The Oregon Business Coach

...just as the economy itself is. In the last few years, Europe has suddenly sent a mind-boggling infusion of money into the stock markets. Europeans discovered equity culture and overnight invested hundreds of billions of dollars of their old wealth into the network of ownership. At the same time, hungry investors are pouring billions into the coffers of Asian and Latin American "emerging markets." Today, almost any investor in mutual funds, whether he knows it or not, has a stake in a company operating in a nation outside his own.

...the same network technology--shrinking chips and expanding communications--that creates wealth in the first place. The tracking, accounting, and transmission of each person's wealth and slivers of ownership can happen only because computation and telecommunication have reduced the cost of a transaction to insignificance. Today there are 7,000 mutual funds--7,000 ways to divvy up the equity of wealth creation. And there are a similar number of publicly traded companies that have, in effect, divvied up their wealth to many owners.

There are several trends in this emerging equity culture, each one amplified by pervasive network technology.

The ownership of organizations is distributed and decentralized into a thousand points. The transactional costs of owning a tiny share of someone's else's dreams and ambitions continues to drop so that it becomes feasible to possess, directly and indirectly, small parts of many companies. When you invest in a mutual fund, you invest in hundreds of thousands of other people's work. You use the wealth that your own ambition has generated to seed the generation of prosperity by others. You may own only some minuscule portion of an enterprise, but you can easily own parts of many firms, and each...

...were once consolidated in a few banks and individual "capitalists," are now fragmenting into millions of networked bank accounts, mutual funds, and private investments throughout society. Elite, centralized banks used to have a monopoly on capital--the engine of capitalism. Bankers loaned their assets as debt, and from this debt, industry rose. But with increased knowledge and communication, investors realized that partnerships--or investments where the investor shares risk--yield significantly more wealth in the long run. Technology has accelerated the migration from making loans to making investments. The ease of computerized accounting allows almost anyone with as little as $100 to plug...

...on a scale never seen before on Earth. But the network economy is not utopia. It is a unique phase of economic development much like adolescence--a thrilling, disorienting, and never-to-be repeated time. The planet can progress only once through the stage when it is first completely wrapped by networks of thought and interaction. We are now at that moment when a cloak of glass fibers and a halo of satellites are closing themselves around the globe to bring forth a seamless economic culture.

This new global economic culture is characterized by decentralized ownership and equity, by pools of knowledge instead of...

One opportunity triggers another. And then another. That's a rifle-shot opportunity burst. But if one opportunity triggers ten others and those ten others after, it's an explosion that cascades wide and fast. Some seized opportunities burst completely laterally, multiplying to the hundreds of thousands in the first generation--and then dry up immediately. Think of the pet rock. Sure, it sold in the millions, but then what? There was no opportunity cascade. The way to determine the likelihood of a cascade is to explore the question: How many other technologies or businesses can be started by others based on this opportunity?

The qualities needed to succeed in the network economy can be reduced to this: a facility for charging into the unknown. Disaster lurks everywhere, but so do unexpected bonanzas. But the Great Asymmetry ensures that the upside potential outweighs the downside, even though nine out of ten tries will fail. Upside benefits tend to cluster. When there are two, there will be more. A typical upside surprise is an innovation that satisfies three wants at once, and generates five new ones, too.

If there is pressure to increase the productivity of human workers, the serious question to ask is, why can't a machine do this? The fact that a task is routine enough to be measured suggests that it is routine enough to go to the robots. In my opinion, many of the jobs that are being fought over by unions today are jobs that will be outlawed within several generations as inhumane.

...of economic growth and productivity. Listening to the technology can loose them. Technology says, rank opportunities before efficiencies. For any individual, organization, or country the key decision is not how to raise productivity by doing the same better, but how to negotiate among the explosion of opportunities, and choose right things to do.

The wonderful news about the network economy is that it plays right into human strengths. Repetition, sequels, copies, and automation all tend toward the free and efficient, while the innovative, original, and imaginative--none of which results in efficiency--soar in value

The key point in economic terms is that each actualization of a desire--that is, each new service or product--forms a platform from which other possible activities can be imagined and desired. Once technology satisfies the opportunity to fly, for instance, flying produces new desires: to eat while flying, to fly by oneself to work each day, to fly faster than sound, to fly to the moon, to watch TV while flying. Once technology satisfies the desire to watch TV while flying, our insatiable imagination hungers to be able to watch a video of our own choosing, and to not see...

...electric lights, a color TV, and a toilet are considered so elementary and primary today that we outfit jail cells with this minimum technology. Yet three generations ago, this technology would have been officially classified as outright luxurious, if not frivolous. In the government's eyes 93% of Americans officially classified as living in poverty have a color TV, and 60% have a VCR and a microwave. Poverty is not what it used to be. Technological knowledge constantly ups the ante. Most Americans today would find living without a refrigerator and telephone to be primitive, indeed. These items were luxuries only...

Instead they are fluid and reflexive. The father of virtual reality, Jaron Lanier, claims that his passion for inventing VR systems came from a long-frustrated urge to play "air guitar"--to be able to wave his arms and have music emanate from his motions. Anyone with access to a VR arcade can now have that urge satisfied, but it is a want that most people would have never recognized until they immersed themselves into virtual reality gear. It was certainly not a primary want that Plato would have listed.

At one time a useful distinction was made in economics between "primary" needs...

...what we want, we are exploring in every direction, following every idle curiosity, and inventing more wants to satisfy. Like everything else in a network, our wants are compounding exponentially.

Although at some fundamental level our wants connect to our psyches, and each desire can be traced to some primeval urge, technology creates ever new opportunities for those desires to find outlets and form. Some deep-rooted human desires found expression only when the right technology came along. Think of the ancient urge to fly, for instance.

KLM, the official Dutch airline, sells a million dollars worth of tickets per year to people...

--clicking aimlessly through dumb web sites, trying stuff, and making tons of mistakes and silly requests--before you master its search process. The web encourages inefficiency. It is all about creating opportunities and ignoring problems. Therefore it has hatched more originality in a few weeks than the efficiency-oriented Dialog system has in its lifetime, that is, if Dialog has ever hatched anything novel at all.

The Web is being run by 20-year-olds because they can afford to waste the 56 hours it takes to become proficient explorers. While 45-year-old boomers can't take a vacation without thinking how they'll justify the trip as...

Dialog was pretty futuristic. In the 1970s and '80s it was the closest thing to an electronic library there was, containing the world's scientific, scholarly, and journalistic texts. The only problem was its price, $1 per minute. You could spend a lot of money looking things up. At those prices only serious questions were asked. There was no fooling around, no making frivolous queries--like looking up your name. Waste was discouraged. Since searching was sold as a scarcity, there was little way to master the medium, or to create anything novel.