The magazine strategy+business has an interesting interview on wave-based change dynamics, with historian Elin Whitney-Smith who has spent 30 years researching and refining her theory of economic progress as a series of information technology disruptions. This interview by Art Kleiner is worth reading in full.
“S+B: Your book-in-progress says that today’s turbulent economic events all have the same root cause — a shift in the way information is managed. Can you please explain that idea?
WHITNEY-SMITH: There have been six information revolutions in human history. Each represents a major change in the organizational paradigm — a change in how people form themselves into groups. The first was among hunter–gatherers just before the invention of agriculture; second, the rise of counting and written language; third, the fall of Rome; fourth, the invention of the printing press; fifth, the electric information revolution that accompanied trains, telegraph, and telephone; and sixth, the digital information revolution that we are now living through. In the last three, the economics follow the same pattern: a long boom followed by a crash. Then a difficult and turbulent struggle begins. New ways of organizing emerge and the old ways, supported by established elites, fail.
S+B: Why do the old elites lose power?
WHITNEY-SMITH: In the short run, it’s always better to be a Spanish grandee than it is to be an English weaver. In the 1600s, the Spanish grandees had no reason to innovate since their wealth was already assured, and they were suspicious of the newly invented technology of the printing press. As a result, the economic leadership of the world shifted to northern countries, like England and Holland, where weavers and other tradespeople reorganized to take advantage of the new capabilities that the press afforded them. It took time for this new approach to pay off, but it did. The world changed accordingly, while the grandees gradually fell behind.
Similarly, in the 1840s, it was better in the short run to be a Massachusetts mill owner than a Pennsylvania Railroad managing engineer drawing an early organization chart. In the 1970s, it was better in the short run to be the president of General Motors than a college student writing computer code. In each of these cases, the member of the existing elite had little incentive to change the way the system worked, or to “mess with success,” but the member of the “out group” — the weaver, engineer, or student — had little to lose and much to gain through being innovative. These out groups ultimately change the way the system works.
Today our own grandees — our economic and political leaders — are making a lot of the same kinds of mistakes that previous elites made. By doing so, they are reducing their chances of dominance in the future. They either ignore the new information technology and miss out on opportunities, or they fear the world it creates and try to co-opt it, shut it down, or control it. This generally fails, their fortunes decline, and a new group of dominant competitors emerges.
S+B: How long does this transition take?
WHITNEY-SMITH: Throughout history, the time frame has gotten shorter. Among hunter–gatherers, it took thousands of years to make the transition to agriculture. From the fall of Rome to the press was almost 1,000 years. The printing press revolution took 220 years. The electric revolution [trains, telegraph, and telephone] took 110 years, and, as I count it, the digital revolution started about 50 years ago. So, in recent information revolutions, there is a kind of rule of halves.
S+B: Why do you call some of these early transitions, such as the shift to agriculture, information revolutions?
WHITNEY-SMITH: First, an information revolution isn’t always associated with an information technology. It is about how information “works” in a culture. Second, if preagricultural people were anything like current-day indigenous hunter–gatherers, they were the purest information culture that has ever existed. They made their living by what they knew, not what they owned. They knew where the animals would be and when to gather the plants they needed. They perceived a world of plenty. Their status didn’t come from having possessions, but from information — having a better story or a better song or dance. Their world view was thus based on sharing; a song or story gained in value by being shared. That’s how people lived until about 10,000 years ago.”