Georgetown University

School of Business

MGMT 550 Information Technology and Business Strategy

The Information Society

Ewan Sutherland


Issues


Introduction

If this is an information society, how might we tell?

The typical case involves use of employment data, which is alleged to show a decline in agricultural employment, then in manufacturing. This leaves everyone working in services. The problem with this is the changing definitions of the sectors and the changes brought about by out-sourcing and sub-contracting. (By transferring the catering staff to an outside contractor, they moving from motor manufacturing to services.) Services in 1890 were very different from 1990.

Strong evidence of decline in typists, clerical staff and secretaries. Interesting new job categories. For example, health care assistants.

What other statistics would help us?

Extremely serious problems of definitions.

Yesterday's measures are irrelevant. So, in all probability will be today's! This technology moves too fast for staticians. Forced to rely on mareting data--much of which is 'unreliable' at best.

We will come back to the question of what drives the change at this pace. When looking at the information technology and telecommunications industries.

Many are not available, not gathered or not reliable. For example, the United Kingdom data on "home computers", where the definition has changed many times.

How would measure the "information" content of an economy?

What might make it different?


Technopolitical visions and visionaries

Could this be political opportunism? (Excuse the cynicism) An interesting parallel is with SDI ("Star Wars").

Can governments do anything? Is it still within their power.

The United States of America

Albert J Gore Junior, Vice President of the USA

The National Information Infrastructure (NII).

What is this?

Can the Congress legislate for this? The primary legislation is the 1934 Communications Act, when things were very different. Most recent effort is by Senator Exon.

European Union

Martin Bangemann, European Commissioner

Dr Bangemann chaired a special working group of industrialists which reported to the Crete meeting of the European Council. It is closely linked to the Delors White Paper of the previous December. Influenced by Al Gore, even in imitation of the efforts in the USA.

In some ways, Bangemann echoes a much earlier report to the French President (Valéry Giscard d'Estaing) by Simon Nora and Alain Minc. "L'Informatisation de la société" [A very bad English translation was published by MIT Press.] This emphasised the american threat and the need for France to catch up. One result was the Minitel Programme. A whole host of other étatiste programmes were launched. Part of a long French tradition.

Is France today any better off?

Japanese visions -- emphasising intellect

Corporations

In many ways it is being driven by the industry sectors which will benefit:

They are also investing billions. Even in the last few days. Notable leader is Rupert Murdoch, the "American" who runs News Corp. He sold 13.5% of News Corp to MCI (itself 20% owned by British Telecommunications) and promptly bid for a controlling interest in Berlusconi's television operation from FININVEST.

Governmental implementations

Consensus is to stand back and allow markets to do things. Admission that, for example, PTTs are unable to cope with the rapid growth of new demands in the market.

France is terribly concerned about content and maintaining a European minimum content. It wants to preserve French culture. This may become an issue in the USA where culture and language are increasngly becoming a political issue.

Regulation may become impossible with video-on-demand, what do you measure?

Economic competitiveness

A major driver for the EU is the importance attached to economic competitiveness. Fear of Japan and the Asian 'dragon' or 'tiger' economies:

Interestingly, it is no longer a fear of the USA. La défi americain has faded [Servan-Schreiber].


Definitions

The information revolution

A blend of millenarianism with echoes of the Industrial Revolution.

First question is how well do we understand the Industrial Revolution. Only then can we evaluate the alleged parallel between steam engines and computers or microprocessors. Much of this lies in the writings of Alvin Toffler and other "populist" authors.

The information society

The post-industrial society

Daniel Bell's vision.

The post-industrial society was accepted in the UK as an ex-post facto rationalisation of economic decline and the death of manufacturing. The question left unanswered is whether manufacturing is something special, better than, say, hairdressing or selling junk bonds. Rt Hon John Smith QC MP, the then Leader of the Labour Party, asked if you could run an economy by everybody taking in each other's washing?

The Third World

What about Sub-Saharan Africa? Is it to be left to slip further behind. In 1984 the Maitland Report for the ITU, advocated that a major challenge would be to have everyone on the planet within two hours walking distance of a telephone by the year 2000. This has not been achieved. In some respects it is further off than before.

Is this socially acceptable?

Is it politically acceptable?

If not, how is it to be achieved?

Can we afford to waste the human capital of hundreds of millions of people.


Productivity

The economists' paradox

Computers and microprocessors are everywhere we look, but there is little or no evidence of improvement in productivity.

People have been talking about the productivity benefits of computers for decades. At least some of it should have been translated into economic gains.

How do you measure the efficiency of what people do in offices? Can we define the tasks? Can we ensure that the benefits that are supposed to be derived from computerisation are realised?

An old argument in office automation from the 1980s was to question whether management was capable of managing the ten percent productivity gain that technology was producing. It could quite easily be lost in unproductive activities. Did management have the tools to control this?

Could economists find the gains even they are there? Economics is not the most sophisticated of sciences.

Many of the gains lie in "soft" sectors of the economy, in areas such as banking and services. Gains here simply may not show up!

Paul Strassmann has shown the problems of correlating investment in IT with improved business performance. a lot of companies appear not to do very well. In "Relevance Lost", Johnson and Kaplan (1987) indicate some of the problems of using accounting techniques developed in the nineteenth century.

If IT shows no gains for business or economic performance why do people and organisations persist with it? Remarkable persistence in the spending of billions of Yen, DMarks and dollars.

Capital equivalency ratio

[Source: Scott Morton, 1990]

Possible explanations and excuses

Delays are caused by learning to use hardware and software. We might expect the gains to take an extra year or two to materialise. The replacement cycle for the equipment is very short, so that new investement is called for.

Flexibility in manufacturing might, for example, lead to more colours and styles of clothing. This might lead the customer to pay more for the goods. However, it is very difficult to measure this as an economic output. It may simply look like inflation and be adjusted accordingly.

Similarly, the cash dispenser or Automatic Teller Machine (ATM) appears to reduce eonomic efficiency, since fewer cheques are processed, fewer employees are required, etc. The electronic transactions may not be recorded in economic models and economists may not assign them any importance. How do ATMs provide increased economic output?


Changes in work

One test of the information society, of a possible information revolution, lies in the changes in the way we work.

Teleworking-Homeworking

It is now possible to work from home. At least we have the technology. It has been done for centuries albeit without the technology. Members of the UK Cabinet are sent home at night with red boxes filled with papers for them to read.

Do we want to work from home?

Who else is there and would they welcome us?

How many homes are designed for such activities?

Emotional and cultural investment in lifestyles.

Commuting

The immortal enthusiasm for commuting! It simply will not lie down and die. Why?

Investment in buildings, both office blocks and homes.

M25 round London, Peripherique round Paris, Washington Beltway, etc, etc.

A side effect of the electrification of the UK East Coast main railway line, from London to Edinburgh, was to bring Doncaster into range for London commuters!

Social and cultural life built around the office. A place to meet people.

Factory automation

Replacement of people with automated equipment. Transfer of work to new locations.

Fierce competition for Foreign Direct Investment (FDI) whether in China (Mercedes to manufacture vans), Scotland (Motorola manufacturing semiconductors) or the USA (Mercedes-Benz in Alabama).

The decline of the blue collar worker.

The death of the secretary

The job was created with the invention of the telephone and the typewriter. The introduction of women into "genteel" jobs in organisations.

Typing pools were wiped out by the word processor. Elimination of re-typing.

The "office-servant" died as the work of managers was re-distributed.

How many managers or executives still have a "personal" secretary? Shared by, perhaps, six people.

The long-forecast death of the middle manager

People have been predicting the death of the middle manager for decades. Finally it is happening.

Finally, the 'companyman' is going in North America and Europe

For example, British Telecom's "Project Sovereign".

Down-sizing. Much more than just IT.

Failure of the great multinational corporations, notably General Motors and IBM.

Warning: the MBA was designed in the hey-day of the American MNC. How many MBAs are produced annually in Germany, Japan or South Korea?

How many engineers do they produce?


Changes in the home

The electronic home

Perceiving the real world by electronic means.

It is difficult for a goldfish to see its own bowl.

[Andre Malraux.]

What do students bring with them to university?

About Yen 50,000 worth of electronic goods, mainly originating on the Western shores of the Pacific Ocean.

A typical car has more processing power than Apollo 13.


Universal Service

Al Gore talks about the information "haves" and "have nots" is this analysis fair? and how might it be resolved? He proposes wiring up schools, libraries and hospitals, but is this appropriate? Do we need real schools on the National Information Infrastructure or should libraries and schools be virtual?

What, today, would be the equivalent of Andrew Carnegie's great gifts of public libraries?

What are the failures of the market?

What are the social costs?

What are the economic costs?

What about red-lining.

Making TelCos pay. Why them?

Nobody expects Heinz and Minute Maid to pay for food stamps, or Firestone and General Motors to pay for roads.

What is or will be the nature of the deprivation?

How can we get the regulators out and a better solution in?


Readings

WWW links relating to the Infobahn and Information society.

Erik Brynjolfsson (1993) "The Productivity Paradox of Information Technology" Communications of the ACM 36 (12) 67-77.

Herbert S Dordick and Georgette Wang (1994) "The Information Society; a retrospective view" Sage, London.

Thomas H Johnson and Robert S Kaplan (1987) "Relevance Lost; the rise and fall of management accounting" Harvard Business School Press, Boston, MA.

Simon Nora et Alain Minc (1968) "L'informatisation de la societe" La documentation Francaise, Paris. ["The Informatisation of Society" MIT Press, Boston, MA.]

Robert B Reich (1991) "The Work of Nations; preparing ourselves for 21st century capitalism" Knopf, New York.

Anthony Sampson (1995) "Company Man; the rise and fall of corporate life" HarperCollins, London

Jean-Jacques Servan-Schreiber (1968) "La défi americain" [English translation: "The American Challenge" Atheneum, New York, 1968.]

Paul A Strassmann (1990) "The Business Value of Computers" Information Economics Press, New Canaan, CN.

Ewan Sutherland (1995) "Universal Service; refefining social obnligations in the single European market for telecommunications" Sixth Annual Conference of the International Association for Business and Society, Wien Österreich, June, 1995. WWW version


Copyright Ewan Sutherland, 1995.

http://www.georgetown.edu/sutherland/mgmt550/info_soc.html