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Implications Of Transition From An Industrial Era
To One Of Information

Robert H. Reck
(Adapted from original submission to Industrial Management and Data Systems Magazine, January/February 1987)

Information technology is rapidly becoming a powerful driving force in the modern world, stimulating new modes of behavior and creating new business opportunities. It is essential for business and corporate managements to understand that technology, not in the sense of its nuts and bolts, but by perceiving its influences within the social sphere and potential within their own businesses.

The technology has emerged from its initial stage as a clever labor-saving and cost-cutting function and now exerts an all-pervasive influence which encompasses corporate organization and structure, product development, manufacturing processes, distribution, customer relations, retailing, marketing and advertising. As the impact of the information era permeates into society, it will induce structural changes, new desires and attitudes, to which successful businesses must respond. The momentum of interaction between technology, business and society is likely to accelerate in the years ahead.

The transition from an industrial to an information era is evidenced by the decrease of industrial employment of service and information workers throughout the Western world. Over the last few years, there has also been a radical growth of computer literacy, which will have an increasing impact as today's young emerge into adulthood. Coupled with this is the development of users friendly languages which even computer illiterates can manage (i.e. cash dispensers). At the same time, certain social trends can be identified which are dependent on, reactive to, and influence developments in information technology.

The profitability of many business organizations will depend largely on the ability to identify these trends and apply information technology imaginatively and strategically to their advantage.

The social trends can be summarized under the headings customization, decentralization, self-help. communication, participation, and equally important, information overload, and the change from an industrial to an information application may be contrasted as follows:

• Standardization - customization



• Centralization - decentralization



• Dependence - self-help



• Transportation - communication



• Autocracy - participation



• Information scarcity - information overload.

The search for individualized products and an individualized life-style is one of the characteristics of modern society; although much of it is mass induced (e.g. jeans, punk), the aim is genuine enough. Sophisticated data-gathering techniques and processing capabilities allow marketing organizations to develop a detailed knowledge, market-oriented manufacturers can produce customized products to appeal to different segments of the market. (Fifteen years ago women were blonde or brunette and nobody bothered much about men's hair; now we appreciate that women and men have many kinds of hair requiring different shampoo treatments.)

The introduction of robots into factories will considerably reduce the size of minimum economic runs and will enable much more profitable product proliferation. Information technology also plays an increasingly important role in linking consumer and manufacturer (facilitating retailer ordering and stock management, so that retailers can control a wider product range), and in reaching consumers through advertising, or directly via mail/telephone/PC/video catalogue ordering.

The dissatisfaction with large, centralized organization has been an important political factor over the last decade on both sides of the Atlantic. In the business field, it is evidenced in the renaissance of small businesses, many of which have grown big enough to threaten the older, established dinosaurs, both in the market-place and in the take-over battles which have dominated the London stock exchange over the last 18 months. Many dinosaurs have set about decentralizing and restructuring their asset base so as to respond more gazelle-like to market opportunities. Such reorganizations can be crippled by insufficient attention to information requirements within the organization and their extension to the company's custom base. Moreover, all too frequently, information requirements have been received negatively, as a semi-clerical function and not as an opportunity for aggressive exploitation. Merrill Lynch's information technology-based introduction of retailed financial and insurance services, now increasingly imitated by banks, building societies and others in the UK, posed a very considerable threat to established banks and insurance companies.

Self-help, originally introduced as a cost and labor-saving exercise in canteens and supermarkets, now extends throughout society and is almost certainly a preferred mode. This is evidenced by the growth, for example, of such diverse entities as DIY shops, cash dispensers, private health, house ownership and personal computers for satisfying information needs. Information technology provides plenty of opportunity for business to exploit the trend to self-help and create a competitive advantage. In the US, American Hospital Supply and McKesson provided their customers with the ability to order their requirements direct, creating supplier-consumer links which also forged entry barriers to competition. ICI's Counsellor System for plant fungicides similarly "locks in" dealers by enabling them to prescribe specific treatments for disease control in response to data supplied (i.e. soil type, crop history, local weather conditions, disease pattern, etc.). The French Telephone Services (PTT) provides a free video text service for all subscribers. In addition to its use as a telephone directory, it earns revenue by currently advertising over 2,000 services enabling instant to such information as what's on at the theater, where to buy a second hand car, or how to get a package to London tonight.

Improved communications interconnect everybody, business as well as housewives. Hence the spread of communications-related activity, such as telebanking, telemail and teleconferencing, since it is cheaper to move information that it is to move people or goods. Working at home with increase, saving time and transportation.

Vendors of all kinds are establishing free phones for ordering goods, services or resolving user problems with equipment or software. They have supplied the advanced video disc/fiber optics system of teleshopping, installed in Biarritz, which enables customers to order directly from a central inventory and eliminate much of the distribution chain. The Japanese "Just in Time" system installed by raw materials suppliers reduces manufacturers' stock requirements by enabling raw material supply "just in time".

The tremendous increase in information and its dissemination has given rise to political and consumer pressure groups of all kinds and signals an increased desire for participation. In the political field, this results in governments having to be infinitely more sensitive to public opinion than was the case five or ten years ago. Similarly, corporate managements have to accommodate the desire to participate if they are to secure the best from their executives. The days of there being one report to consider are almost over. Each executive increasingly has his/her own interpretation derived from a personal computer or information center terminal. Consequently, widening the circle of participation in decision making should also improve the quality of decisions taken, as well as being desirable on "social grounds".

The weakening of traditional influences and institutions, such as family, neighborhood, church, etc., has been accompanied by increasing participation in groups, clubs and other networks across the spectrum of society. These may be for mutual support, such as Weight Watchers or Alcoholics Anonymous, for social and leisure activities or to obtain favorable purchasing terms. Some suppliers create groups among their own customers who are offered benefits exclusive to that group. Either way, the group or network syndrome creates powerful marketing opportunities which can be accessed through information technology.

Just as industrial society produced pollution, the information era has created another type of pollution, namely, information overload - the current load will increase by over 300 per cent by 1990! Too much information is self-destructive. We become data rich and information poor. The challenge is now rapidly shifting from the provision to the selection of information. Correctly, information technology is developing techniques to sift through the data and focus on critical factors. Information overload is not confined to organizations. It has also started to confuse customers, posing quite a problem which cannot be overcome by traditional attitudes to marketing, advertising and communications.

To sum up, the maintenance of leadership in any field of business activity necessitates an outward-looking corporate management which can understand the impact of current trends on its organization and customers. The potential of information technology should be appreciated, as was that of its predecessors: the introduction of steam, the internal combustion engine or electricity. Information technology is now a powerful driving force, and management's task is to drive that technology to their advantage and not be driven by it.

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Archive Articles (below)

• Designing Executive Information Systems
• Executive Information Systems: An Overview of Development
• Implications of Transition From an Industrial Era to One of Information
• Critical Success Factors Techniques can Apply to Team Management, Too
• Decision Scenarios Ensure Information System Meets Business Needs
• Critical Success Factors : Helping IS Managers Pinpoint Information Needs
• Combining Quality and Reengineering for Operational Superiority
• Steering IS Committees Straight
• Internal Consultants and a Consultative Approach
• EIS Plays Critical Role in Reengineering
• Rapid Software Selection

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