From: Max More (max@maxmore.com)
Date: Sat Jun 29 2002 - 16:34:04 MDT
Here's an interesting article by Hal Varian, who some of you heard speak at
EXTRO-5:
Netting A Profit [Explore More]
Optimize by Hal Varian , published on 05/10/02 , rated [][][][][]by our
experts.
http://www.manyworlds.com/logcontent.asp?coid=CO590216363334
Ha! Invariably, Hal Varian brings us deep insights into Internet economics
and related business. In this article Varian presents the results of
fascinating and comprehensive research he did with Robert Litan of the
Brookings Institution and a team of researchers from the Momentum Research
Group. Their goal was to examine and quantify the Internet’s effects on
productivity and profitability. Despite widespread cynicism following the
dot-com failures, this research demonstrates conclusively that the Internet
is continuing to act as a major driver of cost reduction, revenue growth,
and productivity improvement. Most companies were only partway through
their Internet implementations and so considerably more progress can be
expected in the years ahead. Although a majority of companies oddly have no
formal procedure to track the impact of their IT investments, plenty of
information remained for the researchers to discover such facts as the key
factors that correlated with increased revenue—the same factors that
correlate with cost reduction along with supply chain management in the
latter’s case. Varian packs plenty of information into these five pages,
including differences between effects on company, industry, and economy
productivity, differences in US and European attitudes, obstacles to
successful deployment, and why the results suggest optimism for the US
economy.
My reviews of some other relevant items with varied but generally positive
perspectives:
Response to ''The Internet and the New Economy''
Internet Policy Institute by John Zysman; Stephen Cohen; J. Bradford DeLong
, published on 01/31/00 , rated [][][][]by our experts.
http://www.manyworlds.com/logcontent.asp?coid=CO10310019541786
These three economists take a more optimistic view than Alan Blinder in his
paper on IT's contribution to the recent acceleration in productivity. They
argue that this acceleration can be sustained, that what has been measured
is only a fraction of the whole phenomenon, and that the most important
effects of IT will be on structural changes in the economy that it will
trigger. [4 pages]
Internet II: Rebooting America
Getting real and getting it right
Forbes ASAP by Michael Malone , published on 09/10/01 , rated [][][][]by
our experts.
http://www.manyworlds.com/logcontent.asp?coid=CO9240115435464
This refreshingly optimistic and invigorating article by Forbes ASAP editor
Michael Malone argues that the “biggest economic boom in history is bearing
down on us”. Written one day before the terrorist attacks of September
2001, Malone’s perspective nevertheless is more than mere feel-good
vapor-text. He argues that all the signs of a massive turnaround are in
place and will play out over the next four or five years, peaking in 2004
or 2005. The boom will come partly from the upward swing in several cycles
including that of computer chips, but also wireless technologies, universal
broadband access, unlimited server availability, and real-time enterprise
computing. This is Internet II, or the ultranet or meganet. Malone argues
that the Internet II will deliver on what the original Internet promised.
The boom, however, is not inevitable.
The coming boom will be powered by the return of the high-tech business
cycle (previously masked but not gone) which will soon begin to lift us. In
addition, venture capitalists are flush with money and investing in a new
generation of technologies, and a large supply of entrepreneurial fervor
exists. Malone says that trends in optical fiber, semiconductors, the
Internet, online transactions, and languages and interfaces are converging,
pointing to a massive economic boom in three years (2004-2005). The
Internet is not dead, it is molting, says Malone, and he backs up his
dramatic claims with evidence. All this optimism, however, is conditional.
Rather than a pollyanna view of the future, Malone emphasizes the poor
condition of several aspects of the USA’s infrastructure. With all the
changes ahead, the infrastructure will need massive upgrades or else the
big boom will be merely a boomlet or may not happen at all.
The Hypernet Cometh
Intelligent Enterprise by Don Tapscott , published on 03/27/01 , rated
[][][]by our experts.
http://www.manyworlds.com/logcontent.asp?coid=CO12120120284845
Tapscott writes with characteristic gusto about the “hypernet”, his term
for what will succeed the Internet. The Hypernet will emerge from the
convergence of mobile computing devices, broadband access, wireless
networks, and embedded chips to form a vast global network. Tapscott sees
this fueling exponential change in business model innovation and expanding
the boundaries of firms. Quoting Ray Kurzweil, Tapscott plausibly claims
that we “on the second half of the chessboard” (where each square
represents a doubling, from 1 to 2, to 4, to… 18 million billion). The
consquence is that the change we have seen in the last years pales in
comparison to what lies ahead. This article gives a few near-term examples
and argues that adoption rates are accelerating. This brief article does
not go into any detail, but does state that business model innovation will
be essential in the HyperNet, a view with which we would agree.
What's So New About the "New Economy"? Glad You Asked ...
Business 2.0 by Staff , published on 08/14/01 , rated [][][][]by our experts.
http://www.manyworlds.com/logcontent.asp?coid=CO8140121195865
This multi-section article provides a good overview of the enduring changes
wrought by the information economy, despite the recent downturn. It
examines the deep changes in leadership, entrepreneurship, manufacturing,
financial services, and marketing. Leaders have to deal with the erasing of
old industry boundaries and must learn how to connect people rather than
lock up information. Jim Collins says that “the true golden age of
entrepreneurship is in front of us, not behind”, though the article
separates the emergence of new true entrepreneurs from mere “opportuneurs”
(the “day-traders of entrepreneurship” as Sam Hill puts it). You will find
interesting observations in the other sections also.
And Then, Just When You Thought the "New Economy" Was Dead ...
Business 2.0 by Jerry Useem , published on 08/15/01 , rated [][][][][]by
our experts.
http://www.manyworlds.com/logcontent.asp?coid=CO814013525238
This amusing yet substantial article tackles the issue of whether the “New
Economy” is dead, or just taking a break. The author begins with an
anecdote from Davos showing how heated and personal the debate can be.
Michael Porter, representing the old guard, and Don Tapscott, representing
the “Internet changes everything” side criticized each other on stage and
in writing. The author goes on to do a good job of clarifying the issues,
beginning with clarifying just what we might mean by a new economy. It now
seems implausible to see the new economy as a guarantee of sustained high
profitability for leading edge companies. Network effects were
over-emphasized with insufficient attention being paid to barriers to
entry. Yet, the author sides with those who argue that, like previous
economic manias (the canal in the 1830s, radio in the 1920s, electricity,
and so on), the Internet frenzy is creating spillover effects that will
greatly benefit consumers.
He goes on to examine the disagreement about productivity acceleration
since 1995, coming down on the side of those who argue that the improvement
is real and will continue to have an affect as organizations modify their
organizational processes to take advantage of the new technologies. The Net
is only just reaching the 50% penetration rates that marked the powerful
productivity gains of previous technological revolutions. The last part of
the article looks at the likely impact on organizational architectures as
interaction costs decline, leading to unbundled corporations. The
experience of Enron is given as an example. These changes do not imply
massive profitability, but do mean organizational and cultural change,
productivity enhancements, and economic benefits. (6 pages)
Is the Information Revolution Dead?
If history is a guide, it is not.
Business 2.0 by W. Brian Arthur , published on 02/01/02 , rated by our
experts.
http://www.manyworlds.com/logcontent.asp?coid=CO213021721326
Brian Arthur, closely associated with the idea of increasing returns in the
economics of information, provides an encouraging historical perspective on
technological-economic booms and busts. By looking at several previous
revolutions—the Industrial from about 1760 to 1820, the railway revolution
from 1825 to 1875, the steel and electricity revolution from 1875 to 1920,
and the manufacturing age from 1910 to 1970—Arthur distinguishes three
typical phases. In the early phase, a new technology enables a cluster of
technologies leading to a mad scramble, turbulence, and speculation. The
middle phase sees a sustained buildout or golden age of the technology
during which it becomes the engine of economic growth. In the late phase,
the technology has matured, leading to complacency and a search for the
next revolution. Citing Schumpeter and other scholars, Arthur believes that
we are just completing the first phase of the information technology
revolution, with the golden age of buildout still to come. He details
several previous crashes where many people lost large amounts of money in
new technology investments, showing that in each case far more development
of the technology followed the early mania. Arthur argues that the
Internet, like railways and canals, is an interconnection technology and
has more in common with those two than with the steel industry which had no
crash in the 1890s.
While many might grant Arthur’s contention for information technology in
general, there may be more skepticism regarding Internet technology. Arthur
addresses this directly, noting that technological innovations typically
have long incubation periods until organizations and institutions adapt to
them. Giving parallels with the slow adoption of the electric motor and the
obstacles to large steam engines, Arthur argues that business organization
needs to re-architect itself. A crucial further factor is the need to
develop “arrangements-of-use”, the emergence of ways of making new
technology genuinely easy to use, providing amenity. As John Seely Brown
has put it, technology needs to “disappear” into the background. The Web
has not come close to this stage yet. Arthur concludes that not only does
the major part of the IT revolution lie ahead, we can expect more
innovation in this buildout phase than in any previous revolution.
The New Old Economy: Oil, Computers, and the Reinvention of the Earth
Atlantic Monthly by Jonathan Rauch , published on 01/03/01 , rated by our
experts.
http://www.manyworlds.com/logcontent.asp?coid=CO117011475334
This excellent and substantial (20 pages) article looks at how the line
between the New (Innovation) Economy and the Old Economy is blurring. The
New Old Economy uses the production of knowledge to boost productivity in
producing physical goods. The point is made in detail by showing how
information technology is affecting the oil industry and actually
increasing the availability of natural resources.
What’s Right with the US Economy
McKinsey Quarterly by William W. Lewis; Vincent Palmade; Baudouin Regout;
Allen P. Webb , published on 01/04/02 , rated by our experts.
http://www.manyworlds.com/logcontent.asp?coid=CO14022053041
Many observers believe that growing investments in information technology
created the US labor productivity boom of the late 1990s. This paper,
reporting on research from the McKinsey Global Institute shows that IT was
only one factor among several. Almost all the productivity gains came from
six industries, and the most important cause in those areas was managerial
innovation often spurred by new competition and only sometimes aided by
technology. The authors conclude that we should not expect a return to the
recent high productivity gains, though the innovations underlying those
gains will continue to generate productivity growth higher than the
long-term trend for years to come. IT made a big contribution in securities
and commodities brokerage, but the biggest productivity gainer of the
six—wholesale trade and retail trade—resulted far more from competition and
innovation than from IT, as well as from cyclical demand factors. One point
not discussed here is whether the kind of business process innovations,
sometimes facilitated by technology, are likely to flower in other
industries over coming years.
_______________________________________________________
Max More, Ph.D.
max@maxmore.com or more@extropy.org
http://www.maxmore.com
Strategic Philosopher
President, Extropy Institute. http://www.extropy.org <more@extropy.org>
________________________________________________________________
Director of Content Solutions, ManyWorlds Inc.: http://www.manyworlds.com
--- Thought leadership in the innovation economy
m.more@manyworlds.com
_______________________________________________________
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