Cairncross focuses on how the communications revolution and specifically the Internet will alter companies in this century. She makes a strong case that the recent failure of so many standalone “Internet” companies means little about the long-term impact of the Internet itself on existing businesses, which may be as great as that of electricity. While no one these days is in the “electricity” business (aside from utilities), electricity shapes every aspect of business-and so, Cairncross suggests, will the Internet. Her book is a thoughtful guide to what those changes might be, cutting across the lines of sales and marketing, senior management, human resources, corporate strategy, knowledge engineering and more. Too many recent books about remaking companies tend to be cursory appliques of management truisms atop a raft of high-tech buzzwords. Cairncross’s book, by contrast, displays the iconoclastic intellectual rigor one would expect from a long-time editor of The Economist.
The most interesting historical perspective in Cairncross’s book is the suggestion that the Internet will in some ways reverse changes in process that were, in fact, the last major step forward in business-that is, the centralization and consolidation of record keeping. She points out that until the late 19th century businesses were almost all small, and run by their owners: “Venetian merchants of two centuries earlier would have recognized the forms of information: personal correspondence, newspapers, double-entry bookkeeping.” But then as the 19th century ended, industries like the military, financial services and transportation grew so large that they demanded new systems for storing and conveying information.
Engineers became “scientific managers” and inventions we now take for granted-standard business forms, vertical filing cabinets, typewriters and time clocks-appeared, along with a new class of office worker. In the half century following 1870, the U.S. went from employing 74,200 clerical workers to 2,837,000. In the course of that organizational overhaul, an entire business mindset developed around the way information was controlled-and the subtext to all of “The Company of the Future” is that the most fundamental changes that need to made in companies are not so much procedural as cultural.
In short, it was a major triumph of old-style business technology to corral all the business information in one place and organize it, and the entire human enterprise was then built around that edifice. The Internet suddenly adds an entirely new spin: the information can still be centralized and organized on a server, but suddenly a much broader range of folk can have access to it and it can be sliced, diced and distributed in a thousand various fashions previously quite impossible. Add to this the fact that so many current businesses are built on adding value to information-rather than simply turning out physical widgets-and suddenly the corporate information system becomes not just a storage and communications device, but the means of production as well.
And the impact extends beyond individual companies. In an Internet world where connectivity is easy, alliances become vastly more important. Companies will increasingly form associations around the Japanese keiretsu model of independent but interdependent organizations. Managing such relationships, however, may be a new skill set for executives more accustomed to straight-ahead competition. “Like marriages,” Cairncross writes, “alliances work well only when based on trust. Partners can write only so much into a contract.” Indeed, an alliance may be more powerful than a formal contract, in that it allows the partners to respond flexibly to unexpected situations. But like a marriage, alliances require constant work. Cairncross quotes one alliance manager: “You have to be disposed toward the most benign interpretation of the strange signals you get from time to time. You have to interpret them innocently.” For companies that have previously thrived on more aggressive postures, that’s a radical shift in perspective.
Cairncross closes with one particularly provocative section on how the Internet may even alter overall corporate governance. She points out that individual shareholders in public companies have until now been fairly dispersed and ineffective. Now, however, they have the ability to find one another and assemble collective voting blocks on the Internet to present new voices at annual meetings-which can now themselves be held online. Besides the opportunity for obvious abuse (selling votes for money, for example), Internet-powered coalitions of shareholders could comprise a new element of accountability for corporate executives. In a post-Enron world, the attention-or wrath-of collective shareholders could be a powerful new force in corporate life. But if companies have been reading Cairncross carefully, they won’t be taken by surprise.
