November/December 2000

New Realities for the New Economy

Rules of Survival for the Network Economy: Rapidity, Relationships and Results

By Lain Chroust Ehmann

Forget supply and demand. Forget conventional marketing. Forget traditional business models. The old rules no longer apply. Today, communication and connectivity are driving change across all industries — including exhibitions. Welcome to the New Economy. 

In less than three years, the New Economy has already had a profound effect on how businessis done — and not just for technology companies.

Whether you work for a for-profit show management company or a trade association, life in the New Economy may mean partnering with external technology experts — or serving as a technology vendor yourself. It may mean becoming more than just a clearinghouse for industry information and offering e-commerce services to your audience. It may mean rethinking how your organization creates value and restructuring your activities accordingly. It may even mean tearing everything apart and starting from scratch. 

Though the exact impact on your particular organization may not be defined yet, one thing is certain: The New Economy means radical change. 

Beyond efficiencies
The exhibition industry has been quick to recognize the broadcast power of the Internet. According to an April 2000 survey by the Chicago-based Center for Exhibition Industry Research(CEIR), about two-thirds of show organizers have a Web site, which is used primarily to disseminate show information. And efficiencies — such as e-mail, online registration, one-stop-shopping for hotel and air arrangements, and online service manuals — are fast becoming de rigueur. 

But when it comes to thriving in the digital era, organizations must look beyond more efficient ways to do the same old thing. More important than any productivity enhancement is the metamorphosis in the way businesses relate to and communicate with each other, and the way information is accessed and disseminated. Much of this transformation stems from what Kevin Kelly in his book, New Rules for the New Economy: 10 Radical Strategies for a Connected World (Penguin, 1999), calls “the network,” the vast web of relationships enabled by faster, more global means of communication like the Internet and e-mail. While networks have always existed, Kelly writes, now technology has enhanced and multiplied networks to the point that our entire economy is structured around them. 

These networks have rules of their own (see sidebar: The New Rules, page 85). Those who understand their structure and functioning will move ahead, while those who don’t will be left like so much road kill beside the Information Highway. “The new economy is about communication, deep and wide,” says Kelly. 

“Communication is the foundation of society, of our culture, of our humanity, of our own individual identity and of all economic systems. This is why networks are such a big deal.”

Rather than asking what’s going to change under the new rules, a better question is: What’s not going to change? No sector is exempt, and no industry is excluded. Kelly stresses that network principles hold true for the world of the soft — intangible goods, such as software — and for the world of the hard-tangible goods, like steel and oil. “If you want to envision where the future of your industry will be, imagine it as a business built entirely around the soft, even if at this point you see if based in the hard,” Kelly says. 

The changes impacting show organizers most can be summarized by three “Rs,” rapidity, relationships and results.

The need for speed
A key characteristic of the global network is the sheer speed at which information is transferred, and at which new products are introduced — and made obsolete. The current business environment is characterized by shortened product development cycles, faster reaction times, and higher expectations when it comes to giving customers the information and services they want. 

Shortened product development cycles mean previous models for booth sales cycles may soon be obsolete in your industry — if they aren’t already. Potential new exhibitors are coming in and out of industries at a feverish pace. That means booth salespeople need to be connected to the industry. Looking for new companies and products by scouring industry publications, signing up for industry e-newsletters and researching industry Web sites on a regular basis.

It also means that the lead time for launching a show in a new market has been compressed. If you wait two years or 18 months, your competitors will already be there. Instead, many show organizers are rolling out conferences to test the waters this year, then adding tabletops or full-blown exhibits the following year. 

In addition, exhibitors and attendees will demand speed when it comes to service. Show managers have already responded by offering enhanced customer service, such as online registration and hotel and travel booking, immediate e-mail response to show inquiries, and downloadable versions of show documents, like floor plans, event schedules and service manuals. Although exhibitors and attendees have been slow to adopt some of these innovations, they will no doubt become the norm within a few years. 

Beyond these familiar features, organizers must constantly investigate cutting-edge strategies to keep their constituencies wired for speed. For instance, at the NRF.com conference hosted by the National Retail Federation (NRF) in October 2000 in Washington, D.C., the estimated 3,500 attendees were able to instantly access information — such as exhibitor listings and locations, as well as show, event and press conference schedules — using Internet-enabled mobile phones and personal digital assistants (PDAs). Though only about 20 users actually used the system, Don Gilbert, NRF’s Senior Vice President of Information Technology, views this year’s show as a trial run and expects wider use at NRF’s annual convention in January. 

The decision to provide wireless access to show information was in direct response to the growing mobile computing trend. “As an association, you try to provide information any way people want to get it,” Gilbert says, and in this case, mobile was near the top of the list. 

To be able to provide services that customers desire, show organizers 
must keep abreast of new technology. In addition to Internet-enabled phones and PDAs, communication technology trends on the horizon include speech-recognition software that allows users to navigate sites by voice, the enhancement of streaming media that will decrease cost and increase qualityfor video over the Web, and the proliferation of real-time chat (voice and text-based) — all of which contribute to the need to provide that “anytime, anywhere” information access to customers. 

Why can’t we be friends?
By definition, the global network connects everything to everything else. No longer can industries, organizations or individuals think of themselves as independent; by virtue of the ties that bind, each action affects the other members of the collective. By creating new ways to communicate, the New Economy has also created new breeds of affiliations — person-to-person, business-to-business and business-to-customer (see sidebar: Will the Middleman Disappear?, pg. 84). In Kelly’s words, “the prosperity of a firm is directly linked to the prosperity of the network.” And because of the network size and the number of elements organizations must monitor and respond to, the only way to stay on top is to collaborate.

As a result, those previously viewed as competitors may now become collaborators, and customers have become coworkers as they help define new services and products. This manifests in the exhibition arena with the growing occurrences of partnerships as organizations outsource their non-core activities. Show managers — especially smaller groups — are relying heavily on external partners to implement complicated technology solutions. For instance, NRF.com’s wireless applications were provided by technology vendor GeePS.com.

Additional areas ripe for partner involvement include e-commerce services and back-end Web site management. “The focus for staying with your core business is very strong, both among the for-profit show organizers and the associations,” says Doug Ducate, President and CEO of CEIR. Advantages to outsourcing can include time and cost efficiencies, as well as experience and knowledge regarding cutting-edge technology.

Then there’s the reverse scenario where show organizers act as the technology providers for member organizations, as is the case for the Fairfax, VA-based International Communications Industries Association (ICIA), whose internal four-person Web group has been so successful that the organization serves as Web master for two other sites — the Affordable Housing People (www.ahp.org) and the Society of Independent Gasoline Marketers of America (www.sigma.org). 

Nontraditional partnerships are a reality in the New Economy. While dot-coms have led the way, more and more show organizers and suppliers are looking both inside and outside the industry to find synergies with organizations that, several years ago, would have never even appeared as blips on the radar screen. 

In October, Key3Media announced a partnership with Inc. magazine to present programming at COMDEX. At the end of August, Shomex Productions announced a partnership with CBS Marketwatch.com to provide up-to-the-minute stock quotes and information on Shomex’s job fair Web sites. Last December, Advanstar Communications and PurchasePro.com Inc., a provider of B2B e-commerce services, announced a strategic alliance to create 20 B2B vertical communities served by Advanstar’s trade shows and magazines. 

But launching your own portal site with e-commerce capabilities may not be the answer for some shows. Partnering with an established Web site is also an option worth exploring. By bringing a large, loyal membership or attendee base to the table, trade shows can provide the users while the technology partners provide the tools. Bob Krakoff, Chairman and CEO of Advanstar Communications, Boston, says his company did just that by joining its International Licensing Show with ipnetwork.com, an online B2B marketplace for the licensing, event marketing and intellectual property. “We had content and a world-class show,” he says. “They had an existing site and the technology.” 

The bottom line
With all the talk about e-commerce, Web portals and online auctions,
show organizers may ask how they came so far from their main function — organizing events. But that’s a narrow, old-fashioned view; the core function is not event management, but “bringing buyer and seller together,” says Steven Hacker, President of the International Association for Exhibition Management, Dallas. “The risk of not being part of the New Economy — it could be catastrophic.” Whatever the channel used to fulfill that purpose — live shows, Web portals, online marketplaces or some other format — the end result is creating value for constituencies. 

Businesses are used to quantifying efficiencies and return on investment (ROI). Though technology can improve a company’s metrics — for instance, Bob Brown, former Vice President of Expositions and Conventions for ICIA, estimates electronic self-registration for INFOCOMM saves $9 a head — “faster” and “cheaper” in and of themselves aren’t sufficient. 

The success or failure of e-business initiatives can’t be judged by the traditional ROI model, according to “Measuring eBusiness Success,” a report from Cambridge, MA-based Forrester Research. Instead, Forrester recommends basing evaluations on e-business objectives and impact metrics that track results across the business enterprise. Satisfaction and success among partners, suppliers and customers should be gauged by data and information from all participants.

Value is the key objective, says Matt Croson, Director of Communication for the Packaging Machinery Manufacturing Institute (PMMI), Arlington, VA, which partnered with Cendex, a developer and operator of vertical Internet communities, to offers its 491 members a robust e-marketplace, Packexpo.com. The extensive Web site not only offers e-commerce capabilities to buyers and sellers in the $450 billion industry, but also adds value for users with daily industry news, research, discussion groups and other resources. The site has seen a steady growth in its traffic — rising from 35,000 visitors per month in October 1999 to 75,000 visitors per month in August 2000. Since then, Packexpo.com has partnered with Cahners Business Information, which provides content from its Packaging Digest magazine, sales support and advertising for the site.

Looking ahead
While creating cost efficiencies certainly impacts ROI, the real value for show organizers may eventually be evaluated on their ease of connecting buyers and sellers. With this broader perspective on results, services such as e-commerce initiatives and enhanced information provision lie clearly within an association’s or management company’s bailiwick.

But the extent to which it will change the scope of our businesses is difficult to predict. Will the bulk of show revenue one day shift from the live exposition floor to the online marketplace, or to the provision of online education and training? If so, such investments will call for organizational restructuring and refocusing — which will no doubt be dramatic, anxiety-producing and expensive. But what’s even more costly is refusing to change. 

Those groups who understand and implement the “New Rules” and have the courage to recreate themselves will thrive, while those who remain wedded to the “old ways” will find their spot at the table taken by quicker, more forward-thinking players. “The entrepreneurs are always sitting there, looking for the weak,” says Ducate. Organizations refusing to transform may find themselves too late to the game. “This is not an issue any show organizer can afford to be a spectator in,” says Hacker. “They have to be engaging their events today. And for some, even today is too late.”

Sidebar: Will the Middleman Disappear?

By connecting anyone with everyone, will the Internet mean the death knell for the middleman? Not likely. 

For-profit show organizers and associations can serve a valuable role in the New Economy by knowing their industry — and knowing it well. “As the number of items and manufacturers around the world increase, the middlemen add value by finding the right attendees to invite to a show, the right context and the right venue,” says Kevin Kelly, author of New Rules for the New Economy: 10 Radical Strategies for a Connected World. 

B2B show organizers will need to make some changes as they develop new ways to serve audiences, such as opening shows to end-users, as the International Communications Industries Association (ICIA), Fairfax, VA, has done. The ICIA-sponsored INFOCOMM show has traditionally focused on the dealer, says ICIA’s former Vice President of Expositions and Conventions Bob Brown. Now larger, qualified end-users — such as the Department of Defense and the Federal Aviation Administration — are invited to attend. 

E-commerce, web portals and online marketplaces present additional methods of offering value. Rather than replacing traditional shows, these online offerings enhance them; “what was once a threat is now a complementary tool,” says Matt Croson, Director of Communication for the Packaging Machinery Manufacturing Institute (PMMI), Arlington, VA. PMMI spent approximately $3 million and partnered with technology vendor Cendex to create Packexpo.com, which provides members a range of online tools including research, a marketplace and an interactive discussion bulletin board. Four hundred participating vendors pay $1,700 per year for services. Those buying large-ticket items are always going to want the live experience provided by trade shows, says Croson. Packexpo.com helps narrow the field and make informed buying decisions, he says. 

The B2B organizations and shows that will disappear will be those unwilling to reinvent themselves in light of new realities, says the Center for Exposition Industry Research President and CEO Douglas Ducate. “Shows should mirror the industries they serve,” he says.

Freelance journalist Lain Ehmann has written on topics as diverse as hybrid fiber/coax telecommunications systems and massage therapy. Her work has appeared in the Boston Globe, the Christian Science Monitor, Woman’s World, Family Life, Runner’s World, the Industry Standard, HealthGate. com and more. She connects to the globalnetwork from Boston.