Older names 'have business edge'

Brand ownership plays a key role in successful global business networks

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia -- Older companies stand to do well in the age of global electronic business networks, according to U.S. strategist Saul Berman.

"In the world of bricks and modems, 85 percent of new businesses will fail. The legacy players will win in the long term," Berman told CNN.

In a global marketplace where brand ownership, value chain management and role specialization are crucial elements of successful business networks, Berman sees the more established companies as having an edge.

Big brands like diversified conglomerate General Electric, financial services company Charles Schwab and media/entertainment group AOL Time Warner (the parent company of CNN) are likely to be front-runners, he says.

They will "adopt and acquire technology and make the transformation happen" as the business world embraces electronic networks more fully.

Focus on core competency

Berman, based in Los Angeles, is the global leader in strategic change for PricewaterhouseCoopers, the world's largest professional services firm.

He said the key question for chief executives in the networked age was to determine a company's core competency -- not just in its own backyard but on a global stage.

Countries such as China will have to focus on their core competencies

The same applied to nations. They would have to focus on what they did best.

In the case of Asian countries, that might mean a focus on the manufacturing efficiency of China and Taiwan, or the financial services and hubbing abilities of Singapore and Hong Kong.

For Australia, it could be in niche scientific fields, such as biotechnology.

Sharing in brand ownership

Berman said certain Asian brands such as Sony were likely to strengthen and capture more value.

But he stressed that many companies and countries could share in ownership of a brand along a value chain.

It was up to them to determine how best to use their capital. That could mean a role as a brand owner, a technology provider, a participant in a value-adding supply chain, or as a manager of a meta-market.

However, there would be no room for passengers.

Berman said that while the speculative tech bubble had burst, technology remained a key part of the transformation to new business models.

Technology 'has to be user friendly'

"Technology has to be deployed on a global basis and has to be user friendly," Berman said.

He said the Nintendo generation of younger business executives were already attuned to what was called "thumb culture". Older executives were becoming more tech-savvy and were asking the right question: "How does it help me in my business?'

PWC's Sydney-based leader for strategic change in the Asia-Pacific, Grace Chopard, told CNN that business networks were moving from "heritage" groups to those based on merit.

The new electronic environment was throwing out challenges to Asian companies and economies.

"It is all about the ability to assemble participants in a value chain and to re-form that chain to suit changing market needs," she said.

"A business vision has to be backed up with robust delivery. It requires the rigor to deliver and execute the vision -- so you need to be networked," she said.

The emphasis was on speed, flexibility and scalability. But it was also true that niche brands -- such as Australian hatmaker Akubra -- could co-exist with mass brands.