Interesting article I found at the G & K board. Zero implications for telecom but worth the read anyway. Peter Drucker is the author.
Anyone who has tried to master a Niagara Falls of information while making an important decision will feel at home:
nationalpost.com
History lessons for today's revolutionaries
The money and honours showered on IT workers could dry up as quickly as it did for the information superstars of the past -- printers
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SUMMARY
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The "unprecedented" information revolution we are now witnessing is nothing of the sort, says Peter F. Drucker. He maintains that the invention of the printed book more than 500 years ago had an impact that was every bit as great and immediate. And today's most significant changes may be less high-tech than we suppose.
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Half a century ago, around 1950, prevailing opinion overwhelmingly held that the market for that new "miracle," the computer, would be in the military and in scientific research. A few of us, however -- a very few indeed -- argued even then that the computer would find major applications in business and would have an impact on it. These few also foresaw -- again, very much at odds with the prevailing opinion (even of practically everyone at IBM, just then beginning its ascent) -- that in business the computer would be more than a very fast adding machine doing clerical chores such as payroll or telephone bills.
On specifics, we dissenters disagreed, of course, as "experts" always do. But all of us nonconformists agreed on one thing: the computer would, in short order, revolutionize the work of senior management. It would, we all agreed, have its greatest and earliest impacts on business policy, business strategy and business decisions.
We could not have been more wrong. The revolutionary impacts so far have been where none of us had anticipated them: on operations.
Not one of us, for instance, could have imagined the truly revolutionary software now available to architects. At a fraction of traditional cost and time, it designs the "innards" of large buildings. Not one of us could then have imagined the equally revolutionary software available to today's medical students. It enables them to do "virtual operations" whose outcomes include "virtually killing" patients if the surgeon makes the wrong surgical move.
Half a century ago, no one could have imagined the software that enables a major equipment maker such as Caterpillar to organize its operations, including manufacturing worldwide, around the anticipated service and replacement needs of its customers. And the computer has had a similar impact on bank operations, with banking probably the most computerized industry today.
But the computer and the information technology arising from it have so far had practically no impact on the decision whether or not to build a new office building, a school, a hospital or a prison, or on what its function should or could be. They have had practically no impact on the decision to perform surgery on a critically ill patient or on what surgery to perform. They have had no impact on the decision of the equipment manufacturer concerning which markets to enter and with which products, or on the decision of a major bank to acquire another major bank. For senior management tasks, information technology so far has been a producer of data rather than a producer of information -- let alone a producer of new and different questions and new and different strategies.
The people in management information systems (MIS) and information technology (IT) tend to blame this failure on what they call the "reactionary" executives of the "old school." It is the wrong explanation. Senior executives have not used the new technology because it has not provided the information they need for their own tasks. The data available in business enterprise are, for instance, still largely based on the early 19th-century theorem that lower costs differentiate businesses and make them compete successfully. MIS has taken the data based on this theorem and computerized them. They are the data of the traditional accounting system.
Accounting was originally created, at least 500 years ago, to provide the data a company needed for the preservation of its assets and for their distribution if the venture was liquidated. And the one major addition to accounting since the 15th century -- cost accounting, a child of the 1920s -- aimed only at bringing the accounting system up to 19th-century economics, namely, to provide information about, and to control, costs.
But, as we began to realize around the time of the Second World War, neither preservation of assets nor cost control are senior management tasks. They are operational tasks. A serious cost disadvantage may indeed destroy a business. But business success is based on something totally different, the creation of value and wealth. This requires risk-taking decisions: on the theory of the business; on business strategy; on abandoning the old and devising the new; on the balance between immediate profitability and market share. These decisions are the true senior management tasks.
It was this recognition that underlay, after the Second World War, the emergence of management as a discipline, separate and distinct from what was then called business economics and is now called microeconomics. But for none of these top management tasks does the traditional accounting system provide information. Indeed, none of these tasks are even compatible with the assumptions of the traditional accounting model.
The new information technology, based on the computer, had no choice but to depend on the accounting system's data. No others were available. It collected these data, systematized them, manipulated them, analyzed them and presented them. On this rested, in large measure, the tremendous impact the new technology had on what cost accounting data were designed for: operations. But it also explains information technology's near-zero impact on the management of business itself.
Senior management's frustration with the data that information technology has so far provided has triggered the new -- the next -- information revolution. Information technologists, especially chief information officers in businesses, soon realized that the accounting data are not what their associates need -- which largely explains why MIS and IT people tend to be contemptuous of accounting and accountants. But they did not, as a rule, realize that what was needed was not more data, more technology, more speed. What was needed was to define information; what was needed was new concepts. And in one enterprise after another, senior management people during the past few years have begun to ask, "What information concepts do we need for our tasks?" And they have now begun to demand them of their traditional information providers, the accounting people.
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A LITTLE HUMILITY
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The current information revolution is actually the fourth information revolution in human history. The first one was the invention of writing 5,000 to 6,000 years ago in Mesopotamia; then -- independently but several thousand years later -- in China; and some 1,500 years later still, by the Maya in Central America. The second information revolution was brought on by the invention of the written book, first in China, perhaps as early as 1300 BC, and then, independently, 800 years later in Greece, when Pisistratus, the tyrant of Athens, had Homer's epics -- only recited until then -- copied into books.
The third information revolution was set off by Gutenberg's invention of the printing press and of movable type between 1450 and 1455, and by the contemporaneous invention of engraving. We have almost no documents on the first two of these revolutions, although we know that the impact of the written book was enormous in Greece and Rome as well as in China. But on the third information revolution, printing and engraving, we have abundant material. Is there anything we can learn today from what happened 500 years ago?
The first thing to learn is a little humility.
Everybody today believes that the present information revolution is unprecedented in reducing the cost of, and in the spreading of, information -- whether measured by the cost of a byte or by computer ownership -- and in the speed and sweep of its impact. These beliefs are simply nonsense.
At the time Gutenberg invented the press, there was a substantial information industry in Europe. It was probably Europe's biggest employer. It consisted of hundreds of monasteries, many of which housed large numbers of highly skilled monks. Each monk laboured from dawn to dusk, six days a week, copying books by hand. An industrious, well-trained monk could do four pages a day, or 25 pages during a six-day week, for an annual output of 1,200 to 1,300 handwritten pages.
Fifty years later, by 1500, the monks had become unemployed. These monks (some estimates go well above 10,000 for all of Europe) had been replaced by a very small number of lay craftsmen, the new "printers," totalling perhaps 1,000, but spread over all of Europe (though only beginning to establish themselves in Scandinavia). To produce a printed book required co-ordinated teamwork by up to 20 such craftsmen, beginning with one highly skilled cutter of type and going up to a much larger number, maybe 10 or more, of much less skilled bookbinders.
Such a team produced each year about 25 titles, with an average of 200 pages per title, or 5,000 pages ready to be printed. By 1505, print runs of 1,000 copies were becoming common. This meant that a printing team could produce annually at least five million printed pages, bound into 25,000 books ready to be sold -- or 250,000 pages per team member against the 1,200 or 1,300 the individual monk had produced only 50 years earlier.
Prices fell dramatically. As late as the mid-1400s -- just before Gutenberg's invention -- books were such a luxury that only the wealthy and educated could afford them. But when Martin Luther's German Bible came out in 1522 (a book of well over 1,000 pages), its price was so low that even the poorest peasant family could buy one. The cost and price reductions of the third information revolution were at least as great as those of the present, the fourth information revolution. And so were the speed and the extent of its spread.
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IMPLICATIONS FOR THE TECHNOLOGISTS
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The last information revolution, the printed book, may also have a lesson for today's information technologists, the IT and MIS people and the chief information officers: They will not disappear -- but they may be about to become "supporting cast" rather than the "superstars" they have been during the past 40 years.
The printing revolution immediately created a new class of information technologists, just as the most recent information revolution has created any number of information businesses, MIS and IT specialists, software designers and CIOs. The IT people of the printing revolution were the early printers. Nonexistent -- and indeed not even imaginable -- in 1455, they had become stars 25 years later. These virtuosi of the printing press were known and revered all over Europe, just as the names of the leading computer and software firms are recognized and admired worldwide today. Printers such as the famous Venetian Aldus Manutius (1449-1515) and Christophe Plantin of Antwerp (1520-89) were courted by kings, princes, the Pope and rich merchant cities and were showered with money and honours.
By 1580 or so, the printers, with their focus on technology, had become ordinary craftsmen, respectable tradesmen to be sure, but definitely no longer of the upper class -- and they had also ceased to be more profitable than other trades and to attract investment capital. Their place was soon taken by what we now call publishers (though the term wasn't coined until much later), people and firms whose focus was no longer on the "T" in IT but on the "I".
This shift got underway the moment the new technology began to have an impact on the meaning of information, and with it, on the meaning and function of the 15th century's key institutions, such as the Church and the universities. It thus began at the same juncture at which we now find ourselves in the present information revolution. Is this where information technology and information technologists are now?
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THE NEW PRINT REVOLUTION
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There is actually no reason to believe that the new information revolution has to be high tech at all. For we have had a real information revolution during the past 50 years, from 1950 on. But it is not based on computers and electronics. The real boom -- and it has been a veritable boom -- has been in that old no-tech medium, print.
In 1950, when television first swept the country, it was widely believed that it would be the end of the printed book. The U.S. population since then has grown by two-thirds. The number of college and university students -- the most concentrated group of users and buyers of books has increased fivefold. But the number of printed books published and bought in the United States has grown at least 15-fold, and probably close to 20-fold.
Even faster than the growth of the book publishers has been the growth of another print medium: the specialty mass magazine. A good many of the huge-circulation general magazines that dominated 1920s and 1930s America -- Life, for instance, or The Saturday Evening Post -- have disappeared. They did indeed fall victim to television. But there are in the United States now several thousand -- one estimate is more than 3,000 -- specialty mass magazines, each with a circulation between 50,000 and one million, and most highly profitable.
The most visible examples are magazines that cover business or the economy. The three leading U.S. magazines of this type -- Business Week (a weekly), Fortune (a biweekly) and Forbes (a monthly) -- each have a circulation approaching one million. Before the Second World War, the London-based Economist -- the world's only magazine that systematically reports every week on economics, politics and business the world over -- was practically unknown outside Britain; and even there its circulation was quite small, well below 100,000 copies. Now its U.S. circulation alone exceeds 300,000 copies a week.
And there are similar specialty mass-circulation magazines in every field and for every interest. So what explains the success of the print media?
College students probably account for the largest single share of the growth of printed books in the United States; growth in college texts and in books assigned by college teachers. But the second largest group is books that did not exist before the 1950s, at least not in any quantity. There is no English word for them. But the German publisher who first saw their potential and first founded a publishing house expressly to publish such books, the late E.B. von Wehrenalp (who founded Econ Verlag in Düsseldorf -- still my German publisher), called it the Sachbuch -- a book written by an expert for nonexperts. And when asked to explain the Sachbuch, Wehrenalp said: "It has to be enjoyable reading. It has to be educational. But its purpose is neither entertainment nor education. Its purpose is information."
This is just as true of the specialty mass magazines -- whether written for the layman who wants to know about medicine or for the plumber who wants to know what goes on in the plumbing business. They inform. And above all, they inform people about the outside. The specialty mass magazine tells the reader in a profession, a trade or an industry what goes on outside his or her own business, shop or office -- about the competition, about new products and new technology, about developments in other countries and, above all, about people in the profession, the trade or the industry (and gossip has always had the highest information -- or misinformation -- quotient of all communication).
And now the printed media are taking over the electronic channels. The fastest-growing bookseller since Aldus Manutius 500 years ago has been Amazon.com, which sells printed books over the Internet. And Bertelsmann, in the autumn of 1998, bought a controlling 50% in Barnes & Noble, Amazon.com's main competitor. More and more specialty mass magazines now publish an online edition -- delivered over the Internet to be printed out by the subscriber. Instead of IT replacing print, print is taking over the electronic technology as a distribution channel for printed information. The new distribution channel will surely change the printed book. New distribution channels always do change what they distribute. But however delivered or stored, it will remain a printed product. And it will still provide information.
The market for information exists, in other words. And, though still disorganized, so does the supply. In the next few years -- surely not much more than a decade or two -- the two will converge. And that will be the real new information revolution -- led not by IT people, but by accountants and publishers. And then both enterprises and individuals will have to learn what information they need and how to get it. They will have to learn to organize information as their key resource. |
