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What will business look like 25 years from now?

To the consumer, probably not hugely different, just much more convenient and responsive.

Sure, many of us - if not all - will purchase our goods and services without leaving our home or workplace, using some device that gives us permanent and instant access to the outside world. And we will pay in new ways.

But in some ways the experience might be closer to the old days of dealing with your friendly shopkeeper than we might imagine. New economy guru, Esther Dyson, for one, believes the evolution of technology will be toward making relationships with machines more human, and we will be more likely to deal with a person on the other end of the line or wireless connection than a cold computer interface.

And, while many of the brand names might be new, a lot of the product names will be as familiar to us as they were our parents. Brands are showing more than just a tenacious survival instinct, they are seemingly thriving as never before in the emerging new economy.

But behind that façade, doing business will be a whole new ballgame. The information revolution is now in full swing and it is moving us toward an almost mythical state of perfect competition – the frictionless economy.

One of the pre-requisites for genuine competition in a marketplace is perfect information – the ability of buyers to know all they need to know about products being offered for sale.

But a market with perfect information has always been a theoretical device, seemingly unrealisable in the real world.

Imperfect information has been the natural state of the world of commerce and has been the most important determinant of the way the business world operates. Not just between retailers and consumers, but business to business and in the internal organisation of companies.

The information required to run a business day to day, hour to hour or even minute to minute has always been constrained by geography, which created "friction" preventing markets flowing as smoothly as they should in theory. So commerce evolved corporate structures to internalise markets and overcome these dysfunctions. That's why a business manufacturing tyres also had its own sales business, marketing business, advertising business, public relations business, human resources business and even accounting and legal businesses. Sure, they occasionally employed external advice, but usually this was in addition to the work done in internal divisions and often only on an ad hoc basis.

Sometimes, this process of internalising processes to achieve control reach its zenith in single companies. The raw materials to make steel went into one end of Henry Ford's massive Dearborn factory and cars rolled out the other. Ford even had its own social welfare and family guidance programs.

And when these businesses sought to expand into new markets, such as Australia, they set up miniature versions of the same systems, which saw the branch offices of Ford and General Motors designing and building their own, unique cars and supplier networks.

Well, guess what? Information technology has liberated the flow of knowledge, and it is only the imagination of management that prevents the old points of friction from being wiped away.

To get an idea of what that will mean in practice, take a look at Silicon Valley. Not at the technologies themselves, which boggle the minds of anyone not imbued in the black arts of the IT&T world, but at the way businesses there are created and operate. On that one peninsula south of San Francisco is a remarkable glimpse into the future of business worldwide. People with bright ideas partner with people with financial clout to get the money they need to partner with other people with the technical expertise needed to turn the ideas into products.

But they don't do it in one company. They form webs of companies and alliances that each add their special value. Out of this develops new businesses at a pace never seen before, creating wealth and high paid jobs at a similarly unprecedented speed.

Established companies are learning the same lessons. Shoe companies need no longer make shoes. They own the right to have shoes made by other businesses who specialises in running factories, have them marketed by people who devote their careers to understanding how to read and anticipate markets, and have people who specialise in distributing goods get them to retailers who know how to get you and I inside the door to spend money.

Markets will be vertical as long as people continue to want more than one pair of shoes. They will also span the globe, as those who are best at meeting market needs find geographic limitations on their customer base are wiped away by new communications technologies. But the business of supplying shoes to meet the market is really a series of horizontal businesses piled one on top of the other. Specialists rule the new economy.

So why on earth would Ford president, Jac Nasser, want to run around buying up independent Ford dealerships all over the US when the company has spent the past decade outsourcing more and more of its design and manufacturing processes?

Because the glue that holds the new business web together is the brand. It is the interface between all the companies working together and the consumer. At every stage of the process, the values represented by the brand – quality, cost, reliability, high fashion, whatever – have to be the guiding light directing every activity.

Nasser does not want to be running car lots or servicing vehicles, but he has to make sure that everyone who uses the Ford name subscribes to the same corporate and customer service ethos. Once he is satisfied that all those doing things in Ford's name share a single vision, the company will gradually bow out. Nothing is surer.

And why does the frictionless economy mean governments need to understand the venture finance markets?

Because the foundation of the most valuable new businesses today are ideas. The factories for ideas are inside people's skulls, which are just as likely to reside at the kitchen table as anywhere else. Turning ideas into products does not mean building factories devoted to them, but convincing others to do so. And that means the businesses inventing the new core values probably will never have the buildings and plant and equipment to provide the security needed for them to get loans from banks.

And if businesses increasingly become alliance networks rather than monolithic companies, no one will build huge labs in the hope of owning ideas factories funded by past successes. The new ideas needed to keep the processes going will come from small companies or bright individuals.

The money to take an idea from the garage or kitchen table of a visionary has to come from people who specialise in betting on brain-power, the riskiest gamble a financier can make.

Therefore, people with the skills and courage to make those investments are at the core of the new webs of businesses that are replacing the single corporation in those industries at the cutting edge of new wealth-creation. If Australia wants to create wealth and knowledge, not mortgage its future to buy knowledge in, it has to find a way of encouraging those key elements to emerge, just as Israel has apparently done.

The new business world will be divided into high-paying jobs and low paying jobs as never before. Sometimes, even those that are among the most global and dependent on the most advanced information technologies will still be just employers of process workers. Regional call centres might require highly trained staff. But they might require staff with no more than language skills and the ability to direct telephone traffic to where the real skills reside.

Australia could continue to congratulate itself every time it attracts an Asia-Pacific call centre and not worry about its creating the products being serviced by them. But it might want to consider why most shoes that once were made in factories in Melbourne, Sydney and dozens of regional towns are now stitched in places such as The Philippines and India. Skills that are not unique can be exported, and will go where the price is right.

Owning an idea allows one to create a brand, and that puts one at the core of a web of value creation. In a world economy where the only friction is intellectual, the further you move from the centre of the value web, the more diluted becomes your share of the wealth.