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(originally published by Booz & Company)


A Long-Wave Theory on Today’s Digital Revolution

Historian Elin Whitney-Smith looks at previous periods of disruption to understand what companies (and people) are going through today.

According to Elin Whitney-Smith, executives facing technological and economic change have a major decision to make: Will they handle disruption like the Spanish grandees who dominated the 17th-century economy or like the English weavers who supplanted them by embracing the printing press? This is only the sixth time since the dawn of civilization, says this long-wave theorist and economic historian, that human societies have faced a wave of change similar to the one that humanity is going through today. Each time, the disruption has been triggered by an innovation in information technology, which prompts a new form of organization. Today’s leaders have an advantage over the old guard in the five previous waves of change: They can see what’s happening more clearly. But whether they will heed the lessons of the past remains to be seen.

Whitney-Smith has spent 30 years researching and refining her theory of economic progress as a series of information technology disruptions, drawing on studies of subjects as varied as digital media design, medieval gender relationships, and the extinctions at the end of the Pleistocene epoch. (For the perspective of another long-wave theorist, see my interview with Carlota Perez in the Winter 2005 issue of s+b.) Whitney-Smith is currently refining this story in a new book, Winning Information Revolutions: From the Ice Age to the Internet, which she is publishing online, chapter by chapter. She also founded Netalyst, a small Internet consulting firm that specializes in the interface between social organization and technology, where she is now president emeritus. The company has always been virtual — work, meetings, and day-to-day management all take place over the Internet — in part to stake out a role as an early adopter of what Whitney-Smith sees as the victorious form of management to come.

Even leaders who don’t typically pay attention to history may find Whitney-Smith’s views highly relevant, if only because of the strategic implications. She says that for leaders of business and society, in each previous era of information technology revolution, a short-run strategy has been irresistible — but ultimately self-defeating. We met with Whitney-Smith in New York in the fall of 2010 to explore the implications of her ideas.

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.

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