Welcoming Remarks

Michael T. Childress
Executive Director, Kentucky Long-Term Policy Research Center

Good afternoon. My name is Mike Childress and I’m the Executive Director of the Kentucky Long-Term Policy Research Center. I want to welcome you to the Center’s seventh annual conference. This is the first time we have been here in northern Kentucky, and we’re very pleased to be in this fine facility. The other thing that makes this conference somewhat unique and sets it apart from the other six that we’ve done is that we have some partners this year. We have worked on this conference in collaboration with a group, the Kentucky Leaders for the New Century. It was a group of young leaders, 44 people under the age of 40, who were chosen through a process last year. They went through a series of presentations and they have just been a delight for me to work with. In fact, it’s been my honor and privilege to work with these folks.

In addition to the group, Kentucky Leaders for the New Century, I would be remiss if I did not recognize the contributions that Fidelity Investments, Ashland, Inc., and Delta Airlines have made in order to get our keynote speaker today, Mr. Chuck Martin, here to northern Kentucky to speak to us.

Also, Kentucky Educational Television, KET, is going to be televising a live broadcast of Kentucky Tonight with Bill Goodman in this room at 8:00, and they are inviting all of us to be part of this live audience. It’s not going to be a call-in show as it usually is; instead, they will be asking questions and interacting with the audience.

Let me begin by introducing the two Co-Chairs of today’s event. The Center’s portion of this conference will actually begin tomorrow morning. The Kentucky Leaders for the New Century are responsible for putting together today’s portion of the program and the two Co-Chairs of today’s program are Anne Maxfield and Kevin Canafax. Anne is with the Roth Partnership, which is an architecture and interior design firm in Cincinnati, where she is the Director for Business Development. Kevin is with Fidelity Investments, where he is the Director of Midwest Communications for Fidelity, and I just want to thank them. It’s been quite a pleasure to work with them to put this together and I hope you all will join me in welcoming the two co-chairs.

Anne Maxfield
Director for Business Development, Roth Partnerships

Thank you so much, Mike. On behalf of the Kentucky Leaders for the New Century, I want to thank you for being here today. It has been our pleasure to plan this afternoon’s program. We could not have done this without Mike Childress’ support, so thank you again to Mike. Our number one goal in planning this program is so that everyone leaves here today with a much better understanding of the value of the fact that Kentucky has to be involved in the New Economy if we’re going to move forward. So that’s our number one goal for today. I would like to thank the panel coordinators. As you know, we have breakout sessions after Chuck Martin’s speech, but I would be remiss in my duties if I didn’t thank three people who put their blood, sweat and tears and time into lining up some of the best panelists that you’ll hear. The first person is Dr. Steve Clements from the University of Kentucky; Joe Washington, Ashland, Inc.; Craig Greenberg of iVentures. Finally, I need to thank this man right here, Kevin Canafax of Fidelity Investments, who is the co-chair, and what you may not know is this whole idea started about in April or May and Kevin, Trey Grayson, Joe Washington and I all met at the Wildflower for breakfast, and we were talking about some ideas the Kentucky Leaders group may want to do. Kevin was so animated and so passionate about the fact that Kentucky really needs to have this education that we brought this forward. So I want to thank him and also the entire Kentucky Leaders group because they supported everything that we’re doing. Let me turn this over to Kevin Canafax so he can introduce our top-notch keynote speaker.

Kevin Canafax
Director for Midwest Communications, Fidelity Investments

Thank you, Anne. I would be remiss if I didn’t acknowledge all of the hard work that Anne has put into making this program today a reality. I think everybody on the subcommittee that helped to plan today’s activities would agree with me that she was the glue that held this together. So, Anne, thank you very much for all of your hard work. It does give me great pleasure to present to you this afternoon our keynote speaker. I was actually going to attempt to without any notes, but, because our speaker is so accomplished and is so involved in so many activities, I thought I would be doing a disservice by not sharing all of those with you to really give you a sense of what a wonderful opportunity we have in bringing Chuck Martin to Kentucky to talk about the subject, “Kentucky and the New Economy.”

Chuck has been involved in identifying and tracking technological trends and their impact on business since the early 1980s when he was editor and chief of the largest computer magazine in the world. He has worked at five daily newspapers and has been editor-in-chief of four national magazines. He is a former Editor of Corporate Technology, of Time, Inc. and has written for Time magazine’s economy and business section. He has hosted a daily TV show on the Financial News Network and has appeared on CNN and PBS, sharing his Internet expertise. He has served on the executive committee of the News and the Future Program at MIT’s Media Lab. Our speaker, Chuck, was an associate publisher of Information Week magazine and was the founding publisher of Interactive Age, which helped chart the beginning of the course of the interactive industry. Most recently, he was Vice President of Publishing and Advertising at IBM. He’s the author of The Digital Estate, which Publisher’s Weekly called “a smart survival manual for companies marketing online services and products via the Internet and distinguished by a recognition that the global interactive marketplace is a new business environment where old rules don’t necessarily apply,” and, if we don’t take anything else away from the discussions that we have today, that is the one that we really need to hold close to the vest. The rules are new, it’s uncharted territory, there is no road map, there is no past experience to draw on: this is really the advantage that we have in terms of shaping our future—Kentucky’s future—in the New Economy. Chuck’s book is also a New York Times best seller. His second book, Net Future, was published by McGraw-Hill in 1999. If you would, please join me in giving a warm Commonwealth welcome to our keynote speaker, Chuck Martin.

From Kentucky and the New Economy/Challenges for the Next Century: The Conference Proceedings
p. 5-8, published 2001

Martin centered his remarks on life in the world of e-business, as distinct from e-commerce or the buying and selling of things on the web. E-business, he said, involves the transformation of the value chain from product conception to consumer consumption. Ultimately, he suggested, the full process will be driven by the consumer of the product, good, or service, as opposed to the organization.

E-business, Martin asserted, is about the transformation of behavior on a global basis. By way of illustration, he discussed Amazon.com, “the poster child of the Internet,” a company with “a $17 billion market valuation but no profit.” Amazon, he suggested, is not about selling books, but rather about changing the way people buy. Thus, the revolution underway is reshaping consumer behavior as well as the way business is conducted. People in the Net environment, Martin said, think differently, and that thinking is now shifting to the world’s largest organizations. Innovative thinking now matters most in the business environment, he added.

He outlined seven “cyber trends” that are manifestations of the ongoing e-business revolution:

• The cyber economy goes mainstream. As established businesses and industries use the Web to do business, to develop new relationships with customers, an explosion in e-commerce will occur.

• An integration of the physical and the online worlds. Bricks and mortar, Martin said, are not the liability as some have argued in the recent past. Instead, they are now clearly an asset in the pursuit of customer satisfaction, as they enable business and the public sector to provide services and goods in a variety of ways. People can research products on the Web, then inspect and try them at local outlets, for example.

• Re-mediation, as opposed to dis-intermediation. Rather than the decline of business opportunities that many believed the Web meant as it enabled individuals to perform tasks they once routinely paid others to do, we are now seeing the opportunity for creative entrepreneurs to insert themselves in the value chain, to offer a host of products and services that will enable people to enjoy more free time to do things that are of greater value to them. These opportunities are occurring within businesses as employees enjoy ready access to extensive information that enables “in-bound” telemarketing, sales to customers, about whom firms now possess extensive, readily accessible market information. Martin observed that the technology now exists to use information derived from customer inquiries to global positioning systems, to match supply and demand in real time. In short, he suggested, the customer becomes data. In the new environment, individuals pull what they want to themselves, Martin said, but a vast array of services that firms can and are offering can be marketed to the individual when that relationship is established.

• The open-book corporation, the age of self-service. The prime example, Martin observed, is Dell Computers, which sells its computers on the Internet, where customers provide the specifications for the computer Dell then custom builds for them. The consumer, he observed, wants to be a participant, whether he or she is buying a product or tapping a government service. Thus, customer empowerment is key.

• The move to product modernization. In the e-business environment, Martin observed, we can aggregate, place things under electronic umbrellas, either by supply or demand. Realtor.com, which is owned by the National Association of Realtors and not a start-up, offers a good example of the aggregation of supply. It enables a corresponding aggregation of demand, getting the buyers in one place.

• The move to experienced communities. Martin suggested that the conference audience was a potential experienced community that could electronically share knowledge in real time and thus enable everyone to learn best practice.

• The move to real time, all-the-time learning. Information, he observed, is the strategic competitive weapon of the New Economy. Every component of business, said Martin, has to become interconnected in the value chain. “We are really moving to e-everything and that’s not really going to stop.” Thus, the skills needed to participate in the wired workforce are totally different from those of just a few short years ago. Orientation is no longer state nor national, but rather global, and it demands that we cultivate a new understanding of the value of research and information in this arena. People must be trained to learn continuously, and with few exceptions, organizations—business, government, and education—must be linked together to keep education flowing.

The transformation underway is not about technology, Martin observed. It’s about people, about changes in the behavior of people in society on a global basis. The good news, he asserted, is that people such as those in attendance are change agents, who can make things move in a different direction by approaching their business in a totally different way. He concluded that there is no reason we cannot position Kentucky ahead of much of the pack because it’s simply a matter of who steps forward to do it. Most states, he observed, have not.

Questions, Answers and Comments

The question is, there’s a lot of governmental regulation you have to follow during e-procurement, bids and that sort of thing. You need to change the laws. I’m saying that only half jokingly because the laws weren’t really created for this environment because the environment didn’t exist. We have to basically change everything behind the scenes, which is a lot of work, because some of these things were created when they made sense. Then they really made sense and they do protect certain things, but it’s really a matter of doing everything differently end to end. But there are states that are starting to do some things, if you look at things that are crossing state lines, for example. Every organization who’s selling to you will be joining e-marketplaces. There are going to be no exceptions. Everybody is going to do business this way, so if you’re the group, you’ll either do it early, in the middle, or late. The only issue is really when, so it’s about changing everything behind the scenes that you have to change. But you can actually be a leader in that and set the new standards for the country because it has to be done by somebody.

One of the challenges is just getting the old economy to recognize the New Economy and its changes. How do you make a bridge from a website being out there and getting the word out that this website is out there and that it’s available and that people can access it? It seems that we don’t make that connection.

The question is, how do you bridge the old and the New Economy and get the work out once you have a website that’s got something really good? How do you basically get people to go to it?

There are two ways to look at this. When you look at business, organizations tend to mix them. In the old economy, when you take the Net, we take the network environment and we do business a better way. We make things more efficient, e-procurement and so forth; and then there are the other things over here where we really do business a new way, a totally new way than we ever did before. And, when you start to look at that way, and you start to put things in each column, they become really different. Then, in terms of the website, I tend to look at it not as websites but as really customer value. If there’s a customer value, then the customer will find the value. It’s really amazing. This “word of Net” is very real. Like, people just tell each other, “Oh, yeah, I did this.” Whoa. How do you do that? Here, just type this. And companies have become very successful with no marketing, just because they provided such a value and the consumers found out. You’ve got newspapers here. You’ve got magazines here. You do something really innovative, they’ll find it.

It seems like you emphasize business-to-business in your big projection for an increased online growth. Last year business-to-consumer for Christmas was about 2 percent. Do you see that growing at all this year? I self-projected that business-to-consumer for Christmas was going to be less than 2 percent.

Yeah, it’ll be 10, 20 billion. It’s like trivial.

The problem is, why are we not going to business-to-consumer, but we are going business-to-business?

Well, the only thing we measure, why we’re not going business-to-consumer, like this Christmas, when this Christmas will be OK online. The reason is it’s like shopping for cars. What we do is we shop online and then go to the store and buy it. So, that doesn’t get measured as online shopping. It only gets measured if we execute at the website. What’s happening is that the big companies have now figured this out. They are linking everything together. And, we’ll start to look at things like Circuit City and Best Buy, which was CompuSave, but they changed it. They’ll start to look at simply Christmas sales. It’ll be difficult to break out whether it’s telephone, online, or store because now, with Best Buy, you order online but you physically go to the store to get it and we’re going to see much more of that. So I would bet a couple of years from now, we won’t even have the measurement of online sales at Christmas. It just won’t make sense. It would be like what are our telephone sales this year at Christmas? Nobody knows because we don’t track that anymore because it doesn’t really matter. And, that’s sort of where the Net is right now. The Net’s like a baby; it’s still early. We’re not in a mature market. I mean, some of the dot coms would tell you that.

Audience Member

The state government cabinet that I work for, we’re trying to take all of our database of information and put it online for people to touch it. We’re just getting ready to dive into it and, if I can say the name, Oracle decides they’re going to switch what they’re doing. How do you plan in that environment? I mean, you know, we were all ready to go with a certain way to do it, and now we find out that they’re going to change. How do you cope with that?

Chuck Martin

Advil. (Laughter) No, just kidding. That wasn’t a drug question. It was a question about how do you keep up when you plan this whole thing and the technology provider changed the platform underneath you. You basically have to roll with it. There’s no other way. The good news is it gets changed before you implement it as opposed to right after and then you’re stuck with the old one. Like on day one you’ve got the old version. That’s really depressing. It’s really about getting. It’s a mind-set of saying, OK, things changed again. And, that’s really tough because we look for a stable world and it’s not stable right now. It’s just difficult and you can change jobs. That’s what people are doing. I’m only saying that half jokingly. Not you personally, but that’s what people are doing because it’s so easy to change jobs now in this arena as long as you have, like, three minutes of experience in e-anything, you’re worth gold and you can work pretty much anywhere.

Thank you so much.