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Wednesday, April 27, 2005

Rich Karlgaard's Ten Laws Of The Modern World

Rich Karlgaard writes in Forbes, on the Ten laws of the modern digital world. Excerpts with edits:

Moore's Law. This has transcended silicon chips and has become a way of saying that all digital stuff, from PCs to cell phones to music players, get twice as good every 18 to 24 months-at the same price point.
The Back Side of Moore's Law. This says that digital stuff gets 30% to 40% cheaper every year-at the same performance point. It's why hundreds of millions of Chinese and Indians now own their personal portals to the global economy.
Andy and Bill's Law. It went like this: "What Andy giveth, Bill taketh away." It meant that every time Intel brought a new chip to market, Microsoft would upgrade his software and soak up the new chip's power. Moore's Law constantly enables new software. Often the new software is just an incremental improvement. But every few years there’s a wild breakthrough-graphic computing in the 1980s, Web browsers in the 1990s, fast search engines today. Next? Surely something amazing.
Metcalfe's Law. The usefulness of a network improves by the square of the number of nodes on the network. Today, the Internet, like telephones, grows more valuable as more join in. Ebay grew so profitable so fast due to this.
Gilder's Law.The best business models, waste the era's cheapest resources in order to conserve the era's most expensive resources. When steam became cheaper than horses, the smartest businesses used steam and spared horses. Today the cheapest resources are computer power and bandwidth. Both are getting cheaper by the year (at the pace of Moore's Law). Google is a successful business because it wastes computer power-it has some 120,000 servers , just 3500 employees and generates $5 billion in (current run rate) sales.
Ricardo's Law. The more transparent an economy becomes, the law of comparative advantage rules the day. Then came the commercial Internet, the greatest window into comparative advantage ever invented. Which means if your firm's price-value proposition is lousy, too bad. The world knows.
Wriston's Law. Wriston predicted in a networked world,capital (meaning both money and ideas) when freed to travel at the speed of light "will go where it is wanted, stay where it is well-treated.…" By applying Wriston's Law of capital and talent flow, you can predict the fortunes of countries and companies.
The Laffer Curve. Arthur Laffer proposed - Cut taxes at the margin, on income and capital, and you'll get more tax revenue, not less. Application of the Laffer Curve is why the U.S. boomed in the 1980s and 1990s, why India is rocking now and why eastern Europe will outperform western Europe.
Drucker's Law. The greatest results in business and career are acheived if you drop the word "achievement" from the vocabulary & replaced with "contribution". Contribution puts the focus where it should be - on your customers, employees and shareholders.
Ogilvy's Law. Ogilvy's russian nesting doll had a message inside - It read: "If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants." Ogilvy knew in the 1950s that people make or break businesses. It was true then; it's truer today. Amazing compilation - well articulated and deeply insightful indeed!!

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