CONFERENCES.

• Author: Parke, James A.

FEI's annual conference, "Finance 2001: Gateway to the New Global Economy," kicked off May 7 in Scottsdale, Ariz., with a bracing talk about change and thoughts about how to manage it. Author and consultant Ian Morrison, who wrote "The Second Curve: Managing the Velocity of Change," outlined a view of the business world in which there are two basic models -- a "first curve" dominated by old-line industries and established ways of doing business, and a "second curve" involving radically new methods that represent the primary source of future growth. The Internet, Morrison said, is a perfect example of this second curve.

Morrison argued that the "second curve" is often overestimated in the near term and underestimated in the long term. New technologies and new, more educated and skeptical consumers will drive the second-curve strategies, he said -- making brand loyalties often a thing of the past. Knowledge is now the key to value, he argued, and that it will become more and more critical as more of the world's population goes online in the coming years.

Morrison dubbed the Internet "the Mother of all commoditizers," arguing that over time, products sold or distributed over the Internet tend to have their margins captured by the consumer, not the innovator. Eventually, he said, business-to-business models will evolve so that there will be re-intermediation opportunities along the value chain -- i.e., middlemen will be able to add value at different positions between buyers and sellers and get paid for that service.

In a second keynote session, James A. Parke, CFO of GE Capital Corp., outlined GE's approach to converting its existing businesses to the Digital Age. GE is "on a journey," he said, and has been working long and hard to adjust to the hundreds of acquisitions it has made in recent years and to the fact that much of its revenue stream now comes from overseas.

Realizing the growing impact of the Internet a few years ago, Parke said, GE at first tried to "dot-com" its various business lines. But that proved largely ineffective, and the industrial giant decided to retool that approach. Instead, he explained, GE decided to take a three-pronged approach to its business processes -- eliminate them, digitize them or relocate them overseas to far cheaper sites. Much of that relocation has involved India, where Parke said the intellectual capital is very high but costs are only 30 percent of what they are in the U.S. or Europe.

Parke detailed...