Managing in the Next Society 1

Part I The Information Society
Chapter 1 Beyond the Information Revolution
Chapter 2 The Exploding World of the Internet
Chapter 3 From Computer Literacy to Information Literacy
Chapter 4 E-Commerce: The Central Challenge
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When the new economy terminology buzzed in the mid 90's, it was indeed the fundamental change of society more important to discuss. The change consisted of demographic change, manufacturing's presence decrease in the developed countries, and information revolution. Specifically, the change in demography basically means the shrinkage of young people in the society in developed and emerging economies. In 2002, when the book was written, Drucker claimed that the next society represented by at least three factors mentioned above were already prevailing.

During industrial revolution, manufacturing became a major source of power since it increased productivity parallel with a lower cost level, both significantly. In the first half century of industrial revolution, however, the more efficient productions were merely mechanized ones. The products were around all along before industrial revolution took place. Only after the introduction of the steam boat and railroad did the economy start to change drastically. While steam engine enabled a sheer increase in productivity, the steam boat and railroad introduced a new mental geography. There was no boundary anymore. It changed the way people trade. It introduced a new integrated market.

The history always repeats itself. When the first computer was introduced, the information revolution began to roll out, as did the industrial revolution when James Watt invented the steam engine. During the first stage of this revolution, mechanization of processes took place. The benefits of information revolution started to emerge. An apparent benefit of information revolution based on IT invention and innovation was the tremendously more efficient processes. The processes had been here all along, but IT and new software helped people decrease the time and cost needed to execute them. There were software to routinize accounting process, tax return calculation process, learning process, inventory control process, you name it. Only after the use of internet and e-commerce, an even drastic change emerged.

E-commerce and internet changed how people conduct business. While the railroad made the world small and made ordinary people could travel without boundaries, internet made distance even irrelevant anymore. Now, there is no distance. The new mental geography part 2 takes place. The economy, the structure of industry, the market, the customers are all changing. Internet can be seen as a new gigantic distribution channel world wide for products, services, and jobs - managerial and professional. Even poltics is changing because of the information revolution.

While technology is expected to provide new further fundamental innovation, we should aware that only the change in social values made the emergence of new industries possible. Underneath this phenomenon are the skills developed during the process. The technologists are socially accepted and financially rewarded, as were they in the industrial revolution era. To maintain leadership in technology innovation and invention, the economy depends on the skills it develops. The highly skilled people known as knowledge workers are becoming more expensive and more significant as the source of value creations. Consequently, treating them well could be the most effective strategy in the future. Bribing them with only financial rewards will not be enough. They need to be treated as partners and ascociates rather than employees or subordinates.

Related to knowledge workers' increasing roles in the economy, information processing at an individual level and at a corporation level is becoming more and more strategic. However, CEO, other C level executives, and almost all of us still do not understand what information is and how we should deal with it. We need to develop our information literacy and then information responsibility. We need to treat IT and informarion only as tools. As the tool user, CEO, not CIO, is the one responsible to decide what information is needed, when, in what form, and from whom. CEO also needs to consider his or her information further responsibility: what information he or she owes, when, in what form, and to whom. This new attitude toward information will develop our information responsibility (stewardship) roles to maintain our capacity to invent, innovate, and compete.

Talking about information and information systems, Drucker wrote in his book that at present we focus on our inside information systems. However, what we really need is an outside information system. It is more valued if we add outside information than if we improve inside information. Why? It is because profit centers are never inside the business. It is always outside. To make it more crystal-clear, it is not the information of your customers really matters, but information of your non customers does. Outside of outside is most plausible to force your business to change. Drucker also claimed that in the information revolution era traditional perspective toward conducting business will soon become obsolete, since we are now about to move into one global integrated economy. If CEO conducts the business as usual, he should be prepared to lose business from more efficient global competitors even overnight. Without further due, Drucker wants to say hurry up change your attitude, your mind set, and even your business.

Another issue related to information systems discussed by Drucker is the divergence between information coming from the accounting system and information coming from data processing stream. Although prone to be manipulated, accounting reports are still the ones by which decisions are made. Other than its prone to manipulation, a problem of accounting models is that they cannot relate expenditures to results. With a combination of accounting and data processing stream and with accounting model dramatic restructuring, the problems mentioned above should be solved. Data processing stream is also expected, if it matures in the future, to provide information of outside. In short, the two sides should be integrated. While people of the two sides now do not talk to each other, in the future the two schools should be combined. Similar to this phenomenon, technology in general will have to be treated as a christ cross area, not as an individual discipline.