A technology milestone passed quietly for most of us last October — the 25th anniversary of email. A party in San Francisco celebrated the event with speeches by technology pioneers. Many high-tech columnists commemorated the event by looking back at how email has changed our lives. Some focused on the great advance email has represented for us, both personally and in business. Others focused on the continuing challenges of email, such as dealing with spam.
While I love email, and believe it is a net positive, we have yet to figure out when to use email and when not to. I am still surprised at the way some, including senior leaders, shoot off email responses without pausing to remember that this statement with their name on it can go many places quickly and can be kept for a long time. I have received a large number of these over the years, though most I have properly deleted.
However, this milestone, together with the 25th anniversary of the IBM PC also last year, took my thinking to two sets of questions. The first was how technology has reshaped business over this period. What was business like 25 years ago — who were the leaders, how did they make good use of technology, how did they traverse the cost hurdles and avoid the promising, but ultimately bad choices that looked so good along the way?
The second set of questions is harder, surely impossible to get right, but is also interesting. What will technology look like in the next 25 years? What impact will choices in the use of technology have on the leaders of industry in 2032? How will it reshape the leaders in any particular segment of business? And how will it change the segments of business? The importance of this set of questions is that the real leaders need to be thinking about them soon, because near term decisions can anticipate some of these changes, or ignore them.
This would actually make a great book, although I will leave that for someone else to write. It also makes a great assignment for an MBA class, and I am eager to see what my students come up with. Their projects are due to be completed before this appears in print. But here are a few of my thoughts about this 50-year period.
Past Technology Development
In 1982, in addition to the appearance of electronic mail and the personal computer (in popular form — some was available before, most started using these things somewhat later), this was the year the VCR started to be accepted in the marketplace. I was at Boeing, and we received our first supercomputer around this time, a Cray-1 capable of 170 million scientific calculations per second and costing about $15 million.
Today, email and the PC are used by a large percentage of people in the developed world, both at home and in business. The VCR has invaded large numbers of homes and offices as well, though its days are numbered as tapes are being replaced by DVDs. On February 12, Intel announced the design of a new chip capable of performing one trillion scientific calculations per second. This is about 6,000 times the speed of the $15 million dollar computer of 25 years ago — on a chip that uses no more energy than a light bulb!
Impact on Business
For many, this is simply techno speak — of interest only to geeks. So let’s translate this to the business world by looking at three companies in three separate industries.
In 1982, Microsoft was a company with 220 employees, revenues of $24 million, and an operating system called MS-Dos, which was licensed to 50 hardware manufacturers but was nowhere near the market standard in operating systems. Today it is 46th on the Fortune 500 list with over 60,000 employees and revenues of $23 billion. Microsoft has been one of the major drivers of the technology revolution during this period, and its explosive growth has both fed the transformation of other businesses and led to its own growth.
In 1982, Wal-Mart was a regional player primarily in the southwestern part of the United State. It had 41,000 employees in less than 500 stores (276 stores in 1980). It opened its first store in Nebraska in 1982. It was promoting its “Buy America” plan in the 1980s. Today, it is No. 2 on the Fortune 500 list, has annual revenues greater than $300 billion, operates 6,400 stores around the world, and most of its products are made in China. It has almost 900,000 employees in the United States alone.
Wal-Mart is widely recognized as a leader in the use of technology. At its headquarters in Bentonville, Arkansas, the computer facility appears to be the most secure site on the campus. It has pioneered work in logistics, just-in-time inventory management, and automated tracking. One leader in the technology sector told me recently that Wal-Mart’s technology leadership is a bit overrated. Other industries are doing more with RFID tracking devices and advanced bar coding. Even if this were true, it may not be relevant. A good way to think about the use of technology comes from the two hikers who encountered a bear on the trail. One reached down to tie his running shoes. And when the other told him he couldn’t outrun a bear, he said, “I don’t have to. I just have to outrun you.” Wal-Mart has outrun the competitors in its segment and has used technology to differentiate itself in this market.
In 1982, Blockbuster filed for incorporation, opening its first video store in 1985. Today it has over 8,000 stores on four continents, with revenues of around $5 billion, making it the world leader in rentable home entertainment, renting and selling movies, DVDs, and games. It now has two million online subscribers. Mail-based companies such as Netflix pose a threat to Blockbuster as does the sale of low-priced DVDs in many places. But a bigger threat may be coming from cable companies offering downloadable movies. The whole concept of rentable entertainment could change because of technology.
Looking Forward in Technology
Making predictions about digital technology at one level has been easy for a long period of time. Moore’s Law has provided the basis for predicting changes in chip speed and density since the 1960s, and has been remarkably accurate. The new chip from Intel is another remarkable step in this path. Whether Moore’s Law is sustainable until 2032 is questionable. On the other hand, I was told Moore’s Law was running out of gas in the 1980s. But coming alongside digital technology are nanotechnology and biotechnology. These technologies promise to have a profound and as yet unknown impact on ordinary businesses.
Harder to predict is which technology-based products will emerge and find acceptance in the marketplace.
Translating to Business Forecasts
It is more difficult yet to predict what will happen as businesses new and old adopt the technology and transform or create markets. Many look at the technological predictions and make statements like, “We don’t need it. I can’t type any faster, so why would I need a faster word processor?” But the ones who will use the technology to advantage will use it to do something different, not to do the old thing faster. It is these singularities, or transformation points, that cause problems in forecasting, because they can change the markets, the patterns, and take us off in another direction.
Whenever I think about predictions, I am reminded of the study done in the 1860s (probably apocryphal) in the city of New York. With population growing, the forecasters looked to the future and predicted the streets would be one foot deep in horse manure by 1935. No one saw the transformation point represented by the automobile.
From our look back to 1982, we can reliably predict a few things:
- There will be market-leading companies in 2032 that are small today, like Microsoft, Wal-Mart, and Blockbuster were in 1982. This illustrates the often quoted comment, “The future is already here. It is just unevenly distributed.”
- There will be significant market segments in 2032 that do not exist today.
- Many of these leaders will get there by taking advantage of new technology, creating a new way of doing things or new products for the market.
There are many uncertainties that will directly impact forecasts, including war, pollution, health care (itself undergoing change due to technology), societal change (look at the role of China in 1982), and global warming.
Some forecasts sound good but are almost certainly wrong. Ray Kurzweil (scientist, inventor, and author) said in his book The Age of Spiritual Machines: When Computers Exceed Human Intelligence, “By 2019, a $1k computing device will be approximately equal to the computational ability of the human brain.” In some ways, computers already vastly exceed the human brain in their ability to do complex calculations. But brain scientists acknowledge we are a long way from understanding how the human brain does many of its basic functions. Kurzweil does not seem to be troubled by this information, though in a speech since the book, he moved the date back to 2029.
What to Do
Yogi Berra’s famous statement, “Prediction is very hard, especially about the future,” has a ring of truth to it. We know transformation points affect how technology gets used and societal and environmental factors will confound any predictions. So what is the business person to do about the future of technology?
Technology transformation happens much more slowly than technology development. It takes time and imagination to see the new way of doing something. Usually it takes some secondary development as well. The automobile was not useful till there were roads, gas stations, etc. So businesses should have a small effort devoted to looking for the early signs of the future. Putting arrogance aside, there is a great deal to be learned from others, even from other industries. With eyes open, ask the question “What might be possible?” more often than “But what is it good for?” The technology inventors don’t know your industry as you do, so you are in a key position to help answer the first question.
Microsoft, Wal-Mart, and Blockbuster will not continue in leadership positions doing things the way they do them today. I would guess that all three of them know this. What about you?
Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.