Fortune magazine dug into the problems in a recent article entitled “Tearing up the Jack Welch Playbook.” By making fixed costs more variable (ie outsourcing, partnering, and focusing on core strengths), corporate success stories now come from agile companies with streamlined business models that do not require scale but with technology that can (Fortune article)

Software tools that allow instant publishing of opinions, news and information are totally changing the political landscape. Politicians are abusing the flexibility of this new medium by editing their opponents pages as well as enhancing their own (Charlotte Observer article) as covered in this recent article. Flexibility is not a license to cheat however and those indiscretions had to be monitored and made less flexible (try editing President Bush’s wiki entry for instance).

Apply flexibility to your business life. Get down on the floor and stretch. Get your employees and co-workers and clients to do it with you. Try to gain back some of the mobility you had when you were younger. Use it as you go about business today. It may bring a little tightness tomorrow, but you will start to see the results almost immediately in other aspects of strength and agility.

Another auto example is how things don’t work – like the fuel door on my 2004 Honda Odyssey being in the way of the drivers side sliding door when refueling. Toyota rode 100,000 miles with Mom’s before they redesigned the Sienna and the result is new leader in the mini-van category. Customer inputs made that redesign a huge succes for the auto maker.

Customer-focused works for physical space too. Architects have gotten into the groove using charettes – a combination of town hall meeting, brainstorming and old-fashion teamwork to design solutions that solve customer needs. How Buildings Learn by Stewart Brand has some great examples of space changing over time becasue of customer needs. Who among us hasn’t edited our own homes with personal decisions based on our lives?

More importantly, customer focused works for organizations. Nordstrom is famous for their customer service, but it stems from their organizational chart – an inverted pyramid with the Board of Directors at the bottom and Customers at the top. Building customer-focused organizations starts with just that type bent. In The Roaring 2000’s Harry Dent described a little different tact on customer-focused organizations by having the sales people empowered to make decisions and recommendations to help customers more. His perfect company of the future was only seen in the background (like so many eBay entrepreneurs) while creating customized service for each buyer.

Customer-focused seems like common sense. After all – without any customers, you don’t have a business. But in a recent Inc. Magazine survey, CEOs of the fastest growing companies listed their top concerns as: competitive strategies, managing people, keeping up with technology, managing growth and finances. Nary a “customer” focus among them.

Going forward we can all improve on our customer focus. Try adding customer inputs to your next project whether that be home improvements or product development or application design. Chances are you will find a better solution based on the improved inputs.

SIMPLE is not new. It is common sense. And it has been around since the beginning of business. Peter Drucker wrote about Simple in the 1950’s. I listened to Bill Jenson (Simplicity – The New Competitive Advantage ) at a Fast Company Real Time conference. His whole approach seemed right about stripping away the complex to focus on what was important in business – any business. Clarity of purpose is Simple. Very hard – but Simple nonetheless.

Simple is stripping away the old (200 channels and nothing on) with personalized info (Tivo). Simple is not spending 2 years writing requirements for an application, but using faster tools and processes to deliver an application that just does one thing well (iPod, Palm, Basecamp, Blinksale examples). Simple is applying the right people to a task and focusing only on core competencies. For individuals and companies alike.

In today’s web development world, simple is more like the Hollywood movie studio model. Bring in the best talent for lighting, editing, acting etc. and then release them when project is done. Simplify down to what you do well and focus on it. Common sense.

In Jack Trout’s book The Power of Simplicity , he quotes Alfred P. Sloan, Jr. as the CEO of General Motors in 1944 telling Peter Drucker to only put down “what you think is right” in his consulting report on the great company. Simple guidance for any consultant. We should all strive for this simple target.

“Nothing is more simple than greatness; indeed, to be simple is to be great.” Ralph Waldo Emerson

Now it’s all about instant gratification. Who wants to be a millionaire? Everyone. Who wants to work 40 years to earn the security that comes from being a millionaire? No one. Smith Barney had it right 15 years ago: “We make our money the old fashioned way… we earn it.”

That message is passé today. Boomers want youth in a pill. Youth wants instant clout. Society wants fitness in a bottle. Lose 10 pounds this weekend on the Hollywood Diet. “Eat-anything-you-want-and-burn-fat” infomercials promise all that and rock hard abs in three minutes a day. What ever happened to eat less, exercise more?

Business caught the same disease. Employees demanded stock options and unrealistic salaries. It became less about working for something, and more about being due those perks. Executives blindly followed Internet fiction. And companies foolishly paid ridiculous amounts to get it because they were scared their competitors might beat them to the promised land, scared that the startups’ “increasing returns” rationale was indeed rational, scared that without being the first to market they would be forced to pay a huge multiple of the newcomers’ costs.

They were scared because they didn’t have all the facts. Nobody did.

Intelligent people invested serious money in terrible ideas, ones that didn’t make sense for any economy. How many pets do you know who shop for food on the Internet? These ideas were based on the “dollars for eyeballs” falsity that after building market share, a company could achieve increasing returns. Profitability would obviously follow that.

The media fed the frenzy. Suddenly IPOs, stock options and exit strategies were in fashion. First time entrepreneurs told the world (and many actually believed their own press) that they had the skills necessary to run public companies. Unbelievably, investors didn’t balk. Even more farcical was the notion that only time stood in the way of these ventures putting stodgy brick and mortar companies out of business. Few pundits bothered to mention that the old school companies had actual paying customers.

The fiction continued with valuations that were just plain ludicrous.

Somehow many believed that “best to market” no longer mattered in the face of “first to market.” And venture capitalists did little to lead protégés with time-tested business acumen. Many individual and institutional investors believed—mistakenly—that those companies’ fantastic success was based on talent and not timing. Today those same investors must decide which ideas have any value and which should be cut off from further investment. It should be an interesting tax return season.

A few sobering links may further qualify these ideas. The Internet Wasteland chart shows more than 250 companies whose value has dropped over 90% in the past 12 months. Investors will ultimately decide their fate.

Others may not be so lucky. A recent Industry Standard article lists more than 250 publicly traded firms in danger of being delisted by their stock exchange. Delisting is death for a public company. Most mutual funds and hedge funds do not permit ownership of stocks not listed on the major exchanges. And there are not enough individuals interested in penny stocks or pink sheets to merit keeping those businesses afloat. The public trough is dry and these companies are dead. They just haven’t locked the doors yet.

Supply and demand, monetary policy, interest rates and wage expectations: it seemed so complicated and “old school” in college economics class. It seems so clear today. The markets work. And it takes hard work to build businesses that survive in markets.

Welcome to the new millennium, when the economy matters, just like it always has. When success depends on the simple time-tested theories of supply and demand. When customers have more information to make better decisions than ever before. When Internet technologies further enhance the ultimate decisions of those customers—buying decisions.

And when common sense makes a most welcome comeback.

Many of today’s business headlines are garnered by companies that have sold their souls for startup money. Instead of taking the time to define their core values and build a solid business foundation, Internet companies are jumping right into the development of glossy business plans and slick marketing tactics. They have marketing departments and PR firms, but no sellable solutions. They have ideas, but neither the knowledge nor the ability to carry them out. They have sales organizations, but no service understanding. They hire resumes instead of people.

They don’t understand what a true Internet company is all about.

The fact is, a true Internet company is no different from any other successful business in that it must stand for something; it needs core values. It needs focus. It needs a spine. Despite what you read in Internet publications and the popular technology trades, true Internet success is based on the fundamental principles of service, quality, knowledge, relationships, commitment, innovation, individual respect and integrity. A true Internet company isn’t seeking funding.

A true Internet company reinvests its earnings in the people and the process. It is made up of individuals who genuinely understand the medium—because they believe in it. People who are missionaries for the medium, not mercenaries for the dollar. People with years of exposure to the evolution of the Internet. People who weren’t insurance agents last year or real estate brokers in March or investment bankers last month. They “get it” in a way that newcomers will not understand for years. They believe in the medium, not just the paycheck or the stock options or the BMW.

True i is the guiding philosophy at Vialogix. It is a belief system based on the understanding that the Internet has fundamentally changed customer relationships forever. Companies used to be in control of the information—but today, customers are in charge. True Internet companies develop solutions for those customers. They don’t confuse the business model du jour with the fact that success comes from having a solid business plan based on serving those customers.

A true Internet company uses a browser or a WAP phone or a PDA to deliver compelling information. It uses those same tools to reduce costs and share information with employees and suppliers and customers—and it has done this for years.