By Simon Bond 

Zero-sum is a situation in game theory in which one person's gain is equivalent to another's loss, so the net change in wealth or benefit is zero. A zero-sum game may have as few as two players, or millions of participants. In the financial markets, options and futures are examples of zero-sum games, excluding transaction costs. For every person who gains on a contract, there is a counter-party who loses.

As the new economy cannibalises the old economy growth keeps getting harder and harder to come by. Many large businesses have seen "peak profits", and may never see anything more than low single digit growth, if any growth at all. To add, many public companies these days are managed by CEOs who run with the hares and the hounds. They succumb to the interests of the few who are in business for the quick turn and have no interest in growth or creating employment. 

It is crystal clear that what we are seeing on a massive global scale is the new economy cannibalising the old economy. In some cases this is so powerful that total revenue growth in many sectors, ie retail, has actually declined. Online and offline revenue together has shrunk as the new attack the old. In other words a zero or negative sum game.

Many of the commercial activities facilitated by the internet suppress growth and job creation in traditional businesses that have long supported the economies of the developed world, and this is an ongoing and hugely disruptive trend.

Again we cite the examples of Uber and Airbnb as businesses that don't just disrupt, they change the game. As old company revenues and profit growth stalls due to the online onslaught in many cases they just never recover. Recall our ongoing notes harping about the fact that so many businesses will just simply cease to exist. Gone. We also mentioned that following the results from Google, Amazon, Facebook and Microsoft their combined market capitalisations gained over 100 billion US dollars so they must be doing something right. Last week Expedia announced that it will acquire Airbnb competitor HomeAway for 3.9 billion USD. It took Hilton Worldwide nearly a hundred years to achieve a valuation of 25 billion USD, a feat that Airbnb achieved in just 7 years.

The sharing economy increases efficiency and sustainability by better utilisation, waste reduction and easing resource intensity. This quote last week from Airbnb stood out, "We'll spend what it takes to succeed."

The current market capitalisations of the listed heavyweights in US dollars are; Facebook 306.4 billion, Amazon 307.3 billion, Apple 672.4 billion, Google 514.2 billion, Microsoft 434.4 billion, for a total of 2.24 trillion dollars. The total market capitalisation of the Australian stock market is around 1.5 trillion AUD, or less than half of the 5 companies above.

The concept of cannibalisation is more straightforward in retailing than anywhere else. Despite the rapid growth of online retailing, it only accounts for about 10% of total retail sales in say, China.

This means that holding everything else constant, every 10% of growth lost in physical retail channels will have to be made up by a 90% growth rate in the online sales. According to the National Statistics Bureau, during the first half of this year, total retail revenue grew 10.6% year over-year, versus 12.4% during the first half of 2014. The value of online sales, however, grew 39.1% year-over-year in this first half.

There are signs that online sales growth is now flattening-out. The 39.1% year-over-year growth in Chinese online sales during the first half of 2015 marks a noticeable slowdown from the 48.3% registered in the first half of 2014. This exerts yet more pressure on total top-line growth: if online sales growth is not fast enough to counteract the slowdown in the physical channels, then total top-line sales growth will be in serious risk of turning into outright declines.

In a global economy increasingly driven by technology what skills should we humans focus on learning in order to remain relevant in the future of work. In Geoff Colvin's latest book titled; "Humans are underrated, what high achievers know that brilliant machines never will" he details some of the attributes that are becoming more valuable to society and business.

Relationship building, teaming, co-creativity, brainstorming, cultural sensitivity, ability to manage diverse employees, right-brain skills of social interaction, those in accountability roles, interaction jobs, and those able to build relationships (“the most valuable people are increasingly relationship workers”).

Perhaps most interesting are the leadership qualities needed in our new world. “An additional effect of technology is that it forces organisations to change much more quickly than ever before. Basic business models used to last for decades, sometimes many decades; the newspaper business model lasted for 200 years. Now technology is outmoding long-standing models in almost every industry—media, retailing, autos, energy, professional services, health care—and the new models, whatever they are, won’t last nearly as long as the old ones before they too get replaced.