Cisco| Internet Ecosystem
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<u><b>The Internet Ecosystem: The Business Model</b></u>
<br/>
for the Internet Economy
</p><p>
<b>Internet Economy</b>
</p><p>
In any market economy, the rules of competition define who
<br/>
wins and who loses—for countries, businesses and people.
</p><p>
In the agrarian economy, land and resources determined
<br/>
who won and who lost. In the industrial economy, Michael
<br/>
Porter taught us that the value chain—and controlling as
<br/>
much of it as possible—was the basis of competition. In the
<br/>
Internet Economy, where knowledge, information and time
<br/>
are the prevailing currencies of competition, a new set of
<br/>
rules are emerging. The new rules reflect the basic nature
<br/>
of the Internet Economy: Based on technology standards, it
<br/>
promotes broad and massive market participation, while
<br/>
encouraging market anarchy. These rules are becoming
<br/>
tenets of competitive success and guideposts to prosperity
<br/>
for companies and people in market economies.
</p><p>
<b>What is the Internet Ecosystem?</b>
</p><p>
The Internet Ecosystem is the business model of the
<br/>
Internet Economy.
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The prevailing model of competition in the Internet Economy
<br/>
is more like a web of inter-relationships than the
<br/>
hierarchical, command-and-control model of the Industrial
<br/>
Economy. Unlike the value chain, which rewarded
<br/>
exclusivity, the Internet Economy is inclusive and has low
<br/>
barriers to entry. Just like an ecosystem in nature, activity in
<br/>
the Internet Economy is self-organizing. The process of
<br/>
natural selection takes place around profit to companies and
<br/>
value to customers. As the Internet Ecosystem evolves both
<br/>
technologically and in population, it will be even easier and
<br/>
likelier for countries/companies/individuals to participate in
<br/>
the Internet Economy. Already, there is $1 trillion in
<br/>
technical infrastructure in place, ready and available for
<br/>
anyone to use at any time—free of charge. That's why new
<br/>
ideas and ways of doing things can come from anywhere at
<br/>
anytime in the Internet Economy. The old rules don't work
<br/>
any more. The Internet Ecosystem is the new business
<br/>
model of the Internet Economy.
</p><p>
<b>What is the Model for Success? </b>
</p><p>
The potential for success in the Internet Economy can be
<br/>
measured by the quality of a country's or company's
<br/>
ecosystem.
</p><p>
The quality of an ecosystem determines the potential for
<br/>
advancing the standard of living of a country, the
<br/>
shareholder value of a company and the participation of
<br/>
individuals in the economy. Cisco, as one of the first
<br/>
companies taking advantage of the Internet as a business
<br/>
medium, has developed a qualitative formula for measuring
<br/>
the quality of an ecosystem. The Internet Quotient™
<br/>
self-assessment test is a measure of an organization's
<br/>
potential to create and leverage the Internet Ecosystem. The
<br/>
IQ test is a product of two metrics, operations ecosystem;
<br/>
how a company uses the Internet to optimize its internal
<br/>
operations and market ecosystem; a company's ability to
<br/>
expand and create value for the entire ecosystem. Through
<br/>
a series of 20 questions a company can evaluate its own IQ
<br/>
results. While not scientifically linked, the IQ test
<br/>
conceptually correlates with one of the most important
<br/>
measures used by Wall Street to measure the "fitness" of a
<br/>
company to compete successfully on the Internet—return on
<br/>
invested capital (ROIC). It is a blueprint for success in the
<br/>
Internet Economy—how well people will live in countries,
<br/>
how much value in the marketplace companies can build,
<br/>
what people should look for where they work and what skills
<br/>
they should learn.
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