Except for those lucky enough to be in the technology sector, small and medium-sized companies today are stymied for growth. Their customers will neither buy more units nor pay higher prices, which leaves both sales growth and profit growth in the low single digits.

The Internet provides these companies with exciting new growth opportunities by allowing them to partner with other companies. Both companies benefit by specializing in that part of the work where they have a true advantage.

But there is a catch. This Internet growth strategy will only work for the one or at most two companies in an industry who are both fast moving and well-positioned for the opportunity. For the rest it makes things even tougher. Let me tell you about how two companies with which I am associated have made substantial gains through net-based partnerships.

One of our companies is a leading wholesaler of contact lenses - a highly competitive business if there ever was one. We sell prescription contact lenses directly to eye care professionals - ophthalmologists, optometrists and opticians, together called the three O’s - who in turn provide them to their patients.

About 60% of contact lens sales in the United States are routed through these professionals. This has a lot of advantages for you as a customer. You get high-touch, local service. You get to order your lenses from the same optometrist who fitted your prescription, the same ophthalmologist you will go to when you have an eye infection, or the same optician who repairs your glasses. It’s good for the O’s too, giving them regular contacts with their patients and a steady source of incremental income for their practice. That’s why the O’s encourage their patients to buy through them rather than through retail chains or direct sellers.

But the process can be rather cumbersome for both doctor and patient. You call your optometrist to put in an order for tour next three months of replacement disposable lenses. Since there are more than 300,000 different lenses in the market - different size, correction, curvature, color, manufacturer, and so forth - it is not possible for each doctor to keep the lenses you need on hand. So, either the doctor or a clerk in the doctor’s office calls the order in to a wholesaler like us at the end of the day. We pick, pack and ship the lenses to the optometrist by the end of the day. A day or two later the optometrist's office calls you and tells you to come and pick up your lenses. You stop off on your way to the cleaners, park your car, go into the doctor’s office again and pick up your lenses. The billing process is equally circuitous and time and labor-consuming, with the doctor collecting from the patient, the wholesaler collecting from the doctor, and the manufacturer collecting from the wholesaler. As a result the high-tech direct sellers - who will take your order by phone, send the lenses directly to your house and allow you to pay by credit card-- have been gaining market share at the expense of the doctors - our customers -- for some time.

Here's how we used the Internet to both increase our share of this hotly contested market and help our doctor customers protect their market share from direct sellers. To start with, we chose the number one wholesaler in the industry as a platform for our investment. The have the management, the systems and the processes to handle the doctors’ business. We built a sophisticated e-commerce operation for the company that provides a separate tailored website for each O in the United States, all 50,000 of them. The websites are highly personalized to the doctor’s practice, with his or her own unique website address, content, logos, photos and interactive messaging capability. We get no branding from any of this: The site is identified purely with Dr. O. His or her patients can have their contact lens prescription filled with their doctor’s prescription by simply clicking on the site.

Only when you click on the site, the order goes directly to our company where we verify the prescription and ship the order directly to your home that same day. The optometrist can do a better job for his patients, providing them with content as well as product. The doctor and his or her staff can spend more time with patients and less time placing orders with us, handling product, and billing. We give them their own personalized website which they can use to schedule appointments with their patients, provide them with all marketing materials for their patients, and teach them how to use the site.

Patients get the touch of dealing with their own professional and the convenience of dealing with a direct supplier. And we, of course, get the order. It's a partnership from which everyone gains. And it wouldn't have been possible without the Net.

The second company involves graphic images. We own a company that builds picture-framing materials in a factory in Mississippi. We sell framing materials directly to art publishers and framing shops, and we sell both preframed and custom framed art to retail customers through a chain of company-owned shops as well as through leased departments in large department and hardware stores. Our chief competitive edge is that with our own factory and centralized fulfillment capability we can sell at lower prices and faster delivery times than local frame shops that have to order the framing materials for each job after they take your order. When you walk out of one of our shops in Atlanta, for example, your order has already been transmitted electronically to our framing center in Memphis, where the frame will be built and the mat cut to order the same day. So our stores are more profitable and out returns on capital when rolling out new stores are higher than most competitors. Still, it's a slow-growing business.

Enter the Net. We are forging a partnership with a prominent company that owns an enormous catalogue of digital images. Our partner has been selling these images on the net. You search their massive database using keywords to select jus the right image for your wall. Then you give them your credit card number and buy the right to download the image for your personal use.

Selling the images is a great business. Marginal costs are close to zero; there is no inventory to finance. You can sell the same image thousands of times. But for one problem; some customers don't want to buy images. They want to buy pictures to hang on their wall. Order an image and you have to schlep it to a frame shop and maybe wait two weeks or more for the finished product. Not the best way to encourage sales to I-want-it-now consumers.

Their partnership with our framing company will allow the image company to offer its customer a richer experience. They can choose an image, select the mat and frame they like best, and view the finished product on the screen. Click on the site and you can send the order directly to our fulfillment center in Memphis where we will print a single copy, mat and frame it, and send it directly to your home. Within a few days from your click you get a picture ready for hanging and framed to your exact specs. And, because the art is digital, it is scalable. You can specify dimensions to fit the space above your sofa.

The image company will be able to stick to what they do best, e-commerce. It did not have to go into the frame business. It did not have to get into the shipping business. And we get the order for all the fulfillment business, which could dramatically increase our revenues and better employ our capacity.

Think about this for a moment. Both these arrangements involve tying the service and fulfillment capability of one company to the selling or producing ability of another business, exactly the same specialization of labor that Adam Smith wrote about long ago. It's no different from the way mighty Cisco an other New Economy companies do business: More than half of the orders that go to Cisco are routed directly to a supplier who does everything to fill the order. All Cisco does is bill you and pay the supplier…

Our little frame company stands in relationship with the big image company in exactly the same way that Cisco's suppliers stand to Cisco. The customer interface is Cisco: But just about all the physical work is done by the supplier.

The supplier gains by its relationship with Cisco's superb reputation and marketing. Cisco gains by its ability to satisfy its customers without having to build a manufacturing plant or create an order fulfillment infrastructure. Cisco--as is explained elsewhere in this issue--is able to build its business without requiring constant infusions of fresh capital.

In both cases--the frame business and the lens business--we were able to tie our fulfillment capabilities to a net-based partnership, which benefited both parties. Better yet, the relationship improved the consumer experience at the other end.

In your business can you identify net-based partnerships that could make sluggish sales grow again? I suspect you can. Just look around and let your imagination flow.