Tuesday, April 2, 2013

Understanding the push for digital strategy at the dawn of the internet (an aside on government digital strategy)

Much of our reading discussed the need for strategy in changing environments. Business adaptation and agility is about more than just 'seeing the trends' but also looking out over the horizons. When the internet first boomed, both before and after the dot com crash, there has been a massive misunderstanding of the full extent to which this marks a change in human behavior. Companies that locked into the transition towards the internet became rich and successful while those "brick and mortar" only competitors loss share and often collapsed. These are the shifts which break the horizon for the dawn.

The internet dawn had to be seen as a strategy. Hal Varian, current Chief Economist as Google, saw this emergence and was one of the few economists to track its evolution with equation. His popular book "Information Rules" has since become outdated because of his dedication to his working papers. Varian saw the growth of the internet as a new marketplace which had far superior allocation efficiency and feedback mechanisms. Varian's initial accounts of network positive externalities (and feedback) explain the success of Amazon, Facebook and any other socially beneficial internet site. We are in an age of social lock-in. Comfort online. Many recent thinkers refer to our age as the "service age" because we have to ensure the comfort of our customers, our clients and our bosses. We all live in service to one another - and companies compete broadly on service. If an internet site is trusted socially it fulfills a massive number of service needs to its clients. This dynamic shift has to be in the strategic plan of every company today. The heroes of these strategic developments were formed in the dawn of the internet - information was their most valuable good ; and remains so today. That massive amount of information between consumer and provider allows for the provider to optimize service in ways unbelievable in the past.

Today we can search for products and information at speeds impossible only decades ago. This cost of search was once a hindrance throughout society but today is the primary feature of our cornucopian dreams. Varian's analysis of search is thorough and more or less led google to their current success. This article says more about that development: http://www.wired.com/culture/culturereviews/magazine/17-06/nep_googlenomics?currentPage=all

As an aside I'd like to discuss the government's interaction with this strategy. The slowest to adjust to this (ironically) has been the government. Although the government exists solely with the social benefit at stake - it is the slowest to incorporate strategies which bring the social externalities of digital media. This is because the government has little incentive to digitize, and very little incentive to change it's systems. I believe this will be a major downfall in years to come. While electorate is often quite pleased by the display of government information online, it is only during election years that these get any attention. All of the fluff available online does nothing but desensitize our information exchange and sway voters. Government remains entirely incapable of a digital system which progresses various public needs. Most government regulations struggle to even include the digital interface with which many of these policies are typed on. This major disconnect and misunderstanding of the digital realm as a place for public interaction may not be the decision for elections as well as it could be the place for organizing revolt - as we have seen in Egypt. There is a great need for a public strategy here, but as the internet is a powerful tool for the many - the marginalized need only opt out. There is no opting out of the government and this might be the defining difference which forces values to conflate against a growing change in perceptive of government in our generation.

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