A Third Wave Primer
The primary work describing the Information Revolution was The Third Wave, by Alvin and Heidi Toffler. It's an excellent book and well worth reading.According to Toffler, we started off as hunter-gatherers. We were nomads. We chased our food and moved as the food moved, following water and seasons. The sick, old, and weak were left behind and died. Our tools were the blade and the club, mimicking the weapons of animals. The valued commodity was physical strength.
The First Wave:
The Agricultural Revolution
The first wave started as people realized that they could raise crops in the ground. People stayed in one place. The old, the sick, and the weak stayed with the family, and we developed treatments for them.
Families were extended; generations lived on the same land. Their sense of time was cyclical, seen as repeated cycles of moons, crops, and seasons.
Everybody worked the farm. People were generalists, able to do many things. There was very little waste. Consider how a farm uses every bit of a butchered hog for food, clothing, candles, etc.
Any products that were produced were custom made, by hand, among the family. Work was done in the home or on the farm, from which we get the phrase cottage industry. Barter was the medium of exchange. The valued commodity was land, and so that's what was taxed, usually as a share of the foodstuffs grown in the land.
Their tools were the inclined plane, the lever, and the wheel and axle. They used the blade as a plow. These tools magnified human strength.
The information available to people during the First Wave was limited to some verbal narratives and to what their senses apprehended (from which we get the Biblical euphemism, he had knowledge of her). Since information came from experience, people with more experience had more information, and we valued age.
The First Wave Transition
Transitions are generally painful things. Change does not go smoothly.The farmers had conflicts with the remaining hunter-gatherers. Sometimes raiding parties would attack the food stores, and the farmers needed armies to protect themselves.
New types of conflicts arose among the farmers; who owned which land? Who got to use the available water? Who specified where the latrine was? We developed community laws and designated people to enforce them.
How did they pay for the laws, the protection, or the land? Generally, they taxed what was valuable, paying a large portion of their crops to a local strongman.
Three innovations set the stage for the Second Wave.
- Accurate clocks (usually each town could afford one, and placed it in a tall tower for visibilty) permitted the coordination of activities to a degree not possible before.
- The printing press permitted large-scale, accurate duplication and transmission of information across space and time. Literacy became a new skill.
- The quest for farm implements led to new developments in metallurgy, notably iron and steel.
The Second Wave:
The Industrial Revolution
Our tools progressed, and we harnessed powerful forces of nature to amplify the power of our earlier tools. We applied wind, water, coal, steam, and oil to the basic tools and produced railroads, clipper ships and steam ships, and automobiles.
Second Wave work involved investments (capital) in expensive equipment, people (labor) to work the machines, and a location (factories) where all the parts could come together.
These new focuses brought us new groups. Only the Capitalists could afford the investments. A species called Managers appeared to keep the Labor working for the Capitalists. Labor, in turn, organized into Unions. The Corporation gave the business the legal status of a person.
The notion of the factory as the place of work extended beyond manufacturing: schools were factories for learning, hospitals were factories for treatment, asylums were factories for the sick.
As work moved from the home to the factory, people moved to cities. Often the husband went to work (in a second wave job) while the wife stayed home tending to first wave duties, and gaps appeared between the once-equal genders. The nuclear family became the normative unit.
The Second Wave Transition
- In England, farmers and textile workers displaced by the factories organized, burned factories, and called themselves Luddites. Today we call anybody who resists technology a Luddite.
- In France, workers through their wooden shoes (called sabots) into the textile machines in acts of sabotage.
- America's Civil War was a conflict between an industrial Second Wave economy (the North) and an agricultural First Wave economy (the South).
- Arguments about real estate taxes vs. income taxes are a First Wave / Second Wave conflict.
Details of The Second Wave
Second wave workers were specialists to such a degree that barter was no longer practical. Cash money became the lifeblood of the economy. Banks started dealing with the working class. When money became more important than land, we started taxing money (both as income and profits).
Second Wave work was something quite separate from the house. The pinnacle of success was to have a career, a predictable, symbiotic relationship with one employer.
Here's an interesting scenario: The husband spends his worklife in a factory driven by second-wave, stop-watch timing. The wife spends her worklife in a home driven by first-wave, cyclical time. When He takes Her out on a Saturday night, he paces, fumes, and looks at his watch because "women have no sense of time". Ring any bells?
The factories consumed and processed raw materials, often exploiting natural resources in a non-sustainable manner. They found that bigger factories worked cheaper, and they competed on economies of scale. We later found out that economies of scale were restrained by the law of diminishing returns; the efficiency of the factory had limits.
The factories mass-produced standard products for mass markets. (You could have any color Ford you wanted, as long as it was black.) Middlemen and brokers provided the interface between the factories and the consumers.
Organizations progressed as the factories and corporations developed. The vertical org-charts represented the chain of command. The structure of General Motors wasn't that different from the US Army.
Efficient use of the factories introduced time analysis. Frederick Taylor introduced the notion of linear, rather than cyclical, time.
The two World Wars drove the combatants to emphasize their manufacturing capabilities, driving the Second Wave to its peak. Production capacity won the wars as much as men with rifles did.
The information available to people increased. Printed materials conveyed information accurately across time and space. Libraries formed repositories of knowledge and thoughts. Information was stored in analog media, including books, photographs, and audio recordings.
Military needs set the stage for the Information Revolution.
- Ballistics computations drove the development of the first computer.
- Code breakers needed de-ciphering systems, which developed into information processing systems.
- Radar sensor systems extended human sight beyond the visible horizon.
- The Cold War forced military investment in information-based command and control systems.
The Third Wave:
The Information Revolution
Just as manufacturing came out of the peak of the agricultural era, the information age came out of the peak of the manufacturing era. The huge companies and military organizations needed to track what they had, what they were doing, and what they were spending.
The new tools amplified our senses and memories, rather than our strengths. Radar systems warn us of incoming missiles, robot calipers detect tiny variations in ball bearings, and CD-Roms store our accumulated knowledge.
One early, widely developed info system was the telephone network. Several of our other technologies (fax systems, the internet) ride over the phone network. It's not evident, but the phone network is the technological marvel of our age.
Work isn't done in a factory anymore. Many of the factories (including the corporate headquarters, the administrative factory) have downsized, outsourced, and shut down.
Now that information is abundant, we no longer value older people as repositories of knowledge. In fact, we suffer from information overload. Too often, our systems deliver deafening noise without meaning.
The Third Wave Transition
The career, the social compact between the employer and employee, is a wistful nostalgia. Employees are responsible for their own careers now, which will involve many changes.
Too often, Dad's job in the steel mill was gone. Mom got a job working in a phone center. The family unit has changed. It's not the nuclear family anymore; the blended family has replaced Ward and June Cleaver. Gender distinctions in the workplace are waning.
Money isn't important the same way as it used to be. It's still the medium of exchange, and it's still good to have a lot of it, but the tangible, physical presence of paper doesn't translate to the Third Wave too well. The credit card is the new dollar bill.
Details of the Third Wave
- Work is done everywhere: at home, on the road, even in the office! (A return to the cottage)
- Continual education is the pre-requisite for success.
- Size doesn't matter: Small, nimble, companies can compete with giant, bureaucratic, companies.
- Location, Space, and Mass don't matter. (No pun intended)
- Time matters dearly, and we call the new timeframe Internet time.
- We haven't figured out what to tax yet, but they're thinking hard about it.
- Some people argue that Women may be more disposed to success in the third wave, dealing better with ambiguity, subtlety, collaboration, and context than Men do.
Digital Info and Processes
There are two types of information: digital and analog. Digital information, once in a computer, can be whisked anywhere in the world with one click. It can be rapidly moved without delay and without degradation. Digital information is faster and more fluid than analog information.Business processes can gain or suffer from the distinction. Analog workflows built around a carbon-paper information system, a paper-driven scheduling system, and an analog voice driven messaging system, have a hard time competing against a digital info system, web-based scheduling, and digital messaging systems.
Hyper-Organizations
The United States' most successful export industry is the entertainment industry, shipping movies and music (which are, after all, only digital files) around the world. How does Hollywood organize around work?Each film or video is a unique project, developed by a distinct organization, linking people with an incredible range of skills, and the whole shop disbands when the project is over. This is called a hyper-organization, suggesting rapid, churning linkages, as opposed to the GM hierarchical org-chart.
Mass Customization
Your super market's frequent shopper card and your credit card's frequent flyer miles program provide manufacturers with detailed customer information, in an arrangement called one-to-one marketing. You'll get coupons that vary from your neighbor's. Instead of mass-marketing, third wave products are mass customized for individual tastes. (Think Land's End).
The implication is that the information gained in a transaction may be more valuable than the profit from the deal.
The One-to-One Future
Customers now interact directly with manufacturers. First it was 800 numbers, then it was websites. You call their phone center (located adjacent to a FedEx hub), and your sweater with your initials is delivered by 2:00 the next day. That sweater wasn't lying around, ready to be delivered; increasingly, the product isn't finished until just before it goes into the package.
All of a sudden it didn't matter where the phone center was. It could be in Utah or the Sun Belt. And then we realized it doesn't matter where the Company was, and maybe every section of the company should exist where it's most efficient. Like Mexico, or India. Here's a Third Wave mantra: Place doesn't matter anymore.
Disintermediation
The losers in this new world were the middlemen, the intermediaries. The buzzword is disintermediation, the elimination of all steps between the producer and the consumer. Car Salesmen, Brokers, Insurance salesmen: they're all going under the ax. Toyota's busiest dealership in the US is it's website.
Computers summarize the reports and data that used to be the realm of middle manager, who were intermediaries between the shop floor and the annual report. The gutting of middle management severed the career ladder.
Network Economies
The Second Wave featured economies of scale, limited by decreasing returns. The Third Wave economy is different.- If you bought the very first fax machine, it probably cost $18,000, and you couldn't use it because nobody else had one.
- Ten years ago, you'd pay $500 for a fax, and your purchase would connect you to hundreds of thousands of fax machines.
- This week, you can buy one for $80, and that amount will buy you a connection to millions of fax machines.
This is a huge notion. For instance, we give cell phones away if you'll agree to a $20 monthly fee, and you can use that cellphone to call people around the globe. We used to pay for internet access, but now people are giving us web access for free if we'll watch their ads.
Digital Convergence
In the second wave, the phone company handled your voice needs, and the electric company handled your energy needs. Since information became digital, your cable-TV company can sell you phone service, and the electric company can sell you internet access. The old distinctions are blurring, and it's a very confusing time. We call this Digital Convergence. Increasingly, companies are all in the same business: meeting customer needs through information.
Business Implications of The Third Wave
- Time moves faster
- Compete on information
- Seek digital processes
- Place and Distance don't matter
- Avoid inventory, bricks, and mortar
- Build information and relationships
- Use the web for two-way communications
- The information gained in a transaction may be more profitable than the transaction
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