THE DIGITAL MANIFEST DESTINY

STUART N. BROTMAN

Business has a role in guiding where technology takes us

More than 150 years ago, leaders and politicians referred to this country’s continental expansion as “manifest destiny.” This short and evocative phrase connoted more than simple westward expansion. Manifest destiny referred to an ideal, a sense of national mission and purpose. At a time of great social and technical change, American leaders believed that progress was inevitable, and that the country’s expansion into uncharted territories emerged from the boundless progress in science and the arts.Manifest destiny also described a changing social order, and represented the physical embodiment of growth, expansion, and modernity. It was not just an inevitable physical movement West, but also a cultural watershed of hope and optimism.

Today, the same metaphor applies to digital expansion in a time of great social and technological change. Because the nature of converting physical matter to information invariably links that data through networks, there is an inevitable change sweeping over both the visible and invisible landscape. As journalist Jimmy Guterman recently wrote, “Over the past 20 years technology has gone from merely changing the way Americans get through the day to defining our way of life.”

For dark proof of this argument, consider the digital world in the wake of the tragic terrorist attacks of September 11, 2001. Word of the World Trade Center disasters was passed along cellular phones to hostages on board United Airlines Flight 93, which had veered away from its Newark-San Francisco flight path. In all likelihood, this information triggered several passengers to attempt to gain control of the hijacked plane, which later crashed in a Pennsylvania field. Another poignant reminder of technology’s role comes from the stories of friends and family members who received final words from their lost ones via cellular phones on the highest floors of the World Trade Center towers.

In the immediate moments following the attacks, digital networks once more helped reconnect and reassure friends and family over cellular phones. Desperate individuals in need of information supplemented their television viewing with email and Internet access. And as the impact of the new world disorder took hold among fearful Americans and the global citizenry, people turned once more to electronic networks to restore critical personal and business ties shattered by the events. The most glaring evidence of this trend came in the sudden popularity of videoconferencing in response to the diminished willingness of people to travel to meetings. Remote business centers reported a sharp rise in teleconferencing services. And one top executive for a leading executive search firm reported that the firm had replaced the vast majority of its face-to-face client meetings with remote videoconferencing.

TOUCHING EVERY ASPECT OF LIFE

Dark or light, good or bad, material or immaterial, the digital world marches forward, with new technologies gradually permeating every element of daily life. More than half a billion people worldwide have access today to computers and the Internet. In the United States, according to recent US Census studies, more than 54 million households have at least one computer and more than 90 percent of students have access to the Internet through their schools.According to one recent study, there are now more than 550 billion documents available on the Web, with information growing at the rate of more than 7.3 million pages per day. Researchers Peter Lyman and Hal Varian at the School of Information Management Systems, University of California at Berkeley, peg the number of e-mails at more than 3.5 billion daily.

Businesses have been swept up in the digital revolution, relying more and more on conducting an increasing amount of transactions electronically. In the year 2000, according to the Gartner Group, an international market research firm, businesses traded about $400 billion over the Web. Gartner projects that this number will rise to $3.7 trillion in 2003. Forrester Research, another market research firm, projects the 2004 global e-commerce figure at $6.8 trillion. Consumers also are increasingly comfortable making purchases from their computers. During the 2001 holiday shopping season, individuals spent more than $11 billion online.Amazon.com, the leading Web retailer, says that it sold more than 38 million items during the last quarter of 2001.

Global financial markets have been transformed radically as well by the continued digitization of commerce. On the trading floors of Wall Street and other exchanges, handheld wireless computers now log transactions that were once recorded on paper slips. Furthermore, the markets now conduct business through automated systems with the capacity to handle more than a billion trades a day, a sum that dwarves the capacity even of a decade ago.

The impact of the digital manifest destiny is felt not merely through vast numbers, however, but by vast changes in the daily lives of workers, students, and citizens. These changes range from the huge increase in electronic distance learning to the way in which traveling sales representatives store their information on a company network via laptops or handheld computers. Musicians now have the power to record and distribute their music digitally, while hobbyists harness the power of the Internet to create robust communities for increasingly specialized passions. The spectacular rise of eBay, an online trading forum, has created numerous electronic communities of like-minded traders and collectors who have expanded their networks into cyberspace.Digital tools and digital culture continue to spread into every aspect of daily life.

GETTING CONNECTED

Indeed, the digital manifest destiny has crept into every corner of our economy. Just as the advent of electricity led to dramatic changes in how companies organized themselves and their work processes, all companies are realizing that they must implement the new information technologies at a fundamental level. In every industry and every market throughout the world, companies are considering how information and communications technology changes the most basic ways in which they add value.

The dot.com bubble burst early on, and business leaders and consumers alike know that the “Internet Economy” has not displaced traditional global markets. Instead, the current, and more substantial, generation of technology adoption has altered the basic operations of companies in virtually every field of business. Companies today understand that responding to the digital imperative means incorporating the technologies—and their resultant capabilities—into the heart of the value-adding process. Today, we are seeing an integration of these technologies into the most basic ways of doing business.

For corporations, the grand hope for evolving communications and other business-enhancing technologies —the Internet, mobile telephony, communications satellites, and the like—is that they will make better and stronger connections among suppliers, vendors, and customers. Managers believe that these connections will foster a more productive, efficient, and synchronous way of work. Already, corporations have reorganized themselves to use these technologies to engage in real-time transactions with customers and suppliers. Businesses are creating and extracting more value from information about resources than the resources themselves. They are realizing more productivity from fewer employees as a result of redesigning workflows around the power of integrated information systems. They are gathering more and better information about the purchasing habits of customers.

This digital manifest destiny is forcing all companies to compete on the basis of new criteria. It has accelerated the rate of change in products and markets, placed a greater premium on competing through knowledge work, and undermined the ability of leading companies to sustain their source of competitive advantage indefinitely. It already is becoming clear that companies succeed when they understand that crafting business strategies in the digital age is a constantly shifting process, rather than a long-term event.

IS THERE A DOWN SIDE?

So, are all these changes beneficial? We know there are some new dangers. The power of the Internet can be harnessed just as easily by those who seek to do evil, including those who masterminded the September 11 attacks. The notion that all information should be free fails to take into account the consequences of inadvertently providing lethal information to groups who would use it for malevolent purposes.And, on a broader level, the continued spread of digital technologies threatens to exacerbate tensions between developed and lesser-developed countries.

In the business world, the digital manifest destiny creates some negative consequences as surely as it boosts productivity and progress (no surprise, since the manifest destiny of the mid-1800s created adverse effects as expansion moved ahead at a brisk pace). There always are mixed blessings to new ways of working. Giving employees cell phones and mobile laptops may allow them greater flexibility and autonomy in getting their work done. This ubiquity also carries the potential for work life to spill, inappropriately, into every aspect of one’s personal life. The new power of computers to track behavior provides employees with great abilities to keep tabs on every element of an individual’s decisionmaking, but raises new concerns about safeguarding personal privacy. Sudden productivity surges due to information and communications technology investment can lead companies to shed commensurate amounts of employees. And the relentless march of new technologies continually raises the bar in terms of the skills employees must master. Finally, in terms of personal health, the pressure of needing to be available 24/7 is not a trivial stress. Always rushing to make decisions, forever plugged into work, and constantly feeling threatened by new economic competitors only raises the fear factor for all.

Consider the number of companies that have had to resort to job layoffs in recent years, including many of the most professional and innovative companies in the “New Economy.” Those laid off need to be able to return to the workforce without costly retraining and a long orientation to the constantly shifting ways of work. Because digital technologies change the way we work almost as quickly as technology itself marches forward, rejoining the workforce is like running up and jumping onto a moving motorcycle, rather than climbing onto a bus that has stopped conveniently for you. When individuals step off this digital conveyor belt, they can’t return easily to the workforce without some program to keep them technologically limber.

The ripple effects of such spiraling demands can spread throughout the economy. Without a cadre of workers who are trained and able to support an economic turnaround, the prospects for qualitative growth are severely limited. Without the workers who can handle the new jobs formed by healthy companies, we will experience a deepening divide between the highest- and lowest-skilled workers, which will bring enormous economic and social consequences.

Corporate managers are confronted with the many facets of a new digital imperative. Lower-skilled workers, for example, need at least minimal training to participate in new forms of work. Layers of digital proficiency spanning high- and low-skilled employees must be bridged. The current trend towards remote and/or mobile and flexible employees must be supported through an individual’s ability to tap into corporate network resources. All employees must have the ability to continue upgrading their skills to keep pace with evolving technologies. To remain competitive, managers must boast sufficient digital prowess and resources to attract and retain employees.

Finally, companies face the long-term challenge of building digital human capital for tomorrow’s workforce. They must invest in schools, colleges, and other training institutions to make sure future workers are prepared to use an ever-widening array of digital technologies.

REAPING THE DIGITAL DIVIDEND

Until now, the digital manifest destiny has rippled through each element of the economy without much central-level direction from governments or coordination within the business community. While many large companies are responsible for developing and producing the technologies propelling the digital manifest destiny, businesses have responded to the consequences of our increasingly wired world in an ad hoc and reactive manner. Few have created a proactive, forward-looking plan.

The digital dividend represents the payoff that will result when business leaders engage with policy makers to help the spread and convergence of information and communications technologies to take place better, quicker, and in a way that helps suppliers and customers alike.

Business leaders must realize that the new digital world requires a more hands-on, coordinated approach to harnessing and sharing technology. The digital dividend won’t be realized fully unless we take steps to shape the digital world, and companies become the catalyst for this new digital destiny. Businesses have to take the lead in narrowing the digital divide. The issue is not only about offering Internet access to every citizen, nor is it only about social policy or computer penetration. The basic question is how to begin to create an economic and social infrastructure that leverages the promise and potential that these new technologies offer. Seeing this dynamic as an opportunity rather than a problem can help businesses and civic leaders set about creating the digital dividend.

The digital dividend can be viewed as the profound gains that both the business community and the broader community at large will realize when the various digital networks reach their fullest potential. The digital dividend represents the payoff that will result when business leaders engage with policy makers to help the spread and convergence of information and communications technologies to take place better, quicker, and in a way that helps suppliers and customers alike. For example, at some point we may need to consider antitrust law tradeoffs to allow companies that compete against each other to join forces to promote greater digital ubiquity.

Creating the digital dividend will enable businesses to thrive at a new level of post-industrial innovation. The real challenge lies in creating a network of networks that puts digital knowledge at its core. This is not just social policy, an issue of digital equity, access for all. This issue is larger, encompassing individuals and corporations realizing the full promise of digital technology in a complex interconnected world.

To realize this great promise, we must look to active government and private-sector leadership, as well as involvement from the business community. Many based in the policy world call for top-down federal government solutions as remedies. Yet, there is a growing consensus that bridging the digital divide will require strong initiatives by the business community to create a digital dividend—whether by its own initiatives or by leveraging financial incentives and resources provided by the public sector. As an example, businesses both in the United States and throughout the world may need to employ digital technologies to provide the type of focused training necessary to adapt job skills to changing market needs. In doing so, they also will promote their own economic interests in expanding supply chains that encompass operations in developed and lesser-developed countries.

In order to realize the digital dividend, the business community must engage with the world of policy— including ongoing public-private sector initiatives at the United Nations, the G-8, and at the federal, state, and local levels, and vice versa. A new compact must be formed. The policy community has long promoted the concept of “universal service” to ensure that income and geography are not insurmountable barriers to telecommunications access. The business community recognizes the economic efficiency of having as many people connected as possible, but looks to the bottom line rather than social policy as the rationale for supporting digital network expansion. When these two principles are viewed in tandem, they comprise a larger equation—one that can generate exponential growth in digital technology penetration by virtue of both government support and private investment.

It is possible that all of this could happen organically, but it isn’t likely. In fact, we can’t afford to justify inaction in the name of market forces or technological imperatives. The digital manifest destiny requires a concerted effort by business and policy leaders to realize the full benefits for all parties. That’s the way we achieved the manifest destiny of the 19th century. And as the digital manifest destiny of the 21st century takes hold, we should be prepared to use that road map in new and creative ways to transform promising developments into global realities.

Stuart N. Brotman (CC ’00), president of Stuart N. Brotman Communications, a global management consulting firm based in Lexington, Massachusetts, advises domestic and international telecommunications, Internet, media, entertainment, and sports industry clients. He also teaches telecommunications, entertainment, and media law at Harvard Law School and serves as an Eisenhower Fellow.

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