Origins of "Electronic Commerce", "Electronic Business" and "Internet Commerce"


1. Introduction

    This endeavor was the result of preparation work for the conduct of a MBA module "E-Business Strategy" for University of Southern Queensland. During the course of searching, I hit upon this website "The origins of the phrase ELECTRONIC COMMERCE" http://home.columbus.rr.com/cyberlawyer/electronic-commerce-origin.html and that sparks off my curiosity to locate the origins of "Electronic Commerce", "E-Business" and "Internet Commerce based on my search experience. The cited article in the mentioned website dated the origin of Electronic Commerce to a publication "Data Communications Copyright 1985 McGraw-Hill, Inc. Saturday, June 1, 1985 Vol. 14, No. 7". 

    However, being a practitioner in the prior art search (both patents and non-patents publication), search should extend beyond keywords, ie. the concept of the search subject itself. Based on the keywords and concept search,  several new findings were discovered. Note that only one oldest article is listed. 

    The search engines/databases that were used for my search are (1) Google.com (2) Altavista.com (2) USPTO Website (3) ESpace (4) JPO PAJ (5) Map-it (6) Lexis-Nexis Universe.

    In short,

Origins of "Electronic Commerce" dated to this article published on 1982 " American Lawyer Newspapers Group Inc August  23, 1982". However, the practice dated back to as early as 1948.

Origins of "eBusiness" dated to this article published on 1995 "Macworld Communications Inc"

Origins of "Internet Commerce" dated to this article published on 1992 "Globe Newspaper Company The Boston Globe November 11, 1993, Thursday, City Edition"

    Email me if you know of earlier articles and I will acknowledge you accordingly. 

 

2. Origins of "Electronic Commerce" 

    2.1 Keyword search on "Electronic Commerce", non-patent publication (1982)

Copyright 1982 American Lawyer Newspapers Group Inc. 

Legal Times

August 23, 1982

 SECTION: Pg. 4
LENGTH: 1830 words

HEADLINE: Proposed UCC Update Proceeding at a Snail's Pace
BYLINE: By Irwin B. Arieff, Legal Times Staff

BODY:

The soaring use of checks, credit cards, and electronic funds transfers may be making more than cash obsolete.  Some attorneys wonder if the growth in these alternative payment systems has outstripped the ability of the law to govern them, and a draft proposal to update the Uniform Commercial Code (UCC) is creeping through a lengthy review process. 

At the same time, other financial industry lawyers contend broad revisions in existing law are unnecessary, while still others predict that the modernization effort -- however worthy -- ultimately will bog down because of the enormity of the task and the complexity of the money marketplace. 

Whatever the outcome, lawyers will have years to debate its merits, as the modernization project was begun five years ago, and a final draft will not be completed for at least another two to three years.  Even at that point, the states and the federal government will have to decide whether to abide by the draft recommendations.  

The modernization project began in 1977, when the permanent editorial board of the American Law Institute and the National Conference of Commissioners on Uniform State Laws set up a committee to study whether new forms of payment (such as electronic funds transfers) posed a challenge to the nation's legal system because they were not covered by the UCC.  The ALI and the NCCUSL jointly oversee the code, which has been adopted by every state except Louisiana.  The permanent editorial board, composed of representatives of both organizations, has the responsibility for developing proposed amendments to the code.  After an amendment has been drafted, but before it can be submitted to state legislatures for adoption, it must be reviewed and approved by both organizations.  

Draft Reviewed

By last spring, the study committee had spawned a drafting committee, which in turn had produced a draft sufficiently developed to convince the board to refer it to the NCCUSL for a first reading, which began at the organization's early August meeting in Monterey, Calif.  If all goes according to plan, the first reading will be concluded at the NCCUSL's meeting next summer, and the draft then will be referred to the ALI in time for a reading at that group's May 1984 meeting.  Following ALI approval, the draft will have to return to the NCCUSL for a second reading and final approval. 

The project has become controversial because some of the draft provisions would expand some existing consumer protections, which would be likely to make the payments system more costly for banks to administer.  For example, the draft would permit any noncash payment to be reversed within three days of a purchase if a consumer chose to change his mind.  Other provisions would impose new obligations on the banker's disclosure of credit costs and on the resolution of claimed errors. 

Though still at a relatively early stage of development, the payments project has proved to be "the most esoteric" yet undertaken by the UCC's overseers, according to John McCabe, NCCUSL legal counsel.  McCabe said his organization's first reading had gotten off to a "very successful start," though he acknowledged that there had been "considerable debate and discussion" and that "several critical issues remain unresolved."

The project has three main objectives, said Robert Haydock Jr., of Bingham, Dana & Gould in Boston, who is chairman of the drafting committees as well as a member of the Massachusetts Commission on Uniform State Laws.  Haydock said these goals are to correct perceived problems in existing law, to extend the law to cover new forms of payment that were not in existence at the time the current code provisions were written, and to make the code apply uniformly to all noncash systems of payment. 

 

'Simplification Would Help'

"Our aim is to try to have the same rules apply to each payment system," Haydock said.  "A uniform system of rules that would apply to all systems might not be entirely possible, but simplification of the current rules will help a lot."

Haydock said the UCC now specifically covers only paper transactions such as checks and promissory notes, while the general financial trend is toward electronic commerce.  Although federal statutes enacted during the past 15 years cover some aspects of credit card and electronic payments, "there is a serious question whether these systems fit into the UCC," he said.  Other transactions, he said, are not covered by any laws at all.  Instead, such transactions as wire transfers and bank credit card purchases are covered by written agreements that might need to be backed up by law, in case an agreement fails. 

To determine what problems exist in the current UCC provisions, Haydock said the committee has been consulting with consumer and banking groups and has circulated various draft proposals to interested legal and business groups. 

Before any code amendment is finally adopted by the states, the ALI, and the NCCUSL, it must overcome numerous obstacles in addition to procedural hurdles, including possible opposition from Congress, financial industry representatives, and from consumer groups.  Though the UCC applies only to states, Congress is likely to become involved in the process, because portions of existing federal law overlap -- and, in some cases, conflict -- with the areas covered in the draft. 

Though the draft already is being read by the NCCUSL, the debate so far appears to center more on the overall need for an amendment, rather than on specifics.  "People have not yet really taken sides yet" on the actual draft provisions, Haydock said.  "The draft is just getting out now."

So far, opinion is far from unanimous that a new uniform payments code is required.  "It is clear that the present payment system is inconsistent, complicated, and confusing," said Carl Felsenfeld, vice president of Citibank and chairman-elect of the American Bar Association's committee on consumer financial services.  "But the present payments system seems to work very nicely.  I've not yet made up my mind, but I'm not convinced there's a need for a new payments code." Even in those areas in which no rule or law applies, Felsenfeld said, the payment system "still works.  It does not necessarily follow that we need a whole new set of rules and laws.  In some ways, there is an advantage in being able to explore areas that are unsettled in the law."

"I think lawyers are fairly content with the current state of the law as it applies to transactions," said American Bankers Association General Counsel William H. Smith.  "Whether you plug holes by drafting a new uniform code, or whether you just do some adding on is a good question."

Concerning electronic funds transfers, drafting a new code provision is "premature," said Fred Greguras, an attorney specializing in electronic funds matters with Fenwick, Stone, Davis & West in Palo Alto, Calif.  "We just got a federal law [Electronic Funds Transfer Act of 1977] in place.  We ought to get some hands-on experience first, and let EFT develop some more." In the area of corporate wire transfers, he continued "there's a lot less code and a lot more contract law applied.  There's a real question whether or not we need statutes to cover those business-to-business relationships that heretofore have been covered by contract."

 

Increased Costs Ahead?  

Roland E. Brandel, of Morrison & Foerster in San Francisco, sees both plusses and minuses in a UCC rewrite.  Brandon represents the Western States Bankcard Association and also serves as the American Bar Association adviser to the NCCUSL.  The concept of treating all systems of payment equally under the law "is quite attractive to me," Brandel said.  "But now we must examine what the costs will be to society of moving into a new framework.  You're talking about billions of transactions annually.  If you can make this payment system more efficient, you're talking about saving a significant amount of money that currently is being spent because of an inefficient legal structure.  But moving into a new legal environment will certainly involve some disjointedness, and also may involve some increased operational costs as well."

Brandel said the ultimate success of the project would rest in large part "on what the banking industry thinks about it.  Will they decide it will be, all in all, in the best interests of society despite possible additional costs?  Or will they decide to oppose it, in which case it will be difficult to get through?"

The draft currently being read by the NCCUSL would replace Article 4 of the existing code, which covers bank deposits and collections.  It would divide all noncash payments into two categories; draw orders (orders given to the person to be paid, who then must draw the money from a financial institution) and pay orders (which order the institution to pay out the money to a particular person or organization).  For each category, the draft spells out the rights, obligations, and liabilities, the treatment of unauthorized orders, the resolution of claims of error, reversal of payment and disclosure requirements. 

The draft specifies that the new code article would apply to "all orders for the transfer of funds payable by, at, or through, or transmited by or to an account institution." It would not apply to certain negotiable instruments such as promissory notes, which would continue to be dealt with in UCC Article 3 which deals with commercial paper. 

One section specifies that any provision in the code could be overriden by agreement unless one of the parties is a consumer.  

Reversible Transactions

In the view of attorneys familiar with the draft, its most controversial provision deals with the reversibility of transactions.  Currently, only a check can be stopped -- and then, only before it is cashed.The draft would extend the concept of reversibility to credit card and electronic transactions by providing consumers with a three-day period within which to stop any noncash payment.  "That will be a real trouble spot," Brandel predicted. 

Other controversial provisions deal with error resolution and consumer disclosures.  Extending consumer protections such as error resolution obligations and disclosure requirements that currently apply only to certain forms of payment to all forms are likely to anger the banking industry; on the other hand, curbing existing requirements may anger consumer groups.  Either way, eventual adoption of the new provisions would be jeopardized. 

Even if the new code article never is adopted, however, it still could play a role in settling legal disputes in the payments area, in the opinion of EFT attorney Greguras.  "Even if it's not enacted, it will provide a comprehensive reference which I think judges will use," Greguras said.  "It could become a very good reference that would have significant impact on court actions."

 

2.2 Concept search on "Electronic Commerce", non-patent publication

Citation Only

The concept of electronic data interchange was created by Edward Guilbert who, as director for the 1948 Berlin Airlift, found it terribly frustrating to cope with business transactions on paper. The documents describing the goods arrived days after the goods had already reached Berlin. During the Hungarian airlift eight years later, Guilbert improved the process and would not let a plane take off unless relevant information preceded it. It was not until 1966 that he could apply his international experience domestically. While working for the department of Transportation, he established an Office of Facilitation to give business managers a chance to tell the government how business could improve its productivity if the government would ease up slightly on the bureaucracy. Impressed by the response, Guilbert thought it would be a good idea if business managers could practice what they preached. So, in 1968, he and a few colleagues formed the Transportation Data Coordinating Committee(TDCC) to support the standardization of tariffs for overseas shipments.

http://home.sol.no/~yfjell/edi.htm
http://nimbus.ocis.temple.edu/~ychoi/edicb.html
http://www.anu.edu.au/people/Roger.Clarke/EC/EDIIntro.html
http://www.altavista.com/cgi-bin/query?pg=aq&q=%22Electronic+Data+Interchange%22&r=1948&kl=XX&d0=&d1=&search.x=44&search.y=8

 

3. Origins of "Electronic Business" 

    3.1 Keyword search on "eBusiness", non-patent publication (1995)

Copyright 1995 UMI, Inc.; ABI/INFORM 
Copyright Macworld Communications Inc 1995  
Macworld
March 1995

SECTION: Vol. 12, No. 3 Pg. 137-140; ISSN: 0741-8647; CODEN: MARKBC
LENGTH: 2204 words
HEADLINE: Business information in cyberspace
BYLINE: Heid, Jim

BODY:
THIS MONTH'S WORKING SMART IS THE 120th consecutive column I've written for Macworld. For ten years I've had the good fortune not only to cover the Mac as it evolved from an underpowered and overpriced toy into a powerful force in the computer industry, but to do so from a home office.

The most familiar sound in that home office is my modem's shooting the breeze with another modem. Besides going online to turn in stories, swap E-mail, and scarf up the latest freeware, I've used the modem as a research tool to keep up with industry news and learn about new technologies and products. These days, a modem is as essential a business tool as a pinstripe suit (or, for us home-office workers, a pair of warm slippers).

What's Out There?

At the other end of a modem lies a gold mine of business information. Not just current stock quotes and timely news from major wire services--two things often cited as good reasons to use (and tax-deduct) a modem. I mean real business information, such as the following:

* Demographic data.

* Abstracts and full-text articles from major newspapers and hundreds of business, industry, scientific, and medical newsletters.

* Corporate data, such as disclosure statements filed with the Securities and Exchange Commission.

* Data from the federal government.

Many of these information gold mines are available on eWorld, America Online, and CompuServe. (Throughout this column, I list the shortcut keywords for each forum mentioned.) Some of the best libraries and databases, however, are on the outskirts of cyberspace, in specialized business and research services such as NewsNet and Dialog.

eWorld's Offerings

Given that eWorld is a relative newcomer with fewer subscribers than the competition, I didn't expect to find much in a the way of eBusiness eInfo. I was eSurprised: the Business and Finance Plaza has a solid foundation of basic business offerings--and access to all of them is included in the basic eWorld subscription rate.

Much of eWorld's business information is geared toward small businesses and home-office workers. For example, there's Working Solo (shortcut: solo), a forum for entrepreneurs and home-business operators looking for guidance and connections. The forum's software libraries contain business-oriented templates for popular application programs. For online networking, there's an Introductions area where you can post a brief resume and list of services you offer. Inc. Magazine also operates a forum (shortcut: inc online) containing entrepreneurial tips and magazine excerpts.

Another useful forum for small-business types is the Nolo Press Self-Help Law Center.(shortcut: nolo), where you can read interesting (and understandable) articles on topics such as incorporation, patent, and contract law, and post questions for Nolo Press's legal staff to answer. Of broader interest on eWorld is the Business Sector Profiles forum (shortcut: bsp), operated by The Reference Press. Business Sector Profiles contains expanded and annotated versions of reports and forecasts issued by the U.S. Department of Commerce for more than 200 industries.

Similar, though less comprehensive, reports are also available in the Vital Statistics section of the Real-Time Marketing forum (shortcut: rtm) operated by Regis McKenna, a marketing and public relations firm. If you are in the advertising biz, visit the Ad Age/Creativity Online forum (shortcut: ad age) run by Crain Communications, which publishes Advertising Age and Creativity magazines.

If you're looking for company information, check out the Hoover's Company Profiles forum (shortcut: hoovers). This forum, also operated by The Reference Press, contains nicely done profiles of nearly 1000 public and privately held corporations--overviews, founder's names and company histories, headquarters addresses, lists of divisions, and more.

An American Online

Most of the business information offerings on America Online (AOL) are in the News & Finance area.

The Hoover's Business Resources are available on AOL (keyword: hoovers), as are the Woover's Company Profiles (keyword: company). If you're a fan of public television's "Nightly Business Report," you might enjoy NBR Online (keyword: nbr), which contains transcripts of selected NBR interviews and commentaries, business news summaries, and reports on market trends.

If your company is a federal contractor, check out Commerce Business Daily (keyword: cbd), which lists notices of proposed government contract awards for amounts in excess of $ 25,000, as well as sales of government property and other procurement-related tidbits. Each edition contains approximately 500 to 1000 notices--proof that your tax dollars are at work.

Anyone who works in the publishing or communications industry should visit the Cowles/SLBA Media Information Network(keyword: cowles). The Cowles/SIMBA Media Daily contains stories on everything from book and magazine publishing to cable-and-telephone-company wars to satellite broadcasting. The forum's bulletin board is active with debates on media-related issues.

Business-news junkies will be in heaven on AOL. The Top Business window (keyword: business) lets you read current news by industry or search for articles containing keywords you specify. And forums are operated by Worth magazine (keyword: worth), the New York Times (keyword: nyt), the San Jose Mercury News (keyword: mc news), and the Chicago Tribune (keyword: chicago). Generally, these free forums offer only a subset of their respective publications; as I'll describe later, the full text of many publications is available, but it'll cost you.

Sleepless in CompuServe

eWorld and America Online look like small-town libraries compared with the granddaddy of personal computer information services, CompuServe. You can spend days exploring CompuServe's business information offerings.

CompuServe's Business menu (shortcut: go business) is the gateway to dozens of profession-specific forums. Among them: a work-at-home forum (go work), a public relations and marketing forum (go prsig), an inventors' forum (go innovations), a legal forum (go lawsig), an office-automation forum (go oaforum), an international-trade forum (go trade), and a court-reporters' forum (go crforum). As with the forums on eWorld and AOL, these forums are available to all subscribers at no additional charge.

Newshounds will howl over CompuServe's online newspaper and magazine offerings. The Associated Press wire service is available (go aponline), and news stories are updated hourly. The Business Wire (go tbw-1) carries company information and press releases. And researchers will want to explore the newspaper archives (go newsarchive), which let you search for and download full-text articles from more than 50 American and British newspapers dating back to the late 1980s. The News Source USA area (go newsusa) provides a similar service and adds archives of a dozen or so major magazines, from People and Sports Illustrated to Fortune and Forbes. In the Magazine Database Plus area (go magdb), you can search for and retrieve articles from 140 magazines--everything from the New Republic to Cosmopolitan.

Equally impressive is CompuServe's range of reference materials. You can get TRW credit reports and business information on more than 13 million organizations (go trwreport). You can get astonishingly detailed demographic data on cities, towns, neighborhoods, census tracts, Nielsen TV-ratings areas, and more (go demographics). You can search every phone book in the country (go edu8). The full text of the Commerce Business Daily is also available (go combus), as are searchable versions of Books In Pint (go bip) and Marquis Who's Who (go biography). And the IQuest service (go iqu-1) is a collection of nearly 1000 databases in every imaginable category. Type in search keywords that describe your area of interest, and IQuest will return either a list of article citations (including publication name, date, author, and title) or the full text. For expert advice on crafting a query, type SOS, and an IQuest representative will help you.

Note that many of the best reference resources on CompuServe carry additional surcharges. Some services carry an additional hourly charge of up to $ 24, others charge for each article you retrieve or each search you conduct, and still others combine both approaches. All premium-priced services provide menu options that describe pricing details and provide tips on searching.

The Big Guns: Dialog, NewsNet

Two of the information services available through CompuServe gateways, Dialog and Newsnet, are also available directly. Dialog (415/858-2700, 800/334-2564) is the world's largest online bibliographic company with over 200 million searchable items spread across 370 databases. Databases include the full text of 33 major newspapers, as well as scientific journals; government, business, and corporate publications; and law and reference books. You can retrieve the full text of articles electronically or even have them mailed or faxed to you.

Dialog can be daunting. Besides the vast array of searchable materials, the service's interface is archaic, relying on cryptic typed commands. Conducting searches is an art in itself; choose keywords carelessly, and you can wind up with hundreds of irrelevant citations.

Dialog's Knowledge Index is a subset of the full service specializing in science and education. Knowledge Index is available only through CompuServe (go KI); you'll have to pay a $ 24-an-hour surcharge for access.

NewsNet (610/527-8030, 800/345-1301) specializes in business information, providing full-text access to 700 business and industry publications and 20 international news wires that together post 17,000 new items every day, according to the company. Here you'll find not only mainstream newspapers, but ultraspecialized newsletters: Drug Detection Report, Indoor Air Quality Update, Pharmaceutical Litigation Reporter, Toxic Materials News, Wine Business Insider, and Asbestos and Lead Abatement Report. Costs depend on the publication and vary from 40 cents to several dollars per minute of connect time.

For More Information

If I've whetted your appetite for more details on the world of online information, check out Don Rittner's Whole Earth Online Almanac (Brady, 1993). It's a superb directory of forums, bulletin boards, online services, and research CD-ROMs. And now if you'll excuse me, my modem is waiting.

SEARCHING SMART

Say you're interested in snagging stories on Mexico, but you aren't interested in news on Mexican sports. You specify the search criteria Mexico not sports, and the result comes back littered with articles on New Mexico high-school football. It's at times like these that you realize just how sophisticated the human search engine is compared with an online service's. And the killer, is you must pay for these items.

(1) Be extremely specific about what you are looking for--spell it out in detail. In the preceding example, instead of specifying Mexico not sports you might specify Mexico not football or baseball or basketball or soccer or tennis. You might also specify not "New Mexico" (many information services require you to enclose multiword phrases in quotes), although doing so would exclude an article titled "President Zedillo Promises a New Mexico."

(2) Specify the databases to search if your information service permits that.

(3) When the service returns a list of citations, retrieve the full text of the articles you want at this point to avoid repeating the search later at additional cost.

(4) Hire an information broker--a professional trained in online research. You'll pay for the researcher's time, but the savings in connect time should easily pay for itself. (Information brokers are listed in the yellow pages under Information Retrieval Services or something similar; some online services also provide referrals.)

DON'T FORGET CDs

Online isn't the only place to satisfy your hunger for information. Many publishers cater to the needs of business with vital information on CD-ROMs. A few examples:

* MarketPlace Business ($ 849, MarketPlace Information Corporation, 617/672-9200, 800/999-9497). Using a powerful search engine, it provides information on more than 9 million U.S. businesses.

* SelectPhone (Pro CD, 508/750-0055, 800/992-3766). Telephone directories including DirectPhone ($ 149, all U.S. white pages); CanadaPhone ($ 149, all Canadian white pages); and FreePhone ($ 49, all U.S. toll-free phone numbers).

* North American Fax Book ($ 49.95, Quanta Press, 612/379-3956). Includes a directory of 150,000 fax numbers.

* Dialog On-Disc (price depends on database, Dialog Information Services, 415/858-2700, 800/334-2564). More than 60 CDs grouped into subject families: business information, education and humanities, health and biomedicine, law and government, and science and technology.

Contributing editor JIM HEID is the author and producer of the best-selling Macworld Complete Mac Handbook Plus Interactive CD, third edition, and the Macworld Ultimate Mac CD-ROM (both published by IDG Books Worldwide, 1994).

 

    3.2 Keyword search on "E-business", non-patent publication (1997)

Citation

e-business (electronic business), derived from such terms as "e-mail" and "e-commerce," is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. One of the first to use the term was IBM, when, in October, 1997, it launched a thematic campaign built around the term. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilities. Companies are using the Web to buy parts and supplies from other companies, to collaborate on sales promotions. and to do joint research. Exploiting the convenience, availability, and world-wide reach of the Internet, many companies, such as Amazon.com, the book sellers, have already discovered how to use the Internet successfully. 

Increasingly, much direct selling (or e-tailing) is taking place on the Internet of computer-related equipment and software. One of the first to report sales in the millions of dollars directly from the Web was Dell Computer. Travel bookings directly or indirectly as a result of Web research are becoming significant. Custom-orderable golf clubs and similar specialties are considered good prospects for the immediate future. 

With the security built into today's browsers and with digital certificates now available for individuals and companies from Verisign, a certificate issuer, much of the early concern about the security of business transaction on the Web has abated and e-business by whatever name is accelerating. 

IBM considers the development of intranets and extranets to be part of e-business. e-business can be said to include e-service, the provision of services and tasks over the Internet by application service providers.

Reference: http://www.whatis.com/ebusines.htm

 

4. Origins of "Internet Commerce" 

    4.1 Keyword search on "Internet Commerce", non-patent publication (1993)

Copyright 1993 Globe Newspaper Company 
The Boston Globe 
November 11, 1993, Thursday, City Edition 


Copyright 1993 Globe Newspaper Company 
The Boston Globe 

View Related Topics 

November 11, 1993, Thursday, City Edition 

SECTION: LIVING; Pg. 68 

LENGTH: 1116 words 

HEADLINE: Should advertising be allowed on Internet? 
THE VOXBOX 

BODY: 
Dear Voxbox, 

Commercial activity on the net should be limited to its own interest list. In other words, as in other topic-specific lists, there should be a listserv address to sign up for a commercial advertisement list (perhaps broken down into categories). The user can then determine his own interest in and/or need for the information, and have a way of obtaining it. 

To allow commercial advertisements to creep into other lists would be a disservice to users, especially those of us who pay by the minute for our Internet access. Unwanted material is then downloaded against our wills, and we end up paying a price for advertising that is unnecessary. JANICE SADOWSKI cotuit(AT SIGN SYMBOL)kettleer.win.net 
Dear Voxbox, 

I have been tracking the Internet with great personal zeal for four years, and must inform you that the commercial activity on the Internet question is the most absolute white-hot topic I have ever seen on the Internet. 

Your question is actually many different questions in disguise. What kind of commercial activities will be tolerated by the online community? To what extent will these opinions matter? To what extent will various "enforcements" be effective? 

The simple answer is that the Internet is perhaps the closest thing to a workable anarchy the world has ever seen, and issues like what is allowed and forbidden are rather blurred by its general amorphousness and resistance to any form of regulation. 

The more complex answer is that while there is no such thing as the Internet Police (at least, no one goes by that name!) there are definite protocols and "netiquettes" that have evolved that anyone who wishes to use the Internet must respect or they will be "flamed" (assaulted with critical letters) into oblivion. 

The Internet has a very strong taboo against what might be called blatant advertising. One form of this would be junk e-mail sent to someone unsolicited. However, many other more subtle forms of advertising already exist on the Internet, and it is rapidly becoming more pervasive. The general rule of thumb is that the advertiser must bend to accommodate the desires of the network community, or they will be subject to biting flames! (Some in the form of "if you do not stop we will organize a campaign against your company!" - this has already happened with a service announcing its intentions!) 

Many other complex factors must be weighed in addressing the question of Internet commerce. Only a small fraction of the Internet is governed by NSF Acceptable Use Policies. However, it is unclear to what extent Internet vendors' and providers' use policies restrict commercial traffic in general. The basic point is that very rapidly the vast extent of the Internet is becoming commercial, and these interests will certainly not object to commercial traffic! 

But perhaps the most straightforward answer to the question is that Cyberspace (represented by the Internet) is so rapidly becoming intensely and overwhelmingly commercialized that a future question may actually be: What kind of educational and research activity, if any, should be allowed in Cyberspace? What kind of educational and research activity should be forbidden? 

And finally, a Zen master of the Internet would reply, "simultaneously, all traffic will be allowed (globally), and all traffic will be restricted (locally)." L. DETWEILER ld231782(AT SIGN SYMBOL)longs.lance.colostate.edu 
Dear Voxbox: 

No commercial activity should be allowed on the Internet, if by commercial activity you mean advertising. We are far too inundated with advertising as it is. It makes such services as Prodigy unendurable, as it does television programming. If by commercial activity you mean allowing commercial users, as now, such as the Globe, that is fine; all we taxpayers paid for it. JOHN CLEMENS clemens(AT SIGN SYMBOL)dsm.enet.dec.com 
Dear Voxbox, 

The Internet users, administrators and owners (i.e., of the hardware and/or servers) basically need to decide what they want to do with their stuff. This is not an issue for government to step in and tell people what they can and can't send out over the electronic communication lines. If the people who own the telelinks want to make a buck by letting commercial users on, it's fine with me. 

A balance will be created between users dropping off due to excessive commercial posting and users adding on as systems are able to charge less or give more service due to the new funds available. I think a system similar to regular TV and cable TV will develop. People willing to pay a price to avoid commercials will do so, others won't mind as much. 

The lesson learned from the cable TV debacle is that the government (either federal or local) has no place regulating information and entertainment networks. Local municipalities first made cable TV a local monopoly (presumably because they didn't want more than one cable line in the ground - as if that were such a big deal!). When the monsters that the local governments had created unleashed themselves upon us the Feds' only answer was to make it worse. (I'm waiting for wireless cable!) 

So far we've been lucky; the government has been too stupid to know what the Internet even is. Much more than commercialism, I fear that once the government hears about it they'll jump right in, regulate the hell out of it like they do with TV, radio and just about everything else. We'll all have to find some other thing to do freely, once that happens. VERNON IMRICH vimrich(AT SIGN SYMBOL)flying-cloud.mit.edu 
Dear Voxbox, 

I am sick and tired of any advertising that relates to feminine napkins, sprays, douches, etc. Is there anything sacred about the female body? Not when you see advertising like this on television. And since I don't like it on television, I would definitely hate it on the Internet. 

Another type of commercial activity that should not be allowed on the Internet is the sale of guns of any type. (Is that available now?) 

A Shopping Mall feature where I choose when to enter would be an acceptable compromise. Advertisers would be able to track the effectiveness of their advertising dollar by offering coupons to patrons to drum up sales. PAT MELSKI pmelski(AT SIGN SYMBOL)fox.nstn.ns.ca 
Dear Voxbox, 

If the information highway is planned out the way that I am reading in the newspaper and trade magazines, that means that commercials for products will soon follow. Please, please, please leave us alone. THOM DOMBROWSKI TDOMBROWSKI(AT SIGN SYMBOL)ccmaillex .dri.mgh.com 

VOXBOX QUESTION OF THE DAY: Prodigy recently changed its format. Please send us your reaction to the change, and your general opinion on the overall service.

 

5. Origins of first use of "Old Economy" and "New Economy"

    5.1  "Old Economy" and "New Economy" (General Context)

The Associated Press 
March 10, 1981, Tuesday, PM cycle 

SECTION: Domestic News 

LENGTH: 593 words 

BYLINE: By JOHN CUNNIFF, AP Business Analyst 

DATELINE: NEW YORK 

BODY: 
Does the United States need to reindustrialize? A little reminder might help you answer. 

The automotive industry spilled more than $4 billion in red ink last year. Its share of the market is shrinking, forcing cutbacks among suppliers. Chrysler Corp. still bleeds, losing $140 million in January. 

Passenger railroads are probably a thing of the past, commuter lines are losing money, and all but a few airlines are struggling to remain aloft. Meanwhile, the cost of energy to drive them rises relentlessly. 

So do interest rates. One consequence is that many savings banks and savings and loan associations, which have long-term, low-rate home loans outstanding, are losing money every day. Many of them could fail. 

Meanwhile, some of them are effectively out of business, a condition to which builders and homebuyers can attest. The housing industry is a disaster. The demand is there, but the ability to fill it is not. 

Housing and cars are basic industries. So is steel. Steelmakers are managing, despite accusations that their production facilities aren't competitive, but mainly because they are diversifying outside of steel. 

Small business is also basic, and it is also hurting. High interest rates, taxes, paperwork, regulations and frequently an inability to compete for labor are harassing it. Small business, remember, is the vocational school for many trades, the apprenticeship system for jobs. 

So, does the United States need revitilization? Of course; the system has broken down. Beyond the generalization, however, the details aren't clear. There's even confusion about the meaning of reindustrialization.

Some critics maintain that with services now dominant we shouldn't try to re-establish smokestack America. Some fear reindustrialization might be turned into a return to the past rather than an attempt to crack new frontiers. Some claim the breakdown of the old economy should be let to run its coarse, because the new economy already is being designed. 

If the old economy should be left to die, however, the question arises about how to accommodate to the death throes. If other energy sources are to propel automobiles, what is to be done with Chrysler until then? 

If steel is an industry that inevitably moves to the nation with the latest equipment and low labor costs -- for example, from the United States to Japan and, who knows, eventually to China -- should the United States fight to retain it? And textiles? Shoes? And transistor radios? 

Should the nation return to coal, of which it has an abundance? Or should it nurture the embryonic solar industry, in which thousands of innovative entrepreneurs are now seeking breakthroughs? 

Should stick builders -- those who build houses board by board on site -- be encouraged, or should we seek to develop the construction of homes in factories, with possible advantages in productivity? 

Everyone, it seems, is encouraging America to get the lead out of its pants. It's a very safe position to take, and it makes for great public relations. But where should it get moving to? And how? 

Should there be a blueprint and federal incentives for it, or is that just asking for more federal intervention, which may have been one of the major factors in speeding the breakdown of the old economy

Would it be more the American way to simply relieve the negative pressure of interest rates, taxes, regulations and other impediments and let market factors dictate? 

Those are the questions. Far tougher questions than whether or not the country should reindustrialize. 

 

    5.2 "Old Economy" and "New Economy" (Internet Context)

Copyright 1993 Time Inc. 
Fortune 
December 13, 1993, Domestic Edition 

SECTION: MANAGING/COVER STORIES; Pg. 66 

LENGTH: 4306 words 

HEADLINE: THE NEW ERA; 
WELCOME to the REVOLUTION 

BYLINE: by Thomas A. Stewart, REPORTER ASSOCIATE Ani Hadjian 

LET US NOT use the word cheaply. Revolution, says Webster's, is "a sudden, radical, or complete change . . . a basic reorientation." To anyone in the world of business, that sounds about right. We all sense that the changes surrounding us are not mere trends but the workings of large, unruly forces: the globalization of markets; the spread of information technology and computer networks; the dismantling of hierarchy, the structure that has essentially organized work since the mid-nineteenth century. Growing up around these is a new, information-age economy, whose fundamental sources of wealth are knowledge and communication rather than natural resources and physical labor. 

Each of these transformations is a no-fooling business revolution. Yet all are happening at the same time -- and fast. They cause one another and affect one another. As they feed on one another, they nourish a feeling that business and society are in the midst of a revolution comparable in scale and consequence to the Industrial Revolution. Asks George Bennett, chairman of the Symmetrix consulting firm: "If two percent of the population can grow all the food we eat, what if another two percent can manufacture all the refrigerators and other things we need?" 

Good question. The parking lot of General Electric's appliance factory in Louisville, Kentucky, was built in 1953 to hold 25,000 cars. Today's workforce is 10,000. In 1985, 406,000 people worked for IBM, which made profits of $6.6 billion. A third of the people, and all of the profits, are gone now. Automaker Volkswagen says it needs just two-thirds of its present workforce. Procter & Gamble, with sales rising, is dismissing 12% of its employees. Manufacturing is not alone in downsizing: Cigna Reinsurance, an arm of the Philadelphia giant, has trimmed its workforce 25% since 1990. 

Change means opportunity as well as danger, in the same way that the Industrial Revolution, while it wrought havoc in the countryside and in the swelling town, brought undreamed-of prosperity. No one can say for certain what new ways of working and prospering this revolution will create; in a revolution the only surety is surprise. The transition may be difficult. As Neal Soss, chief economist for C.S. First Boston, puts it: "Adjustment is the dismal part of the dismal science." And, as Robespierre might have observed on his way to the guillotine, this time it's personal -- for the inescapable tumult involves your company and your career. The paragraphs and stories that follow explain the causes and consequences of this era of radical change -- and introduce some business leaders who are meeting the challenges it poses. 

General Electric Lighting is an ancient business, begun in 1878. It is headquartered in Cleveland on a leafy campus of brick Georgian buildings separated by placid lawns. Like sin into Eden, the world burst through the gates in 1983, when traditional rival Westinghouse sold its lamp operations to Philips Electronics of Holland. To John Opie, GE Lighting's chief, the memory is so vivid that he describes it in the present tense: "Suddenly we have bigger, stronger competition. They're coming to our market, but we're not in theirs. So we're on the defensive." 

Not long: GE's 1990 acquisition of Hungarian lighting company Tungsram was the first big move by a Western company in Eastern Europe. Now, after buying Thorn EMI in Britain in 1991, GE has 18% of Europe's lighting market and is moving into Asia via a joint venture with Hitachi. As recently as 1988, GE Lighting got less than 20% of its sales from outside the U.S. This year, Opie says, more than 40% of sales will come from abroad; by 1996, more than half will. In a few short years, Opie's world changed utterly. 

What happened at GE Lighting illustrates the surprises and paradoxes of globalization. Surprise: Globalization isn't old hat. Global competition has accelerated sharply in just the past few years. The market value of U.S. direct investment abroad rose 35%, to $776 billion, from 1987 to 1992, while the value of foreign direct investment in America more than doubled, to $692 billion. 

You ain't seen nothin' yet. The extraordinary rise in overseas telephone traffic (see chart) may best gauge how much more often people in different nations feel they have something urgent to say to one another -- much of it coordinating business activity. First Boston's Neal Soss points out that in the past five years or so the commercial world has been swelled by the former Soviet empire, China, India, Indonesia, and much of Latin America -- billions of people stepping out from behind political and economic walls. This is the most dramatic change in the geography of capitalism in history. 

Paradox: Though it's hard to imagine a more macroeconomic subject, globalization is intensely parochial. Trade policy and competitiveness are vitally important, sure; but globalization's strongest effects are on companies. Says Anant Sundaram, professor at Dartmouth's Tuck School of business: "Statistics at the macro level grossly underestimate globalization's presence and impact." For example, Chrysler got just 7% of sales from outside the U.S. and Canada in 1992, but global competition nearly killed it. 

Investment numbers also reveal too little, for they do not count minority ownership or alliances -- or the impact of competition originating abroad. Notes Frederick Kovac, vice president for planning at Goodyear, whose products can be found on all seven continents and the moon: "The major strategic decisions of our biggest competitors are made in France and Japan." Sales by overseas subsidiaries of American corporations are about three times greater than the value of all U.S. exports. Thus a lot of commerce that looks domestic to an economist -- such as the Stouffer's frozen dinner you bought last week -- looks international to a chief financial officer, in this case Nestle's. 

This makes for a profound change, Mr. CFO, in your job. Some observers argue that it is time you forgot about the business cycle, or at least paid a lot less mind to it. Says Gail Fosler, chief economist of the Conference Board: "It's every industry on its own. When I talk to companies, it's very difficult to describe a business environment that's true for everybody." For example, she says, as FORTUNE's economists also hold, that capital spending "is no longer driven by business cycle considerations but by global competition." If the world is your oyster, an oyster is your whole world. 

Horace "Woody" Brock, president of Strategic Economic Decisions, an advisory firm in California, agrees. He says a nation's economy should be viewed as a portfolio of businesses whose fates are less and less linked: "What happens in the U.S. copper industry may be caused by shocks in Africa, and will have no effect on Silicon Valley. Silicon Valley may drive events in Japan's electronics industry, but these in turn will be uncorrelated with the auto industry in either Japan or Detroit." Look at Seattle, Brock says, where two great technology companies, Boeing and Microsoft, operate side-by-side, one sagging, one booming -- "utterly out of sync." 

For a nation, the net effect should be more stability, with long odds against all sectors booming or busting together. For individual businesses, however, it's a different story. Says Brock: "If your competitor in Germanydoes something, you react immediately -- you don't wait for interest rates or recovery or anything else."  

Fortunately, the revolution in information technology is creating tools that permit just such agility. 

Robert Immerman is the founder of InterDesign, a private company in Solon, Ohio, with sales north of $10 million. InterDesign sells plastic clocks, refrigerator magnets, soap dishes, and the like. WalMart, Kmart, and Target are customers, as are hundreds of houseware stores. 

There's not a high-tech item among them, but computers have changed the business. In the past twelve years, InterDesign's employment has tripled, total space has quintupled, and sales have octupled, but megabytes of computer memory have gone up thirtyfold. Seven years ago Immerman dug deep and found $10,000 to buy a used disk drive that had 288 megabytes of storage -- capacity that costs about $350 today. Says Immerman: "In the Seventies we went to the Post Office to pick up our orders. In the early Eighties we put in an 800 number. Late Eighties, we got a fax machine. In 1991, pressured first by Target, we added electronic data interchange." 

Now, just two years later, more than half of InterDesign's orders arrive via modem straight into company computers. Errors in order-entry and shipping have all but disappeared. Immerman says: "We had 50 weeks perfect with a big chain, then one week we missed part of the order for one item on a long list -- and they're on the phone wondering what's wrong." Staffers who used to man phones taking orders now track sales by product, color, customer, region -- valuable information that Immerman once couldn't afford to collect. 

InterDesign's story is typical. In Alcoa's Davenport, Iowa, factory, which rolls aluminum foil, sheet, and plate, a computer stands at every work post to control machinery or communicate data about schedules and production. Practically every package deliverer, bank teller, retail clerk, telephone operator, and bill collector in America works with a computer. Microchips have invaded automobiles and clothes dryers. Three out of ten American homes have a PC. 

The revolution begins when these computers hook up to one another. Already two out of five computers in the U.S. are part of a network -- mostly intra-company nets, but more and more are crossing company lines as InterDesign's electronic data interchange does. Data traffic over phone wires is growing 30% a year, says Danielle Danese, a telecommunications analyst at Salomon Brothers. Traffic on the global Internet doubles every year. 

The potential for information-sharing is almost unimaginable. On the wall of every classroom, dorm room, and office at Case Western Reserve University is a box containing a phone jack, coaxial cable, and four fiber-optic lines. Through that box a student could suck down the entire contents of the Library of Congress in less than a minute, if it were on line and she had room to store it. 

For years CEOs and economists lamented that billions invested in information technology had returned little to productivity. That dirge is done. Says William Wheeler, a consultant at Coopers & Lybrand: "For the first time the computer is an enabler of productivity improvement rather than a cause of lack of productivity." Instantaneous, cross-functional communication about orders and scheduling enabled M.A. Hanna, the $1.3 billion-in-sales polymer maker, to speed production, reduce inventory, and cut waste so much that the company needs a third less working capital to get a dollar of sales than it did four years ago. CEO Martin D. Walker notes that this gain came entirely within the four walls of the company; he estimates that an equal gain in working capital turnover is waiting to be found by networking with suppliers and customers. 

Efficiency is a first-order effect of new technology: That's how you justify the capital expenditure. The second-order effects are more interesting, because unpredicted. One disorienting result of the spread of computer nets has been the transformation of sales, marketing, and distribution. To see the change, says Fred Wiersema, a consultant at CSC Index in Cambridge, Massachusetts, dig a ten-year-old marketing plan out of the file and compare it with a new one: "The distribution channel is a mess. Customers have much more power. There's fragmentation in media and advertising. The activities of the sales force are completely different." 

In a computer-mediated marketplace, Martin Walker warns, "Everything you know about marketing and distribution is up for grabs." The next trend, says William Bluestein, director of computing strategy research for Forrester Research, a Massachusetts firm: "Companies that empower their customers." Soon, pursuing cost savings, suppliers and customers will be able to rummage around in each other's computers, entering orders directly, checking stock and shipping status. One vehicle manufacturer can already go into Goodyear's system. Says strategist Kovac: "There will be a day in the not-distant future when customers will get data on the tests of a new tire as soon as our engineers do. They'll see everything -- warts and all." 

From there it's a short step before customers start comparing notes -- maybe on your network. Says Bluestein: "If I were Ralph Nader, I'd set up a consumer chat line so someone who was thinking of buying a Saturn could ask people who have one how they like it. If GM were smart, they'd do it themselves." 

Like globalization, information technology vastly extends a company's reach -- but has the paradoxical effect of rewarding intimacy. Computers enormously increase the amount of information a company can have about its market -- but deliver premium returns less to careful planningthan to quick responses to changing circumstances. 

Both phenomena have powerful implications for the way work is organized. 

In 1958 Harvard Business Review published an article called "Management in the 1980s" by IDs TK Harold J. Leavitt and Thomas L. Whisler. It predicted that the computer would do to middle management what the Black Death did to fourteenth-century Europeans. So it has: If you're middle management and still have a job, don't enter your boss's office alone. Says GE Lighting's John Opie: "There are just two people between me and a salesman -- information technology replaced the rest." 

Leavitt and Whisler, knowing only mainframes, foresaw an Orwellian workplace in which the surviving middle managers were tightly controlled from on high, little different from the proles they bossed. In a world of expensive, centralized computing, it might have happened that way. But distributed computing redistributes power. Says Goodyear's Kovac: "It used to be, if you wanted information, you had to go up, over, and down through the organization. Now you just tap in. Everybody can know as much about the company as the chairman of the board. That's what broke down the hierarchy. It's not why we bought computers, but it's what they did." 

The management revolution has many fathers, some more venerable than the computer; self-managed teams and total quality management have intellectual roots reaching back half a century. Why, then, does it seem as if the mores and structures of management are undergoing discontinuous change? Is this really new? Or are we deluding ourselves, the way each generation of teenagers thinks it discovered sex? 

The evidence suggests a basic shift in the organization of work. Look first at the ubiquity of change. No longer is the management revolution confined to the same dozen trend-setting companies, the GEs, Motorolas, and Xeroxes. Says Stephen Gage, president of the Cleveland Advanced Manufacturing Program, a federally subsidized organization that helps small business apply new technology: "I doubt if there's a company around here that isn't experimenting with something having to do with dismantling Taylorism." 

Equally striking, leading companies now envision an endlessly changing organizational design. Kovac says: "The key term is 'reconfigurable.' We want an organization that's reconfigurable on an annual, monthly, weekly, daily, even hourly basis. Immutable systems are dinosaurs." To make this sort of agility possible, leaders are crafting such techniques as rapid product development, flexible production systems, and team-based incentives. 

At bottom, the management revolution triumphs because the underlying economics of communication and control have changed, and those changes favor small, flexible organizations, not big ones. The argument, developed by microeconomists influenced by Berkeley's Oliver Williamson (and here oversimplified), goes like this: 

A transaction can be accomplished in one of two basic ways: You can go out and buy something from someone else; or you can produce it yourself. (Yes, there are hybrid forms, but remember that we're oversimplifying.) Call the first system a market and the second a hierarchy. Vertically integrated businesses, in which transactions take place between divisions, are hierarchies. Each system has its advantages. Markets generally deliver the lowest price, because of competition. But hierarchies usually have lower coordinating costs -- such as for salesmen, advertising, or debt collection. Depending on how those costs and benefits line up, a given industry will tend to be more or less vertically integrated, feature larger or smaller companies, and display a bureaucratic or entrepreneurial management style. 

Now buy a computer. The costs change. In particular, hierarchies begin to lose their comparative advantage in coordinating costs. Invoicing is automated, decimating armies of clerks. Electronic order-entry cuts selling costs. Says Thomas W. Malone, professor at the Sloan School of Management at MIT: "Coordinating activities are information-intensive, and computers make coordinating better and cheaper." The result, Malone argues, is to increase the range of transactions in which markets are more desireable. Result: More companies decide to buy what they once produced in-house. 

The nice thing about this argument is that it checks out. Big companies are breaking up; outsourcing is on the rise. According to Roy Smith, vice president of Microelectronics and Computer Technology Corp., three out of ten large U.S. industrial companies outsource more than half their manufacturing. 

Businesses are more tightly focused: Conference Board figures show that between 1979 and 1991 the number of three-digit standard industrial classifications (SIC codes) in which an average U.S. manufacturer does business dropped from 4.35 to 2.12. Companies are also smaller: Census data show that the number of employees at the average U.S. workplace is 8% lower than it was in 1980. Combining those figures with data on spending for information technology, MIT's Malone and several colleagues found the shrinkage is greatest in industries where IT spending is highest. Smaller payrolls are not simply the result of automation, for gross shipments and value-added also decline. The strong implication: In an information-age business, small is beautiful. 

Of the four horsemen of revolutionary change, the hardest to grasp is the invention of an information-age economy. How can a whole economy be based on intangible knowledge and communication? Yet intellectual capital -- knowledge that can be captured and deployed to create advantage over competitors -- is as vital a business concern as capital of the financial sort. Intellectual labor, too, is where the action is, a fact demonstrated by the widening gap between the pay of college-educated workers and those less schooled. 

Though knowledge assets and outputs are intangible, they are no less real for being so. It is possible to track the "intellectual content" of the economy. In 1991, business investment in computers and telecommunications equipment -- tools of the new economy that create, sort, store, and ship knowledge -- for the first time exceeded capital spending for industrial, construction, and other "old economy" equipment. The figures on the chart WHERE, while impressive, understate investment in knowledge machines because they do not show the growing intellectual ability of industrial gear. For example, more than half of machine-tool spending in the U.S. is for equipment with built-in computer numerical controls that, often, can be connected to networks. Says Jodie Glore, vice president of the automation group at industrial-controls powerhouse Allen-Bradley: "The electro-mechanical boxes we used to sell had a macho feel. You could tell that they cost a lot. Now it's, 'You see this disk . . . ?' " 

The new economy will transform the old and reduce its relative importance, but will not kill it. The Industrial Revolution did not end agriculture, because we still have to eat, and the Information Revolution will not end industry, because we still need cans to hold beer. Microsoft chairman Bill Gates, to date the preeminent capitalist of the knowledge age, spends his money on a big house and fancy cars, tangible stuff indeed. 

The first effect of intellectual capital and knowledge work is to alter the economics of familiar goods and services -- a process well underway. For example, in the now-misnamed "industrialized" world, the amount of energy needed to produce a given amount of GDP has fallen 2% a year, compounded, for more than 20 years. Factory labor is less physically demanding: Gone the heroic workman, a WPA mural in living flesh, ruddy in the glow of the blast furnace; now she's likely to be a middle-aged mom sitting in front of a screen who attends night school to study statistical process control. Many auto repairs will soon be made not by a grease monkey with a wrench but by a technician who fixes an engine knock by reprogramming a microchip. 

As the usefulness of information, information technology, and information work grows, businesses find more ways to substitute them for expensive investments in physical assets, such as factories, warehouses, and inventories. By using high-speed data communications networks to track production, stock, and orders, GE Lighting has since 1987 closed 26 of 34 U.S. warehouses and replaced 25 customer service centers with one new, high-tech center. In effect, those buildings and stockpiles -- physical assets -- have been replaced by networks and databases -- intellectual assets. 

Similarly, the cost of establishing a retail bank branch has shrunk: You can find one inside the door of the supermarket, next to the Coke machine. Especially in the Christmas shopping season, each day's mail brings you a stack of department stores. For the right products, catalog retailers will migrate to computer or television networks. Rent in cyberspace is even cheaper than catalog space, and much lower than rent at the mall. 

THE INFORMATION ECONOMY, like globalization, computerization, and the management revolution, arrives first as a way of doing old jobs more cheaply. For those on efficiency's receiving end, it is a threat. But efficiency has also paid to string 8 million miles of optical fiber in the U.S., and, long before any couch potato has ordered up video-on-demand, efficiency will pay for a lot more construction of the electronic superhighway, the infrastructure of the information economy. 

That endeavor, says Paul Saffo, an analyst at the Institute for the Future in Menlo Park, California, "is a full-employment act for entrepreneurs." Compared with trade in traditional goods and services, commerce in knowledge is start-up heaven. A major reason, according to Forrester Research analyst Bluestein, is that entry barriers are low. Distribution and marketing of information need little capital; they don't even require access to a printing press any more. Many products and services can be distributed electronically. 

The second-order effect of change, opportunity, is the unpredictable one. Gottlieb Daimler, Ransom Olds, and their pals thought they had invented an improvement on the horse. They did not know that the automobile would fill the countryside with suburbs -- which, in turn, created thousands of jobs building houses, making lawnmowers, and delivering pizza. The knowledge economy is still so young that we have little idea what its second-order effects will be, in the view of Richard Collin, who studies the subject as director of Neurope Lab, a think tank in Archamps, France, near Geneva. Says Collin: "Today, we are thinking in terms of using knowledge to improve productivity in our old businesses -- how to do the same with less. Tomorrow, we will think of competition -- how to do more in new businesses." 

It makes sense that the core business of the knowledge economy will be . . . knowledge. Information, like electricity, does nothing unless it is harnessed in useful devices, like appliances. All kinds of appliance-makers -- writers of software, creators of databases -- are beginning to fill the information age business directory. 

The most valuable devices will be those that help business and people cope with change. Says consultant Fred Wiersema: "Management today has to think like a fighter pilot. When things move so fast, you can't always make the right decision -- so you have to learn to adjust, to correct more quickly." The same imperative holds for individuals. Says Kovac: "Today the job is You, Inc. When I came to Goodyear in 1958, my chances of promotion were one in eight. For a young person today, they are one in 30, and it's going to one in 50. But I think my children and grandchildren will have more opportunities than I did. They'll just be different." 

For Dustin Hoffman, as The Graduate in 1967, the future was plastics. Today you might say it's plasticity: the ability to adjust and learn. 

 

Acknowledgements

    Thanks to all my USQ MBA students for both modules "Information Systems for Managers" and "E-Business Strategy" for your support and pressure.


Created on 10 July 2000, Last Modified on 11 Nov 2000
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