The New Global Enterprise

8/3/2019 The New Global Enterprise

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In 1989-90, I read two compelling books on

how increasing quantity and availability of information was transferring

market power to the consumer from corporate producers (Power Shiftby

Alvin Toffler), and,

how the nature of work was changing as the Baby Boomers would begin

to approach retirement in 2008 (The Age of Unreason by Charles

Handy).

The impact described by Toffler and Handy portends radical changes in corporate

structure, the people working in and for those corporations, and processes to

accommodate the secular changes so convincingly foretold. For example, the

Gerstner transformation of IBM to a market centric instead of production focused

enterprise displays the full impact of the Power Shift in the Age of Unreason. In

addition to the transformation of IBM, the 90s saw the full impact of information

technology in the form of the great increase in productivity as the Boomersreached their peak performing years. The Economic Boom of the 90s was driven

from the Boomer productivity phenomenon, not the Internet which, while

important, was a distracting overlay where people mistook means for ends. The

Age of Unreason worker will be with us for some time. In the next decade, the

full impact of the retirement of US Boomers will unfold as the oldest turn 62 in

2008. The population bubble is 25 years wide, so their influence will be great

for some time to come.

This is an essay in thinking about how corporations and people will be changed

by these two forces and what to do strategically about it.


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As changes sweep through societies, industries and organizations, they occur in waves from innovators, to early

adopters, to followers, and, f inally, to the laggards. Change is a wave that radiates out from one or more focal points.

The pattern of change depends on how many foci there are (and each new adopter becomes a potential focal point), the

speed with which it emanates, and, the persistence of the replaced devices, methods and ways (referred to pejoratively

as legacy as if older is always bad and new always good). So at any time and in any place, the prevalence and

distribution of an innovation varies greatly.

On the 2 -hour one-way commute to Wall Street from home in Philadelphia each day while working at Citicorp-Shearson Lehman American Express-JP Morgan, the train ride was populated by many people like myself who were

attracted by the gravitational field of NY City. These people were driven and usually very engaging. What other kind of

person would suffer in a half-time job of commuting to a full-time job? To be sure, many conversations turned into

interesting discussions on topics ranging from the possible physical chemistry dynamics that could make Cold Fusion

feasible with David, a former dentist turned Pharma research analyst or addressing the question of What is money,

really? with Mickey, now Chief Economist of a very large national bank. The train offered many cliques of commuters of

differing characteristics. My Amtrak social group consisted of five core people plus four or five occasional partic ipants.

The friendships could be profound. In fact, I introduced one of my favorite f riends Janet, a bond salesperson, to my

cousin and they have been married 10 years now with two beautiful children (one for one, I retired quickly from my

matchmaking career). We were the thinkers and talkers often requested to shut up during an exciting discussion on the

5:40AM commute so others could use the time to sleep. The reply usually was, The sign says No Smoking not No

Talking. Of course, we would lower our voices to be respectful of others, but not before a typical New York come-back.

I would air and vet my newest or most persistent thoughts with the people in this group. At 5:40 in the morning, the mind

may be just waking up, but the day has not yet launched the usual many, distracting parallel tasks. So all my brainpower

was dedicated to these discussions. Stanley, a corporate communications representative for a Japanese bank, was oneof the brightest people Ive ever met. His training was a PhD in Asian literature and he was fluent in both written and

spoken Chinese and Japanese. But his knowledge and analytic capabilities extended far beyond that. In 1993, while

discussing the formation of the ideas of this essay, he introduced me to a certain South Asian view of the structure andoperation of the cosmos is called Indras Net which relates to the communications dynamics of the Internet.

Indras Net idealizes the universe as a mesh of pearls where some attribute is introduced to one pearl instantly appears

at every other pearl so that the point of introduction is indistinguishable from the copies. This is zero-latency diffusion of

state and function, the Holy Grail of distributed computing. It led me to the idea that there is no center of the Internet.

The Center is Nowhere and Everywhere. But compared to the pre-Internet t ime for diffusion of ideas, innovations and

changes that result from them, Indras Net seemed to be a great ideal for understanding the future driven by near zero-

latency diffusion of ideas and innovations.

Interestingly, we have arrived at a time when ideas and innovations diffuse faster than many entitiesindividuals,

organizations, industries or societiescan respond to them. One or more generations of innovations can be

missed/skipped simply because they run their respective courses before permanent, sustainable responses can be madeby an adopting entity. Thus, not only is the distribution of the future uneven, but it is not even close to a continuous

function.


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The new dominant economic sector encompassing both services and production

alike will be Cyberian. It will be more agrarian than industrial in character.

While dominant entities will exist, they will be less in control of their fate as

constant scaling will be required up, out or down with equal ease, and all will be

market driven. As in the Darwinian sense, selection will be based on adaptability

and flexibility rather than number, size or strength. Frequent radicaltransformations may be required as markets grow efficient at an increasing rate.

It will come to be the consolidator or change or die.

After Richard Dawkins, noted zoologist and author ofThe Selfish Gene (cf.

http://www.world-of-dawkins.com/Catalano/rl_memes.shtml), the meme pool will

need to be quite diverse. In the 1989 second edition (first edition in 1976) in

Chapter 11, Dawkins noted that information operates much like DNA in genes.

He dubbed the unit corresponding to the gene, meme, The meme contains and

transmits the subject information of the meme. Collections of memes define a

class of knowledge, an idea, that is self-propagating. In the end, self-propagatingideas are like species. Some combinations of ideas produce knowledge that is

like a hybrid, like a mule, strong and useful, but not able to self-propagate.

The idea of meme is a meme itself and replicated itself exceedingly quickly

viral marketing as they call it. It has been applied in many different activity

areas all over the world. To wit, one of the clearest explanations is on the

Namibia Economist Web Site in a page on branding:

http://www.economist.com.na/2004/26mar/03-26-23.htm. Strategy is composed

and most useful within an entity, if it is memetic knowledge, i.e., coherent,

relevant and actionable.


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1993 was a year of the convergence of many ideas for me. It was a year of a great synthesis that has held me in goodstead professionally for the past 11 years. The postulate that Knowledge is the last bastion of competitive advantagewas introduced to me by Lester Thurow. He was the Keynote Speaker at the InterOp Conference (focused onnetworking and communications) May 1993 in San Jose, CA. As he was then dean of MITs Sloan School ofManagement and an Educational strategic manager, his main thesis was that education was the paramount economicinfrastructure for any country wanting its citizens to compete in the world economy.

In my thinking, Thurow precipitated the expression mechanism for the specific memes I was working with courtesy ofHandy, Toffler and yours truly. That is the idea of commoditization of factors consigning competitive advantage. It began

with Natural Resources, superseded by Capital Availability, eclipsed by Technology Ownership and ending withKnowledge. Knowledge Management is the thread that weaves all three of the ideas together. In his InterOp Keynote,Thurow opined about the four stages of sustainable competitive advantages to his end of arguing for more funding of ITand Business Research in Higher Education. In this essay, they have been embellished with the color and tenor ofhistorical setting and controlling agents. They have worked and reworked in the past 11 years to a point beyond whereThurow may disown the conclusions here. So be it. Knowledge is the ultimate reusable and renewable resource, limitedonly by the experience and mental capabilities of the entire human race, now 6 billion strong. A one-in-a-million thinkerdenotes potentially 6,000 people. So we all have lots of company in our thinking processes. And this is only of thoseliving now! I have maintained for a very long time, moreover, there are no new ideasand that is an very old idea itself. (I do so digress!)

Now to the argument for the Sherr Corollary of the Thurow Only Knowledge Matters Postulate. Economic globalizationis not a new phenomenon. It scaled up dramatically after Marco Polo established the diplomatic relationships betweenPopes Nicholas IV, St. Celestine V and Boniface VIII and the Great Kublai Khan in the 1290s. Two hundred years later,Columbus discovered the New World. Apologies to Leif Erikson and St. Brendan who arguably did it four and ninehundred years before Columbus, respectively. However, these two explorers did it without the intent of general economicexploitation. This essay is about economic exploitation in the most benign sense, of course.

In broad strokes, the first important date for the sake of the Sherr variant of Thurows argument here is the 15 th Century

which nominally ushered in the beginnings of Capitalism. It was at that point in history when availability of Capital beganto commoditize Natural Resources as the conveyor of sustainable competitive advantage. Availability of Capital itselfwas to start being commoditized by Technology Ownership Rights and the concomitant Industrial Revolution at the closeof the 18th Century. The Industrial Revolution continued into the 20th Century until the 1970s when the Computer-Communications revolution kicked into overdrive facilitating Knowledge and its Management as the ultimatecommoditizer, even of itself.

Diving into more detail, before 1400, the main source of competitive economic advantage was Natural Resources. It wasprotected or garnered via geography and armies. Many civilizations flourished during this period, Sumerian, Egyptian,Asia Minor, Mediterranean, Mayan, Incan, South Asian, Chinese, Mongol, Meso-Mexican, to name a few. They all hadnatural resources as the center of their advantage which was protected or garnered via geography or armies.

While Trade and Exploration existed during these times. It did not automatically support sustainable advantage. Withthe invention of the large sea worthy sailing vessels and the general availability of Capital from the early Renaissancesurplus production, Natural Resources were commoditized as advantage sustainers. I posit that the perfection of thehorse collar by the late 11th Century allowed a great increase in agrarian production in Europe. Marginal lands were ableto be brought into production. The population, however, tracked the with the food increases (thank you, Rev. Malthus)which did not allow for surplus generation. Plus, the Feudal social organization concentrated wealth in the lords andkings who indulged in extravagances and wars. Enter The Black Plague in the 14th Century which decimated theEuropean population by one-third without concern for class or age. All of sudden, the serfs who did the work and thevassals who managed and conveyed the wealth to all the Feudal lords fell away from the socio-political body.


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The New Global Enterprise

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