It can be said that the economy is characterized by change. Throughout time, starting with the post-war industrial period, continuing with the following decades dominated by marketing, then with the internet and software applications, to arrive today at an economy dominated by AI, change has stood defiantly before business without revealing the real engines of business, based on the same principles as always, having the same fuel as always, even though realities have reconfigured them to adapt to the new, to profit from internet-based business models, from network effects. If 30 years ago double-digit annual sales growth meant an efficiently managed business, today everything depends on costs and the possibility of scaling, of increasing the number of clients by keeping fixed costs at a minimum level, through continuous growth of profit margins. It seems that today we live in two parallel worlds, where the economy no longer respects its values and the only important variable remains growth, preferably of recurring revenues. However, it is a game of priorities, a game related to timing in which the main concepts are redefined to stimulate these priorities. Despite the coexistence of traditional businesses with those in the technology area, the basic principles remain the same, and a business, regardless of which category it falls into, will be born, will live, will survive, will succeed or will die according to the same rules that we or our predecessors did not invent. They have been true and will be true forever as long as businesses have a foundation, a structure and a competitive advantage, regardless of what form these will take at any given moment.
My plea is in favor of equal attention given to business as a unitary whole, to strategy, fine adjustments, profitability calculations even if they relate only to gross margin, the business's capacity to generate cash and its growth even if not in volumes that cover expenses, short-term forecasts that support short-term measures and timely adjustment of investments according to their efficiency and how they are accompanied by modification of current activity, of the asset conversion cycle, whatever they may be.
I also believe at the same time that it will soon prove that any business must revolve around sales even if there is a central product that captures current attention. Sales must be adapted according to market evolution and any company must have the flexibility to adapt its offering whenever needed.
Even if success eventually brings attention back to the details of an efficient company, I believe we are all obligated to keep in sight the principles of healthy business functioning regardless of today's priorities.
In the 2000s, the renowned Professor Michael E. Porter, who developed Porter's Five Forces model, was put in the position to argue why the internet-based economy is founded on the same principles as any other business, even though apparently not a single detail was in its place anymore. What he created in 1985, the competitive advantage of companies and the comparative advantage of nations, remained unwavering as the foundation of the economy, with all strategic principles aligning financial management both in traditional companies and in startups.
