Dot-com visionaries were wrong to predict that the "Internet will change everything." The rules of the game of business remain constant: providing value to customers and profits to shareholders. But in the past 15 years, the "arena" in which businesses compete has been transformed. All four of its walls have been replaced--and so has the floor.

Here are the old and new arenas:

Wall One: The Global Economy Replaced the Berlin Wall

The Berlin Wall was torn down in 1989, ending the Cold War. At the root of the downfall of the Iron Curtain was the inability of totalitarian societies to compete in a knowledge-based economy. It was not capitalism that triumphed so much as the pace of change inherent in free-market economies.

In 1992, Francis Fukuyama wrote "The End of History," in which he argued that democratic capitalism had beaten every rival system of government - communism, fascism, dictatorships, monarchies, etc. There remain other dysfunctional societal and economic models, of course. But these are destructive models, such as those of Al-Qaida or North Korea.

Samuel Johnson once said: "Man never does less damage than in the pursuit of commerce." A market-driven society might be distasteful aesthetically or trivial morally. But it has no incentive to be evil, unlike totalitarian societies that tyrannize on behalf of ideology.

Wall Two: The Triumph of Lean Manufacturing Over Mass Production

In 1991, an MIT research team led by James Womack wrote: "The Machine That Changed the World: The Story of Lean Production." The book described the three models of manufacturing in the international automotive industry:

• U.S. Mass Production: High-volume and low-cost but inflexible, with quality inspected at the end of the assembly line.

• European Craft Production: Cars are produced by teams of skilled craftsmen, one at a time. High-end brands such as Mercedes and BMW did it best, though efficiencies and cost suffered.

• Japanese Lean Production: Continuous process improvement intertwines statistical process control and worker empowerment to eliminate errors before a car is made. As practiced by Toyota and Honda, it allows for low-cost, high-quality products and market flexibility. Lean production was invented by Americans such as Edwards Deming and enthusiastically adapted by the Japanese after World War II.

Today, lean manufacturing has won decisively. Just as there are no functional economies today that are not free markets, so only lean manufacturing survives. All auto manufacturers use it, some better than others.

Moreover, lean, flexible methodologies such as Six Sigma are revolutionizing services as well. General Electric, Dell and Wal-Mart thrive in commodity industries because of their ability to reinvent their markets using lean principles.

Many feel that Japan's recession economy of the past dozen years is substantially attributable to internal resistance to applying lean principles to rationalize Japan's retail, back office and banking sectors of the economy.

Wall Three: The Death of Vertical Integration and the Rise of Outsourcing

In the 1920s, Henry Ford's gigantic River Rouge complex produced every component of his cars, turning rubber from Ford rubber plantations into tires and iron ore into car frames.

But in the 21st century, vertical integration is almost unknown. The re-engineering of the world's Fortune 2000 companies in the past 15 years resulted in a large increase in the outsourcing of corporate functions outside of a company's core competence or value proposition.

Companies routinely outsource component manufacturing and nonstrategic services to specialist suppliers, and focus their resources on the bigger picture. This further drives the globalization trend.

Wall Four: Abbreviated Product Life Cycles

Product life cycles have shortened drastically in nearly every industry. Those that lasted decades, such as heavy equipment, have shortened to years; those that used to take years, such as those for software, now take months; those that used to take months, such as in the entertainment industries, now take days; and those that used to take days, such as in the news media, now take hours. Competitive "barriers to entry" have never been more tenuous.

The Floor of the Arena: Information Technologies

The floor of the business arena is now made of standardized Internet technologies, which enable worldwide collaboration inside of companies and with customers and vendors. The ice is much faster, and the "puck" bounces more quickly off the four walls of globalization, lean production, outsourcing and shortened product life cycles.