21st Century Business: Managing and Working in the New Digital Economy
Authors: James W. Cortada
Venue:  (2000)

From the Book:PREFACE:Preface The business climate today is in a state of flux, evolving in many ways, but essentially from the forms familiar to managers and workers during the Second Industrial Revolution into new ones. For sake of convenience, I call the new environment the Information Age, and we work in the New Digital Economy because the Internet has changed so much how we use computers and work. This book is about what tasks both managers and workers in this period of transition from one economic order to another are doing and need to do to be successful. The answer lies largely in doing three things. First, managers have to perform many basic tasks of management essentially unchanged from one decade to another. For example, managers still have to run organizations that generate a profit. Second, both managers and workers need to leverage technologies quickly and effectively and, in the process, adapt to the consequences of such actions. You see this strategy already at work-using the Internet for new channels of distribution of products and services-but the activities required extend far beyond this new merger of computing and telecommunications. Third, most managers and workers have to work effectively in companies (even government agencies) that live in two worlds, that of the old Industrial Age and in the emerging Information Age. This book is about how to carry out these new requirements. In the early 1990s, an author of a book such as this would have had to defend the notion that things were changing. Today, such an author finds readers very familiar and accepting of the notion that things are changing, often very rapidly. So, the discussion has moved ontothe next level, what to do about it. While I have a great deal to say about what people are doing and need to do, let me begin by delivering some good news: The fundamentals of management, as described, for example, by Peter Drucker in more than a dozen books and 35 articles, still apply. What is changing is how these fundamentals are being executed because there have been important technological changes in the past decade, such as the arrival of the Internet. The services and knowledge content of work has increased sharply as well. Most workers today are also experiencing the consequences of the simultaneous survival of pre- and post-industrial economies in many industries and in various nations. Noneconomic conditions have also changed, affecting workers around the world. The Cold War is over, and one consequence has been an enormous expansion of international trade. One byproduct has been the growth of free trade practices. A second has been both the expansion of democracies (especially in Latin America and in Central Europe) but also significant chaos in what used to be the old Soviet Union. It became more difficult to do business in Russia, but a lot easier to sell goods in China. Economic sociologists argue that we are moving from economies that focused on the physical manufacture of goods to new ones in which assets are information and knowledge, where the key skills are not centered around making things but around using information technology. Microsoft is worth more than General Motors. Welcome to a new work environment! There are many issues, but the central one is how are we to respond to change? Change is taking place at different speeds across various industries. It is playing out in various forms around the world. In this book I recognize and accept that change is occurring, often profoundly, but-and this is where my message differs from that of many other commentators-it is occurring more in an evolutionary rather than a revolutionary manner. Looked at over long historic periods, as opposed to just over the past couple of years, I conclude that the adjective evolutionary is a more accurate way of describing what is going on. It is from that perspective of viewing events as evolving that I find answers to the questions about how you can thrive in such a period of change. To be sure, change is more or less intense from one industry to another, and occurs at an uneven pace. Successful managers and workers view their duties as more than just keeping up with the Internet and e-everything. To be successful, the key insight they need is to apply many of the basics of business and managerial practice either in response to changing circumstances or to create those changes, and to do it holistically, thoughtfully, but with a grip on reality.This book is written for anybody who works today, particularly in highly industrialized (economists would say "advanced") economies. I address my comments to the skilled and experienced employee and to the newly minted MBA who knows her way around the Internet. The senior executive also needs help because he or she worries about the implications of many of the new technologies causing changes in their industry. Middle managers often feel the crush of change earliest in an organization, since they are the ones who normally alter processes, buy and use computers, and experience the consequences of changing market conditions. This book is very much intended to reassure them that the changes underway can be exploited to make their work rational and successful, although their lives will remain fraught with change and churn.As enterprises increasingly came to share managerial responsibilities with non-managerial employees over the past two decades, it became essential for "empowered" workers to understand and practice the basics of management. As members of teams, as process owners, and as users of an organization's assets, they had, for all intents and purposes, assumed many of the roles and responsibilities of managers. This role is as profound a change as the arrival of the Internet, for instance. There is a melding of manager/non-manager roles, even though traditional command-and-control and hierarchical organizations still exist. Because the roles of managers and non-managers are blending together, yet often simultaneously remain apart, I frequently apply the terms management or managers to the tasks of workers.The term worker needs further redefinition. In the mid-twentieth century, the word would have conjured up images of men wearing blue shirts, hard hats, walking around with lunch pails, and proud to be members of a union. By the 1980s, many observers were calling white-collar office personnel workers, not just white-collar workers. They included in this category lawyers, doctors, consultants, and accountants. By the end of the 1990s, we also had Web masters and process engineers. Today, the term workers is widely used to include anyone who draws a salary; that is how I use the word in this book. I raise this issue because some commentators on modern economic conditions use the term just to refer to either blue-collar employees (an old economy perspective) or in reference to non-managerial personnel. I have organized this book around major topics, themes that address what people are dealing with as they transcend both the old and new economies. The chapters help to catalog and rationalize the changes underway and how work must be done. Because the changes I discuss have already started, we have specific examples available of how that is occurring, and what is working well, to guide your own personal behavior.Chapter One looks at the big picture of what is happening to business in general. I describe how the world of work is transitioning from the Second Industrial Revolution to one based on information and the use of information technologies in ways that are not necessarily clear today. The chapter explains the fundamental historical features of the Information Age and how they differ from the past, viewing changes through the eyes of managers and workers. Driving forces in the new economy include technology, but more important, the hunt for new ways to make money and profit.Chapter Two discusses the notion of learning organizations set within the context of managerial best practices. Knowledge, skills, historical perspective, and knowledge management represent key sources of change as companies move into the new economy. Key themes in this chapter explain how institutional knowledge management and personal skills development make sense, and how historical perspective makes it easier for you to see what practices are essential during the transition. I reaffirm the value of process management as a relatively new, yet highly effective, way of organizing work.Chapter Three discusses the role of knowledge, and knowledge workers, because in a services-centric economy, institutional and personal knowledge is essential to an individual's economic success. Best practices in knowledge management represents a core body of actions people and firms can take to simultaneously exploit the old and new economic realities. I set the issue of knowledge management into the context of such new technological influences as e-business and the Internet.Chapter Four is devoted to a broad discussion about the nature of work, especially as it is affected by the introduction of the Internet into the daily activities of workers. I argue that the Internet, more than any other current development, is fundamentally altering how work is done. That change is both at the individual task level and in the way organizations organize, allocate, and perform work. It even affects what work is done and by whom. So, understanding the Net, its potential, and the way it is evolving is essential to successful performances by workers and organizations.Chapter Five looks at how people are hunting for new ways to generate profit, using value and supply chains. If one had to pick the current battlefield upon which the old and new economies are campaigning, this is it. The most important use of the Internet today is in the fundamental redesign of supply chains, because they are being digitized and are the major source of new economic value. The costs of operation are declining and the flow of goods and money is increasing in speed and accuracy. In short, these new supply chains are making it possible to squeeze out inefficiencies, improving productivity while allowing firms to connect in new ways to suppliers and customers.Chapter Six is all about patterns of behavior among managers and workers that make it possible to live in both the old and new economies and which are essential to success in the Information Age. I argue that despite the ambiguity of all the change going on, we are not its victims; rather, we can help shape our own futures with proven techniques. I discuss a variety of those actions, ranging from effective forms of leadership to a raft of activities managers are finding effective for themselves, their firms, and their employees. To a large extent the topics I have chosen are those drawn from my own experience and research on modern business practices. Other commentators often discuss some of the topics in one fashion or another. These issues usually include the Internet and knowledge management, while others, for instance that of value propositions and the modern role of the supply chain are almost ignored. Others prefer to emphasize the role of the Internet. I argue that the changes underway include a great deal more than just the Net. Like other workers, my thinking is most profoundly a byproduct of my own collective experiences. I feel blessed to have spent the last quarter of the twentieth century at the crossroads where the old and emerging new economies meet. As an employee of IBM during that entire period, in positions that allowed me to observe both technological innovations and how users responded and exploited these changes, I feel like a jaywalker in the middle of a busy avenue in New York or Hong Kong, about to be run over by people on their busy way. But I feel that I am also at the center of the action. I have been witness to the cutting edge of many things, within an organization that has enjoyed the benefits of the changes described in this book and also the travail such transformations force on all of us. I learned from customers and colleagues that we do not have to panic as the economy of the world changes; we are all better prepared to work well during the shifts. As you and I are propelled along to the Information Age we are beginning the ride of our lives. Just like a roller coaster ride at an amusement park, this one will be fun, frightening, but in the end, safe.No book is solely the product of the author. We borrow from people who know so much, thoughtful commentators who are willing to take the time to put their notions on paper, and, of course, those who stare at manuscripts while they are still poorly written. My colleagues at IBM have been especially supportive of my work. John K. Condon taught me a great deal about what governments are doing in applying technologies, shattering any image I might have had that public agencies are not progressive. Donald Cotey, Larry Prusak, and Eric Lesser exposed me to the nuts-and-bolts of knowledge management. Ray Lamoureux, one of IBM's key experts on e-business strategies, taught me almost everything I know about the subject, while Harvey Thompson made clear how customers and firms are increasingly coming to interact. Gary Cross went through my discussions about supply chains to make sure that this material reflected exactly what was happening today. A special thanks for encouraging my work goes to Michael Albrecht, Jr., the executive who worries the most about what skills and capabilities IBM's consultants need in the future. Over the past several years, clients, customers, and others have answered questions and tightened up my thinking. They made clear how work is changing, management practices improving, and yet how we are living in a period of transition in which we operate in two worlds at the same time. For the sake of convenience, I simply refer to these worlds as the Industrial Age and the Information Age. I thank them all profoundly for their help. The team at the Financial Times and Prentice Hall have been very supportive. In addition to wanting to publish this book, my editor, Tim Moore, had excellent ideas about how to enhance it. My manuscript improved enormously when Russ Hall scrubbed through every sentence and idea. Moore's production staff did a wonderful job in efficiently moving this book through to publication. I also want to thank Jeff Modjeski at IBM for once again preparing the graphics for one of my books. The views expressed in this book are mine alone, and do not necessarily represent those of IBM, the many individuals who advised me on how to write this book, or of the publisher. Any weaknesses or errors of judgment or fact are my fault, for which I ask for your tolerance. The subject of this book is much like a cathedral under construction in that we have walls up, the roof is being worked on, but it is not yet fully clear what the final building will look like. But you have to take a measure of the building under construction if you are to continue the job well. James W. Cortada