1. Increasing Returns and the New World of Business Presented by: Alexandra Mezhenina Vladimir Fedotov Yaroslav Pavlov By W. Brain Arthur

2. New reality of economy Transformation from application of raw energy to application of ideas, from resources to information

3. Two economical worlds World of diminishing returns World of increasing returns

4. Diminishing-returns world Commodities production depends heavily on resources and lightly on know-how Diminishing returns and nearly perfect competition Still exists in modern economy in bulk processing

5. Increasing-returns world New rules of the game Market became unstable, unpredictable…

6. The reasons of this phenomena Up-front cost Network effects Customer groove-in

7. Factors of new system Flat hierarchy, mission orientation, flexibility in strategy… Because: adaptation never stops every participant of the process becomes very important

8. Playing the high-tech casino Discount strategy Psychological positioning Cross-company mutual feedback

9. Increasing returns in service-industries Services can also be described in terms of this phenomena Two consequences: A lot of small companies concentrated on one service Winner-take-most

10. Managing two economical worlds Do I understand the feedback in my market? Which ecologies I am in? Do I have resources to play? What games are coming next?

11. Thank you! Comments Questions yaroslav.pavlov@gmail.comyaroslav.pavlov@gmail.com - Yaroslav Pavlov sasha.gsom@gmail.comsasha.gsom@gmail.com - Alexandra Mezhenina vaavilen@yandex.ruvaavilen@yandex.ru - Vladimir Fedotov