To succeed in the Internet economy, companies must undergo a pragmatic revolution — deconstructing existing processes and organizations and reinventing them to meet new market demands. At the Forrester Executive Strategy Forum in Boston, more than 800 corporate leaders gathered to learn how they must reshape their external business relationships and internal organizations to meet the real-time demands of the Internet economy.

“Most companies understand that the Internet economy requires the introduction of new business models and technologies,” said John McCarthy, group director of Research at Forrester Research, Inc. (Nasdaq: FORR). “But few companies have figured out which business models will thrive or how to integrate their eBusiness initiatives with existing operations. To successfully implement all of these changes, companies must go through a pragmatic revolution that reshapes existing practices and processes.”

At the heart of the Internet economy are eBusiness networks — interdependent networks of suppliers and customers. These eBusiness networks accelerate innovation by breaking down long-term relationships with customers and suppliers. Likewise, eBusiness networks will drive liquidity thresholds to zero by pushing down transaction costs and enabling more efficient markets to form. Finally, eBusiness networks increase the competition for outside resources, forcing companies to virtualize and bring vertical integration largely to an end.

There are five business model archetypes that Forrester expects will thrive in the eBusiness environment. Consumer magnets are companies that turn relationships into an experience. Transformers are companies that dramatically transform the value of a product or service by optimizing it. Broker/intermediaries are companies that aggregate supply and demand, matching buyers and sellers online. Industry specialists are companies that deliver highly focused expert services, doing one thing incredibly well. Infrastructure providers are the companies that deliver trusted horizontal services on a large scale.

When asked which of the five archetypes that audience members thought their companies will be in 2001, 11% identified consumer magnet, 13% selected transformer, 7% chose broker/intermediary, 14% said industry specialist, and 19% thought infrastructure provider. Thirty-four percent indicated that they believed their company would combine two or more of the archetypes.

Forum attendees also acknowledged the growing importance of eCommerce to their companies’ future revenues. Twenty-six percent of audience members indicated that their companies will sell more than $10 million in goods and services online in 1999, an increase from 21.9% at last year’s Forum. Twenty-nine percent of the attendees indicated that their companies will purchase more than $1 million in goods and services online in 1999, up from 18% last year.

The Forrester Executive Strategy Forum was the last of seven Forrester Forums that took place in 1999. Forrester Forums are designed to provide opportunities for senior executives to informally share ideas, discover the latest technology tools and vendors, and develop successful business strategies. Six Forums are planned for 2000, beginning with the Technology Leadership Forum in Scottsdale, Ariz., on February 28-March 1.