WCM/U1 Topic 1 The Emergence of Information Age; Competition and Business Challenge
American futurist Alvin Toffler has described three periods of economic evolution: the agricultural age, which lasted from 8000 BC to the mid eighteenth century; the industrial age, which lasted until the late twentieth century; and finally, the information age that began in the 1960s and will last for many decades to come (Toffler 1980).
These dates are of course approximate and overlapping. The agricultural age was driven by physical labour and the key sources of wealth were land and natural sources. The critical factor of economic success was land: those who could dominate and possess land were guaranteed controlling role in creating wealth.
The industrial age was driven by machines and blue-collar workers. During this period, a dramatic shift took place: from land to capital as the primary factor in generating wealth. The addition of more capital to the process of creating material wealth led to considerable increases in the effectiveness and efficiency of technological and commercial activity. Consequently, in this age, wealth passed from those who controlled the land to those who controlled access to capital. The rich were no longer the landowners; they were the owners of capital. The ability to finance industrial endeavors became the scarcest commodity of production.
The information age (treated here as synonymous with ‘information economy’) is driven by information technology and knowledge workers, in concert with change in the nature of work and workers. It is also characterized by the emergence of information or post-industrial society
(Bell 1973), which is dominated by knowledge workers-those working with information rather than producing goods. After World War II, capital started loosing its scarcity because of enormous accumulation. Technology also began to change-telecommunications, television, computers, commercial air travel, and so on-making capital far more fungible and resilient, easier to move around and, therefore, less scarce. With capital easily available, the critical production factor shifted to people. But it did not shift to simple labour. Instead, knowledge displaced capital as the scarce production factor and information became a strategic resource.
Those who had knowledge and knew how to apply it would henceforth be the wealthiest members of the society. Information thus became the source for knowledge as well as the medium to apply knowledge (Toffler 1990).
Business in the industrial and information age had different characteristics in various areas as shown in Table 1.1
In the industrial age, wealth was created by manufacturing and the process of making things was changed by technology. Industrial organizations grew around manufacturing operations and had owners, managers and workers. Information was needed on what to make, how much to make, how to make it and the financial status of the company. Information technology used was ‘word of mouth’ and ‘pen-on-paper’. The industrial organization evolved through most of the twentieth century, building on the process work of Frederick Taylor and Henry Ford, and the organizational work of Alfred Sloan.
The industrial age organization reached its pinnacle from the 1960s through the early 1980s. Then new information technology emerged-computer-enabled organizations that could store and process vast amounts of data. With computers, companies were able to speed up the execution of their processes. Information became an additional source of power.
However, the processes and their attendant procedures did not change significantly till the late 1980s, when the environment started undergoing massive change-changing industry structures, new strategic alliances, new technologies and modes altered the way the business was done. As a result, companies felt the pressures of heightened competition and the business impact of changing technologies. At the same time, the nature of both work and the workforce also started changing. This was the dawn of the information age.