Promises and Perils of an Information Society

1
Promises and Perils of an Information Society

• Jirí Zlatuka

ISSS 2000Hradec Králové, March 2000
2

• Information Society
• Organizational change and Qualification
  structure
• Network Economy
• Productivity Paradox

3
Computers and (tele)communications

• Simon Nora and Alan Minc, 1978 telematics as
  a neologism combining computing and
  telecommunications
• Analogy between electicity and information in a
  modern society
• Information also involves reaction, not just
  dissemination
• Networks, feedbacks, changes of organizational
  structure both at large and at small.

4
Informatization of the Society

• Communication infrastructure promotes new
  international division of labor
• Decentralization of economic activities
• Lifestyle change
• Transformation of work patterns
• Horizontal communication as a catalyst of
  societal changes
• New cultural models

5
Information Society

• Nora and Minc, 1978société informatique
  vs.société bloquée(rigid social and
  political institutions, bureaucratic structures,
  inability to react to change)
• New technology changes social structure

6
Reflections of Big Social Transformations

• Difficult to observe changes by their
  participants
• Industrial revolution as a term invented only
  100 years after it happened (1884)
• Positive expectations
• Attempts to predict future trends
• Preparing our own attitudes
• Choosing from possible development options

7
Organizational ChangeandQualification Structure
8
Qualification Structure
9
Organizational Structures

• Flexible links within organizations
• Subcontracting
• Networks of cooperating companies
• Invention as the decisive factor
• Knowledge economy
• Changes generated by technology
• Dynamics of an organizational churn

10
Qualifications

• Rapid change in qualifications requirements
• Continuous learning
• Good qualification corresponds to changes yet to
  come
• Individual skills more important than geography
  of physical resources
• End of career perspective for secondary or lower
  level school graduates

11
Workforce competitiveness

• Routine production (traditional manufacturing,
  limited mobility)
• Personally assisted services (restaurants,
  households, )
• Professional and social services (education,
  health care, social services, etc.)
• Symbolic analysts (knowledge, ideas, information
  instead of physical commodities) high mobility,
  globalization effects
  (Robert Reich Work of Nations)

12
Trends in real income dependence on education
level
Source RAND Corp.
13
Managerial Employment
Source US Dept. of Labor
14
New unemployed, unemployed graduates,
unemployment rate
New unemployed
Unemployed graduates
Unemployment rate,
15
Unemployed Graduates
16
Educational requirements

• Generic knowledge
• Communication skills
• Combinations
• Symbolic manipulations
• Creativity more important than facts
• What is a limiting share of high-tech jobs
  created by the society?

17
Industrial Revolution
Source Greenwood, 1996
18
Network economy
19
Network Effects

• Value increases with quantity in a network
• Open systems with greater communication potential
  
• Combination of technologies creates new
  opportunities
• Technology generates new demand which is then
  fulfilled by the very same technology

20
Network Marketing

• Capturing attention
• New products and services generated faster than
  amortization rate
• Products often distributed for free, profits
  coming from additional services
• Importance of intangible assets

21
Standards

• Economy development towards information products
  requires shared standards
• Industry standards often better than legal
  requirements
• Market potential determined by the number of
  customers sharing the same standard

22
Positive-Feedback Economy

• Snowball effect in network product distribution
• Instability encourages fast growth determined by
  invention
• Growth generating monopoly
• Monopoly in a network environment drives down the
  costs
• Without open standards, monopoly degenerates
• Winner on the market often determined more by
  previous history than by a real quality per se
  (VHS/Betamax, Apple)

23
Total and Marginal Utility of a Network Product
Source Gordon, 1999
24
Productivity Paradox
25
IT Investment Consequences

• Staff numbers
• Data-processing applications made many jobs
  obsolete,
• text editors reducing numbers of secretaries,
• PCs and office systems gradualy reducing office
  staff numbers.

26
Office Productivity

• During the 70s, growth estimates 4 p.a.
• In 1980 estimates of up to 15 savings because
  of new technologies
• Real growth patterns influence return on
  investment.

27
Practical Problems

• Growth, not decrease of administrative personnel
  numbers.
• Not much growth within companies, new company
  formation.
• Uncertain productivity measure.
• Quantification of output product difficult.
• Diversity of office activities (ranging from
  managers to low-level staff).

28
Actual and Trend labor Productivity19601995
Source Sichel, 1997
29
Dynamo Effect

• Productivity pradox explanation as an
  accumulation phase
• Industrial revolution analogy
• Expensive and non-perfect equipment in early
  phases
• However, computers have already been around for
  40 years
• Internet as the qualitative change?

30
IT Investment and Productivity Slowdown
Source Greenwood, 1996
31
Electrification and Productivity
Source Greenwood, 1996
32
Productivity Growth in the 90s?
... explainable just as a result of computer
manufacturing.
Source Gordon, 1999
33
Real and Nominal IT Investment
Source Brynjolfsson, 1997
34
Computer Investment and Possible Negative
Returns?

• Internet and Web explosion should add value to IT
  investment
• Duplication of information electronically and on
  paper
• IT investment often just redistributes value, and
  does not create a new one
• Computers often merely duplicate existing human
  workforce
• Higher technology level does not necessarily mean
  higher quality of administrative work

35
(No Transcript)