Redefining the Basic Assumptions for the Global Economy, Published in "Overcoming Indifference", 10 Key Challenges in today Changing World. Edited by Klaus Schwab, New York University Press, New York, August 1995.
1- Description of Change
We are entering the digital age. We are currently in transition from energy intensive societies and infrastructures towards information intensive societies and infostructures. From pyramidal, vertical, specialised, Taylorian organizations, to networked, decentralised structures within which information flows naturally. One does not replace the other. The two will co-exist.
Man has externalised his methods of communication. Even before writing he manipulated symbols outside his brain. Then he developed the capability to store images on photographs and film. More recently he externalised his memory through computers to store text and images using external media. Television is the long-distance eye. Radio the long-distance ear. Computers are the external part of memory. The acceleration of the externalisation is represented in the following figures : 5,000 years ago was the age of writing, 500 years ago the age of industrialising writing by printers, 50 years ago the age of audio-visual and computers, and 5 years ago was that of digitization in commercial networks.
After these stages of exteriorisation and reintegration, we now enter into an "explosive" phase : that of networks delivering information over great distances (using cable, satellite, television and computer networks). A complex network emerges on the scale of the world resembling a nervous system. Receiving information, circulating it and manipulating symbols touches our daily lives. We have entered an "explosive" phase of media developments which I call the "mediamorphosis".
The mediamorphosis is shaking industrialized societies through decentralization, time acceleration, and space shrinking. Large industrialized groups in the data processing and publishing sectors are threatened by small new ventures. Mergers and acquisition are changing the map of the multimedia sectors (cable, telephone, television, publishing, software, home shopping, video games). The market of communication systems and products is exploding. Governments are trying to capitalize on such developments or to protect national industries in the communication sector.
2- Main Reasons for Change
Why such a mediamorphosis ? What are its catalysts? Why is this global system in the process of accelerated development ?
- Microprocessor improvements : the first catalyst of rapid change in the digital age is the microprocessor. Dating back some twenty years ago, it has changed everything. It destabilises some leading enterprises, shakes top executives, and questions the survival of some 50,000 information technology companies world wide. It is found everywhere - from telephones to televisions not to mention video players and portable microcomputers. The microprocessor power (8 bits, 16 bits, 32 bits) is currently changing by an order of magnitude. The generation of the 64-bit microprocessors has already been launched on the market. One indication of this change in scale : the DEC Alpha microprocessor with 64-bit words, permits 18 billion billion addresses. Its speed with which it processes information is 150 MHz (2 l/2 times the average microprocessors) and it supports 140 million instructions per second (MIPS). The power of a Cray One Computer at the beginning of the 80's is available today on a desktop computer for one thousand's of its price. This gives an idea of the potential for processing information, not only alphanumeric but also images and sound, thus enabling voice and pattern recognition.
- Digitization and data compression : whatever its origin a signal contains a large proportion of useless or redondant information. Compression algorithms can be used to reduce the quantity of information by a factor of one hundred. A television signal of 25 million bytes per sec can be compressed to 4 millions bytes/second (HDTV) and even 1 million bytes/sec. A stream of coded information compressed at the input and decompressed at the output allows the passage of extremely dense information via the telephone. These techniques of compression already exist. MPEG, the international standard recently adopted is already challenged by "fractal" and "holographic" compression techniques.
- Hybridisation of communication technologies : several elements converge into a single device. In the digital age it becomes pointless to use a fax, a scanner, a laser printer, a telephone answering machine and a computer. It is better to use the scanner system as the "reading fax", or the laser printer as the "printing fax" thus constituting a single device for a lower price. The "note-pad", a "personal digital assistant" (the portable computer which includes a telephone) is another example of a hybrid equipment. Hybridisation of communication technologies is a powerful factor of change in this field.
- Computers and communication interfaces : man machine interface has constanly improved during the last 10 years. The traditional input/output devices like keyboards and cathode ray tube for computer screens are being replaced by mouses, scanners, voice input devices, pen, flat LCD color screens, virtual reality head sets and data gloves. In the future, biosensors will directly feed information from the brain into the computers.
- Computer networks and electronic highways : large computer networks like the Internet link millions of PC's around the world. Commercial services allow connexion with large data bases. Electronic highways based on the ATM technology, video servers using parallel computers permit the transfer of considerable amounts of multimedia information and the emergence of interactive television with thousand of services.
3- Probable Consequences
- Convergence of industrial sectors : catalysts of the digital age such as microprocessors, new software and communication systems lead to the convergence of technological sectors, which in itself triggers the convergence of industries. Four spheres of activities are merging thanks to digitization : editing (printed text, magazines, books); audio-visual (video, television, cinema); micro-computers and software; telephone and communications networks. Merging text and telephone produces the fax. Text and computer produce word processing. The three together (text, computer and telephone) generate videotext. Telephone and video produce the video phone. But the combination of telephone, video and computer produces what I call "videomatic" - a new sector where still and moving pictures are carried by networks as well as text and graphics. For industries, mandatory mergers and huge re-engineering adaptations are triggered by the convergence of these four sectors.
- Opening of new multimedia markets : Today we receive television broadcasts via radio waves, satellites or cable. In France, the Minitel is transmitted only via telephone lines and information is in the form of alphanumeric characters and a few graphics. The screen definition is not excellent, but the use of the keyboard and standard menus permits the access to numerous (8,000) information services. Thanks to compression of data, digitization of information and the presence of terminals everywhere (television and telephone), interactive multimedia television brings high resolution colour television via normal telephone lines without interrupting normal telephone usage. We are entering an era when the television at home will be not only an entertainment device but also a tool for business. Five hundred services will be at our disposal in two or three years, first in the United States and then perhaps in Europe - a hundred channels with movies, ten educational channels, ten sports channels, ten shopping channels. With a remote control device, everyone should be able to have access to these services.
- Impact on organisations and re-engineering : the centralized structures of the industrial age are challenged by the new networks. The flow of information in digital networks, its processing through personal computers, the possibilities of groupware create the opportunity for virtual entreprises. Telework is a reality for many workers in the computer, banking and insurance sectors. Traditional hierarchical and taylorized structures are replaced by "flat" organizations with reduced levels of hierarchy. The digital revolution creates a re-engineering need in many giant firms and public organizations.
- Risks and constraints : the increased complexity of computers and telecommunication networks creates a risk of fragility : breakdowns, computer viruses, sabotage, privacy intrusions are all consequences of such rapid developments. There is a "Big Brother" risk created by the need for control and surveillance of the exchange in such networks for security purposes. Individuals can also find themselves isolated in their "electronic bubble" with reduced face to face communications. "Couch potatoes" will spend time ordering products on their interactive television or playing electronic games with multiple partners. The educational needs will be important to master such complexity. A new economic gap might form between the "information-rich" and the "information-poor". For developing countries the digital age is a chance and a risk. A chance because it will help them catch up with major advanced industrialized countries, particularly in the fields of education and health. A risk because those which will not be able to adapt will increase the information gap and see their intellectual ressources drained away by the international economy.
4- Proposed Actions
- Adapt regulations to the growing sector of international communications : FCC regulations or national PTT monopolies are not adapted to the free flow of information between enterprises and individuals. European regulations are in particular need for such adaptation. Equipement agreements will have to be eased to allow freer access to the networks.
- Promote standards : new technologies are born with their own standards. Engineers tend to fight over the best suited standards and influence politicians which in turn slow down the developments of new communication technologies. International standards for data compression and transmission, digital television, memory cards, sound and speech processing equipment, telecommunication software, are needed. Recent history shows that the public only invests when standards are mature, thus lowering costs and complexity of use.
- Catalyse mergers and regroupments between companies: alliances between american and european companies are needed to compete with major asian players in communication equipment and programs.
- Promote laws to protect intellectual property rights : intellectual creation will represent one of the most important asset and wealth of the coming century. Intellectual products should be allowed to cross international borders freely without technical obstacles. Such laws would have to be harmonised betweed countries.
- Help the third world : technologically advanced countries should help developing ones to master the techniques of the digital age, giving them a chance to enter the international competiton and opening new markets for the future.
- Protect privacy : public networks, access to data bases, groupware, telework, cellular phones, personal digital assistant, agent software, interactive television and home shopping, all create opportunities for infringement of privacy. International rules and regulations should protect individual freedom and privacy in the digital age.
- Avoid protectionism : the digital revolution creates a nervous system at the level of the planet involving every nation. Traditional protectionism will be counter-productive in such a transition stage towards the wired society.
- Invest in education : education in order to master the new information and communication tools is essential for every individual. It will become one of the major societal goals for the next century. The digital revolution provides powerful tools to meet such a challenge : CD-roms, A/V computers, interactive multimedia television, telematics and networks. New "navigation rules" should be set to help the young generation navigate through the hypermedias. Edutainment should replace most of the video game of the present market.
The digital age represents an unique opportunity for a New Model of Economic Development. Beyond the concept of "sustainable development" the digital age offers the possibility of an "adaptive self-regulated development" needed to reconcile economy and ecology.
Joël de Rosnay
Director of Strategy
Cité des Sciences et de l'Insdustrie – La Villette – Paris – France
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