Turmoil and Unprecedented Innovation

Just as the Internet tsunami is causing turmoil and unprecedented innovation in the private sector, other facets of society are experiencing similar upheaval. In particular, our government, democratic institutions, and the state itself are in the early stages of what will be a dramatic transformation. The only question is whether existing governments will be willing participants or victims.

The traditional vertically integrated industrial corporation is doomed. If Trump and “Trumpism” was the reference model for businesses of the Industrial Age, then Cisco and “Ciscoism” is the model for companies in the Digital Economy a few years way back. Cisco had become one of the most valuable companies in the world, but much of its value lies outside its corporate borders.

Cisco is at the heart of what I call a business Web (see “Let’s Get Vertical). Through networked applications, the company connects chip manufacturers, component distributors, contract manufacturers, logistics companies, employees, systems integrators, and customers. These B-Web participants can perform like one firm because they all draw upon the same Net-well of information.

The punishment Cisco is inflicting on competitors such as Lucent Technologies is severe, because Cisco’s new means of Internet-based wealth creation is dramatically more effective and nimble. Buyers vote with their dollars, and producers reap rewards for better quality or lower prices.

Industrial Age government is almost as obsolete as the Industrial Age corporation. We just can’t see it as clearly yet. Absent traditional competitors, the shift in governance moves more slowly.

But as progressive political and government leaders from many countries understand, the issue today is not simply how to create better, cheaper government. Across North America and around the world, there are many examples of government services being delivered more effectively and inexpensively because of networking technologies. As consumers, today’s citizens are getting more bang for their buck. But being able to order vanity license plates over the Web is not the point.

As Alvin Toffler correctly predicted, Industrial Age (“Second Wave”) government is becoming obsolete because of the erosion of civic and democratic culture. Citizens are increasingly disillusioned. Many no longer believe that governments will act in their best interest. Large percentages of the population no longer bother to vote. In the United States, the turnout for presidential elections has been falling for decades. One hundred million people likely will not vote in the upcoming election.