2020 Vision..pdf

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Chapter One: Just Past Growth, Still Short of Maturity (35 pages)Most information in the current economy can be classified into four distinct forms and functions; thus, the inherent

power of information comes from understanding the interplay of this architecture of information. The four forms are: (1) data (although data existed before computers, it was the computer’s unique data handling capability that spawned the information economy); (2) written language, as distinguished from spoken language, which technology considers one form of sound; (3) sound, or what we hear (essentially voice and music); and (4) images, or any visual forms.

When we generate, process, store, and/or transmit these basic forms of information, they become more complex—all the combinations and configurations producing an infinite variety of information-based tools, products, services, and businesses. For example, by combining a tape recorder and a telephone, an answering machine is created—sound is generated, transmitted, and stored. The combination of more forms and functions equals more added value.

The simple information form/function grid provides managers and entrepreneurs easy access to the remaining years of the information economy. All products and services that deal with information can be analyzed in these terms;

Stan Davis

and Bill Davidson

© 1991 Simon & Schuster

ISBN 0-671-73237-4

2020 VisionTurbocharge Your Business Today To Thrive in Tomorrow’s Economy

Volume 8, Number 3 • Copyright ©2000 Corporate Support Systems, Inc. • All Rights Reserved

Reviewed by Lydia Morris Brown

http://www.BusinessBookReview.com

Stan Davis and Bill Davidson2020 Vision


but more important, all companies can use this grid to form their future businesses in tandem with the evolving economic infrastructure.

Throughout history, each economy has relied on the infrastructure peculiar to the technology of the era. Today, computers, linked by telecommunications, are creating a new infrastructure (or infostructure) that promises to transform society and the economy even more so than in the past. Industries build each infrastructure, yet their economic value is dwarfed by the greater productivity of new businesses and industries that result from the newly laid foundation.

Technological bottlenecks create obstacles to an even wider application of the information infrastructure. Like people in the second stage of life, the infrastructure falls between growth and maturity and is torn by the necessity of choosing from among competing paths, or standards.

Chapter Two: There Is No Jack Benny Law of Business—You Can’t Stay 39 Forever (31 pages)

The information infrastructure has matured to the point that the internal organizational efficiencies it creates and the external added service value it provides are the factors in the survival of older generation businesses past forty.

Just as most businesses will industrialize, they will also eventually informationalize. Competitive advantage and growth belong to those businesses that establish new standards of performance. Following are some equations that portray how mature companies will behave in the second half of the economy: • Informationalization = Customized Products

+ Rapid ResponseQuality, productivity, and customer service combine

with mass customization (including self-design) and real-time operation, i.e., rapid response. Already, this strategy

finds success in the traditional home mortgage, insurance, and publishing industries. • Informationalization = Manufacture at Point

of DeliveryRapid response can be accomplished by moving the

final production stages as close to the customer as possible. Thus, in the second half of the information economy, the core function centers on distribution and delivery. Film processing, eyeglasses, and printing have already moved production into the retail outlet. Nonetheless, informationalization has already begun to eliminate the retail outlet in the pizza delivery business: Technology allows customers to telephone the delivery truck where their orders are taken and prepared. • Informationalization = Shrinking Overhead,

Inventory, and Working CapitalIn the information economy, most goods and services

will increasingly be designed, produced, and delivered to order, making the preproduction of standard products in large, remote facilities and the stockpiling of inventory obsolete. Thus, the need for working capital is declining and being replaced by new assets, e.g., data bases and electronic networks. As a result, accounting methods will also become informationalized, and suppliers, producers, distributors, and customers will all connect to an electronic payments network. In turn, purchasing and payables departments can be reduced, leading to a further reduction in overhead, response time, and working capital. Obviously, those firms that establish these kinds of informationalized operations and relationships will gain a significant competitive edge. And, as informationalization pervades the economy, the increasing velocity of money will free vast resources for more productive uses. • Information + Direct Access = Higher Service

StandardsDirect access enables customers to access all the

vendor’s products, services, and resources in any configuration with seamless order entry, fulfillment, and settlement. Progress in the use of these methods depends upon their convenience and on educating and training the customer. • Informationalization = Inter-Organizational

BondingAn increasingly sophisticated information architecture

causes suppliers, distributors, and retail consumers to

About the Authors

Stan Davis, author of Future Perfect, is an advisor to large corporations and former Harvard Business School professor.

Bill Davidson, consultant and author, is an asso-ciate professor at the University of Southern California.



become more intertwined with producers. This electronic intimacy, however, blurs the distinction between internal and external transactions and creates a host of new problems—security and independence for example. Rather than viewing this problem as an excuse to resist change, Florida Power and Light saw an opportunity for further innovation that has substantially benefited both the utility and its suppliers. • Informationalization + Logistics =

GlobalizationNational and global competitors can be virtually as

responsive as local outlets by stripping the information component from the tangible product and moving it around the world on sophisticated information systems. Publishers increasingly use information technology to print their publications in far away locations; banks, credit card companies, and airlines have their checks and vouchers processed in the Caribbean; and U.S. insurance companies turn to Ireland as a policy and claim processing center. Globalization is easiest for such products as semiconductors that have high value-to-weight ratios; however, logistics partnering makes it possible in all businesses (Federal Express, DHL, and UPS are competing in that arena).

Chapter Three: Find the Turbocharger in Your Business (30 pages)

Turbochargers recycle engine exhaust as a means of enhancing an automobile’s power and performance. In the same way, information technology produces information exhaust that can be turbocharged to improve the performance of any business or industry. In fact, turbocharged services usually give birth to new enterprises that often become worth more than the parent. TV Guide, for example, was purchased in 1987 for more than $2 billion—more than the market value of any of the three major broadcast networks (ABC, CBS, or NBC).

Every business contains one or more latent info-businesses, i.e., the creation of value by providing information related to the primary product or service. These new enterprises (infomediaries) use various combinations of the forms and functions of information to electronically link buyers and sellers, producers and consumers, providers and users, and senders and receivers. And, because they deliver real-time results with convenient 24-hour direct access, they are superior to traditional intermediaries. By consolidating information from many different sources,

they provide a wider range of options; they simultaneously inquire, process, and transact; and they facilitate customized transactions. By the time the information economy matures (before 2010), these infomediaries will be the principal means of access for all buyers and sellers; however, this shift will have the greatest ramifications in financial services.

An alternative to infomediaries is embedded intelligence. Continuing advances in microelectronic technology make it increasingly possible for information services to be an integral part of a product which is in the customer’s possession. This is already the case in computer processing: Whereas intelligence was once centrally located in an organization’s mainframe, it is now located in each user’s desktop PC. Eventually info-businesses will be able to locate their information in individual telephones, televisions, computers, cars, and other products belonging to their customers. Accessories that allow basic products to expand their information functions will eventually be available for virtually every product; thus selling info-accessories will also be a major opportunity in the future.

Chapter Four: Is It Time to Kill Your Organization, Before It Kills Your Business? (33 pages)

Information, which is already having a tremendous affect on the way business is conducted, will begin to impact organizational management, structure, and sourcing. Because we are midway through the information economy, the time has come to focus less on the organization and more on the business. A business applies resources in order to create the products and services that meet the needs of the marketplace. An organization—the mechanism that administers these resources—is the housekeeping function and includes structure, systems, employees, and culture.

The future business, rather than the current organization, should be the basis of organizational change. The key to good management is the constant awareness of the distinction between the two. Although managers acknowledge that their businesses have life cycles, they persist in believing the myth of the immortal corporation. But by accepting corporate mortality and embracing the life cycle process, managers could manage a maturing economy and an older generation of business more realistically



and better prepare for the next generation. Somewhere between growth and maturity—at the first hint that the “organizational tail is wagging the business dog”—is the best time to start.

Growth is the key to survival within a single life cycle, but once growth reaches its limits, reproduction is the key to life across a succession of life cycles. Thus, spin-off business, such as the new generation of information services, logically form. By keeping this offshoot connected to the parent plant, the corporate entity is extended in both time and space. An interorganizational world—electronically linked upstream, downstream, and laterally—emerges.

The conversion of organizations into businesses has the added benefit of strengthening corporate performance through a variant of the make-versus-buy operation. Some

corporations are beginning to contract organizational activities (such as running the mailroom, collecting receivables) to employees, making them entrepreneurs who have legal and economic ownership of the business for which they are responsible. Thus, by shifting the focus from organization to business, internal customers become real customers, significantly improving service.

Chapter Five: You Can’t Ride on Tracks You Haven’t Laid Down (34 pages)

Future economic, military, and social world leadership depends upon sustained dominance of core information technologies and industries. National economies must become informationalized global economies by building and using the new information infrastructure; spurred by competition, mutual growth will occur around the globe.

Although developments in Japan and Europe pose a formidable challenge to the U.S., America’s information services, software industries, and venture capital industry are particularly strong. Nonetheless, America’s private institutions and markets are inadequate for planning and building the critical public information infrastructure needed to compete in the future global information

economy. While public policies in Japan and Europe aggressively promote the development of sophisticated public telecommunications networks, the U.S. lags behind.

Chapter Six: Between Molecules and Stars—Dimensions of the Next Economy (27 pages)

The end of the current economic cycle is within viewing distance, and the beginning of the next cycle—the bio-economy—will likely occur during the careers of those entering the workforce today. This next economic life points to a future that will likely redefine what human or even life means.

Developments in mind-like computers, in genetics, and in the extremes of miniaturization—three core technologies, will have tremendous impact on the bio-economy. And,

although your business may have nothing to do with any of these technologies today, they will tomorrow. Evolutionary parallels between biology and business life cycles are being reexamined, and the science of chaos demonstrates that chance and

chaos, rather than purpose, are likely to guide economic and organizational theories in the future. Since DNA is the basis of the biological information code, the bio-economy model of management may be very similar to the models that are emerging for this information economy. Nonetheless, the bio-based models of management and organization will not appear until the bio-economy has matured.

* * *Bibliographic notes by chapter are provided.

Remarks

PresentationAlthough we find 2020 to be highly accessible, it

suffers from a malady we rarely see—underdevelopment. Each chapter is such an eclectic mix of ideas that we are left with a great deal of ambiguity concerning the exact relationships among concepts, their implications, and their practical applications. The insights provided here

"Highly competitive markets and abundant information have placed the customer at the center of the business universe. In this new environment, successful businesses are those that employ customer-centric thinking to identify customer priori-ties and construct business designs to match them.”



cannot help but fire the imagination toward change and innovation; however, as it stands, the work is merely an introduction. What the authors cram into six chapters could well be expanded into six sections, with the present subheadings standing alone as chapters. Without a doubt, a 2020 Vision, Part II is needed.

ContentThe importance of information technology vis-a-vis

economic competitiveness is obviously the topic of the 1990s, forming the fundamental premise of most current business works. Informationalization and turbocharging, as presented here, are enlightened competitive approaches which add considerable value to existing management strategies: The simple information form/function grid provides an all-purpose, user-friendly tool which any business professional can use in the ever-evolving economics infrastructure. By differentiating business from organization, the authors also provide a practical means

of using the natural life cycles of every enterprise to one’s competitive advantage. This is a thought-provoking, important work; the only drawback is that there is not enough of it.

Reading Suggestions

Reading Time: 5 to 7 hours, 223 Pages in BookChapters One, Three, Four, and Five bear careful

reading, and perhaps rereading. Chapter Two, which explains how to combine informationalization with quality, productivity, customer service, etc., is mostly a recap of familiar strategies; thus, you may want to just skim through it. Chapter Six, an outline of the future, is another section that you need not concentrate on unless genetic engineering fires your imagination.

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