about? It is about three things: the expansion of individual opportunity, the disruptive energy of ceaseless innovation, and the transformative power of information technology and communications. At its heart, the new economy that this magazine has been chronicling, charting, celebrating, and critiquing represents the convergence of these forces -- forces that challenge the conventional wisdom of the Industrial Age and that unleash entirely new ways to make strategy, launch products, serve customers, and organize for creativity and productivity.

Consider first the scope of individual opportunity. After decades of thinking that "business" was synonymous with "the corporation" and that workers were anonymous cogs in a giant machine, we have come to understand that the new unit of analysis for creating value, making change, and producing results is the unit of one.

One person with one great idea is the fuel that powers the new economy. That person may be an evangelist for change inside a vast, global corporation, the leader of a high-energy startup, or the sole creator of a Web site that attracts millions of visitors. Never before in the history of business has each person mattered more -- as a talented performer, as a leader in an organization, as a consumer in the market, as a creator in the world of enterprise.

Second, disruptive innovation is the new operating condition of business. The era of stable, predictable, set-piece competition is over. The only way to stay in business today is to be fully, constantly, and instantly alive -- alive to new ideas, alive to new practices, alive to new opportunities. The job of leaders everywhere is to challenge conventional wisdom in their industries and received wisdom in their companies.