Uri Merry
Consultant, USA
Is it chance that both the New Science and the Information Age appeared on the world scene at approximately the same time? The thesis of this article is that it is not chance: there is a direct connection between the two. Both were born out of the same technological development, they affect one another, and are co-emergent. With regard to organizations, their relationship takes this form: the Information Age has intensified a set of complex problems for organizations and other human systems. The New Science applied to organizations is an attempt to deal with those problems. Like the Information Age, the New Science was made possible by the development of computers and their networks. The New Science has the characteristics needed to begin to approach the complex adaptive problems facing organizations in the Information Age.
Toward the end of the second millennium of the Christian Era several events of historical significance have transformed the social landscape of human life. A technological revolution, centered around information technologies, is reshaping, at accelerated pace, the material basis of society. Economies throughout the world have become globally interdependent, introducing a new form of relationship between the economy, state, and society. (Castells, 1996: 1)
This technological revolution centered around information technologies has ushered in the Information Age. The Information Age has brought about major changes to humanity. The repercussions of these changes are of no less consequence and impact than those brought about in its time by the Industrial Revolution, which was co-emergent with the steam engine and another information breakthrough, offset printing presses and the consequent literacy explosion. The new era has significant implications for broad areas of human functioning. These in turn have far-reaching effects on organizations. What are these changes and how do they affect organizations? How have computers ushered in the Information Age?
The Information Age has two faces: the Knowledge Era and the Network Society. Both aspects of the Information Age have major consequences for society in all areas of human activity, such as work, culture, economy, national autonomy, business, identity, and ecology. They both have outcomes that have a great deal of impact on organizations: they affect the environment of organizations; they create growing difficulties for organizations to adapt; they decrease organizational lifespans; they demand a new set of characteristics from organizations if they are to be able to achieve sustainability. If an organization is able to embrace all these outcomes, it may be better off.
Much has been written about how knowledge has become the foundation of the modern economy as we have shifted from an economy of goods to a knowledge economy. Today, it is easy to see that we have evolved into a society whose distinguishing characteristic is that knowledge is the prime creator of wealth.
The Knowledge Era expresses a change in the basic resource of human production. It is a move from energy and matter as the major resources of human production to information/knowledge as the major resource. This signifies a trend in all areas of human production to activities based on a higher velocity of developing new knowledge. With the demise of the centrality of smoke-stack industries, industries based on knowledge, information, and communication take center stage and are the most vibrant sector of the economy, and even smoke-stack industries become more knowledge intensive. In the Knowledge Era, the quality and uniqueness of the knowledge component—whether in industry, services, or agriculture—form the main factor forging the destiny of that production. Organizations with an “intelligence advantage” have a greater survival capacity (McMaster, 1995).
The other face of the Information Age is the Network Society or, as some call it, the Network Revolution. The Network Society describes the basic change in connectivity and interdependence taking place in the world. Globalization is no longer a future scenario, but is now an everyday reality affecting all aspects of human living. Throughout the twentieth century the enormous advances in transportation, communication, and information technologies played a major role in making the world a global village. But more than anything else, it is computers and computer networks that created the means by which different parts of the world are intimately tied and braided together. They have been the dominant factor in spinning the intricate web of interdependencies between all sections and parts of the human world.
The Knowledge Era and the Network Society are two sides of the same coin. The Information Age emerges from their interaction. They each make each other possible, derive from the upsurge in the same basic technologies, and co-evolve.
The catalyst of the Information Age—in both of its forms, the Knowledge Era and the Network Society—is the imploding, exponential growth of modern computing and networking technology. Computer technology is expanding at an accelerating rate from year to year. The more we have of this technology, the faster it grows. As computer technologies grow and proliferate, knowledge becomes the critical factor in production and the world becomes braided together in ever-expanding networks of rapidly changing, knowledge-based interdependencies.
These technological developments have catalyzed the advent of the Information Age:
The exponential growth, development, and diffusion of computers and their networks have far-reaching implications for communication as a whole, and in particular for communication in and between organizations.
The cost of communication devices has decreased immeasurably and they are used by an ever-increasing numbers of people and organizations throughout the world. There is an acceleration in the rate of communication between people and between organizations, and a sharp decrease in the importance of geographical proximity between one organization and another. There is a growth in the accessibility of communication devices, which have become more user friendly. More and more people in organizations are using cellular phones and sending fax and emails. There is a multiplication in the quantity of communication between companies throughout the world, decreasing the effects of distance, time lags, and time zones. Services and industries have much more flexibility, such as enabling a US air carrier to do its bookkeeping in Ireland. Organizations and individuals have at their disposal a greater variety of communication devices, such as fax, email, intranets, cellular and regular phones, radio, computers, billboards, mailing lists, etc. Technically, any organization or person can instantly communicate with any other person or organization in the world, wherever they are. Almost all people and organizations in all parts of the world have been tied together.
This communication revolution has ushered in the Network Society. It has networked the world with endless flows of interactive communication, tying all together in one intertwined, braided complex of interdependent entities. It has changed the quality of distance and time in human affairs. It has globalized human society and transformed the world in which we live.
The impact of computers, their associated technologies, and networks is not only on communication and networking, but also on knowledge. Computers have launched the Knowledge Era. Advanced semiconductors, advanced computers, fiberoptics, cellular technology, satellite technology, advanced networking, improved human-computer interaction, digital transmission, and digital compression have all played their part in introducing the Knowledge Era (Albert & Papp, 1997).
Computers and their associated technologies have brought about the Knowledge Era in a number of ways:
Computers and associated technology are qualitatively changing the place of knowledge in human affairs. They play no small part in the shift from energy and matter to knowledge as the major resource.
The advent of the Knowledge Era reaches expression in a variety of ways. Production based mainly on knowledge and information is becoming the main source of human wealth. The development and advance of new directions of production (e.g., biotech or new materials) depend foremost on their knowledge base. The knowledge element is becoming the crucial factor in the advance and success of production in agriculture, services, and industry. Knowledge workers of all kinds are becoming a growing sector and an important part of the workforce. Power in society is shifting into the hands of those who have control over information and knowledge. They may also control the resources of wealth. Societies with a greater ability to acquire knowledge develop at a faster rate and outstrip other societies. There is a growth in the importance of the media and others who handle and direct the flow of information. Wealth takes an informational, electronic form that is stored in cyber-memories and transferred by networks of computers. An organization's sustainability depends increasingly on the quality of its people in terms of the level of knowledge, information, and knowhow at their disposal. Societies with a greater and greater ability to acquire knowledge and information develop at a faster rate and outstrip other societies.
Knowledge is replacing other resources such as energy, capital, and materials. It is becoming the key factor in global power struggles, replacing conflicts over material and energy resources. The free flow of knowledge and information is becoming a critical factor in the successful running of an enterprise. The growth of knowledge at the end of the twentieth century outpaced all the discoveries and advances of human knowledge throughout human history (Merry, 1995).
Computers, networks, and their associated technologies have therefore played a major role in creating the conditions for the advent of the Information Age. What implications for organizations does this new age bring with it? To understand the implications for organizations, it will be necessary to make a short survey of some of the wider implications of the Information Age that are having a deep impact on organizations.
The advent of the Information Age has impinged on the world scene in many unpredictable yet eventful ways. Developments that are having a major impact on organizations include globalization, accelerated change, the crunch economy, changes in the workforce, hypercompetition, and a knowledge landscape.
There are other significant implications of the Information Age that will probably have impacts on organizations, for example the decrease in influence and autonomy of the nation state, the creation of economic blocs, the decrease in the power of the labor unions, the search for identity, the new social-time ecology that disrupts local time cycles, the accelerated making of everything into a commodity (commoditization), the emergence of the immediate experience and gratification lifestyle, the globalization of crime, etc. At this stage, their full impact on organizations is still difficult to discern and they will not be discussed here.
New information and communication technologies are revolutionizing and globalizing business and commerce at a steadily increasing rate. Networking has created a global economy in which capital and labor flow freely between countries. Developed countries' investments in other countries grow from year to year. In the US, as early as 1992, movement of capital across the border with Mexico was about 110 percent of GDP. Electronic commerce networks are changing the fundamental structure of how businesses distribute products, goods, and services, on a worldwide scale. Commerce and trade are becoming more and more international and global. Complex transnational mergers, alliances, and common ventures have become a regular occurrence. Large multinational corporations flourish in the world economy.
Globalization has developed through networks. This takes the form of a world economy, in which the economies of most nations have become increasingly tied to each other and are interdependent. Over a trillion dollars in foreign currency flows daily in exchange throughout the world. Capital flows between countries are not affected by borders. Services already make up over 20 percent of global trade. Great sums of money circulate throughout the world in electronic form. The capital and currency markets are braided together so that a fall in a major market reverberates the world over. Capital investment, services, and labor flow in increasingly greater quantities and more freely over national borders.
Online networking has accelerated the rate of change and novelty generated by the rapid flow of real-time information and goods in the globally networked world. The landscape (environment) to which human systems of all kinds must adapt is in a constant, turbulent whirl. The space and time between a product's development and customers' desire have collapsed in this time-compact economy. This is also true of new services. The lifecycle of goods, the introduction of new products, new materials and innovative services multiply at a rate that many organizations have difficulty keeping up with. This is posing an unprecedented problem of adaptation for organizations of all kinds used to a more leisurely and predictable rate of change.
Flexibility, speed, creativity, novelty, innovation, and entrepreneurship are becoming a condition of organizational survival.
The acceleration in the rate of change and globalization has farreaching implications for society and its values. One might be that the instantaneous gratification of an experience becomes a prevalent lifestyle. Another is the acceleration in the rate of commoditization of everything, in terms of seeing and treating everything as a commodity that may be bought and sold. While these will probably affect organizations, it is still early to speculate on what their effects will be.
New and emerging technologies are driving transaction costs sharply downward. Because of this, firms need to reconfigure their organizations, increase their agility in responding to opportunities and threats presented by low-cost communications, and be able to reconfigure market strategy at short notice. In this open, networked economy, the free flow of products, services, capital, and labor over boundaries spurs the spread of hypercompetition.
The Information Age necessitates and allows globally distributed planning, design, production, assembly, transportation, and marketing across and between continents and states. Computers and other technologies allow this flow to be coordinated throughout the world.
Manufacturers, wholesalers, dealers, and end users who fail to grasp that the inventory-based model of doing business has been replaced by an information-based model will be doomed to extinction. (Segal, 1997)
The use of electronic commerce and communication is growing daily. Hypercompetitive purchasing from different countries increases year to year. Hyper-competition and the network society are leading to the incorporation of the customer into the production process, often with direct access into the producer's computers.
To some degree, hyper-competition favors those who are already strong. Those who have, get. Companies can move capital and jobs around the world, like pieces on a chessboard. Hyper-competition favors those concerns that can utilize the advantageous conditions for labor costs, taxes, services, transportation superstructure, and currency rates that may be found in different countries. Hyper-competition makes it more and more difficult for the new and weak to compete, and decreases the sustainability of those who have difficulty adapting to these new conditions. Hyper-competition bestows advantages on and facilitates the growth of multinational giant companies that straddle the world's economy. Globalized hyper-competition is a major factor behind the growing survival difficulties of many human systems.
Globalization, hypercompetition, and the accelerated rate of change are some of the factors that are developing what Kevin Kelly calls the “crunch” economy. Alongside the regular economy of the Industrial Age, a new economy is developing based on a novel and different set of rules, such as positive returns and lock-in. Surviving in the crunch economy is an increasingly difficult feat that many organizations have great difficulty in accomplishing. The major victims of this new grinding economy are young and small organizations.
The new rules governing this global restructuring revolve around several axes. First, wealth in this new regime flows directly from innovation, not optimization; that is, wealth is not gained by perfecting the known, but by imperfectly seizing the unknown. Second, the ideal environment for cultivating the unknown is to nurture the supreme agility and nimbleness of networks. Third, the domestication of the unknown inevitably means abandoning the highly successful known—undoing the perfected. And last, in the thickening web of the Network Economy, the cycle of “find, nurture, destroy” happens faster and more intensely than ever before. (Kelly, 1997)
The workforce in the Industrial Age consisted mainly of industrial workers, a decreasing agriculture sector, and a developing service sector. There were few women in the workforce. The Information Age has changed all this and brought about a major change in the workforce of developed countries. One of the most important changes is the growth of a new workforce of “knowledge workers,” who are generally more devoted to their professional activity than to the organizations to which they belong. There has also been a great rise in the number of women in the workforce. All of these changes have been accompanied by a sharp decline in the percentage of industrial workers (14 percent in the US); while, at the same time, there has been a rise in the number of people in the service sector. Of special interest is an enormous increase in the number of temporary and part-time workers (getting close to 50 percent in the UK). Another emerging group is those who are not part of the workforce.
In developed countries, new occupations are predominantly found in information and knowledge work. Alongside these changes in the workforce, it is possible to discern a far greater mobility between countries of both production plants and workers. From the poorer countries, many workers—at least those who are able to—are flocking to more fortunate countries and are being employed in their less desirable occupations. These trends are affecting the negotiating power and influence of the trade unions and the strength of labor movements.
Knowledge has become the critical factor affecting an organization's fate. The accelerating rate of growth of knowledge in all disciplines has created a knowledge landscape for organizations. The economy has shifted from one based on energy and material goods to one based on knowledge. Knowledge has become the main source of power and the prime creator of wealth. An organization marketing its products is in effect selling concentrated knowledge. It is the uniqueness of the knowledge factor in the product that has the main effect on its value.
The ability of an organization to continue functioning and sustaining itself depends more and more on its knowledge assets and its ability to develop and use them. Organizations with an intelligence advantage are surging ahead. Becoming a learning organization or community is becoming a necessary condition for remaining sustainable in the knowledge landscape. Attaining and acting on new knowledge before its competitors may influence an organization's future.
In 1991, business investment in computers and telecommunications equipment—tools of the new economy that create, sort, store, and ship knowledge—for the first time exceeded capital spending for industrial, construction, and other “old economy” equipment. The figures, while impressive, understate investment in knowledge machines because they do not show the growing intellectual ability of industrial gear. For example, more than half of machine-tool spending in the U.S. is for equipment with built-in computer numerical controls that, often, can be connected to networks. (Stewart, 1997)
All of the above implications of the Information Age affect organizations and create a new environment for them, to which many have difficulty in adapting.
In attempting to increase flexibility in dealing with the crunch economy and hypercompetition, organizations resort to downsizing their workforce, enlarging the number of temporary workers, and outsourcing parts of their production or other processes to places with lower labor costs. While these measures may be a stop gap for tightening budgets, some of them may misfire, and in the long run they are insufficient on their own to deal with the new conditions developing in the Information Age. The long-run balance sheet of these measures is as yet unclear.
Two other trends are developing in reaction to the new conditions. The first is the creation of networks between organizations. This may take many forms, such as alliances, partnerships, strategic development of a common market, exchange of knowledge resources, joint marketing, etc. There are many successful examples of small businesses, such as the garment industries in northern Italy, creating a common network for production, development, and marketing.
A second trend is the development of new organizational structures. These are becoming more pliable and flexible, resulting in new forms such as the virtual organization and autonomous subunits.
One of the greatest challenge to organizations may be to executives and senior management. Both the Knowledge Era and the Network Society are reducing the capacity of control and increasing the requirement for distributed intelligence and accountability. The move needed is toward autonomy and self-organization and away from central direction and control. The adjustment in thinking and attitude is proving extremely difficult for many formal leaders.
The difficulties of adapting to a globalized, hypercompetitive, crunch economy, changing at a dizzying rate and continually demanding new knowledge, are beyond the capability of many organizations. Many do not survive for long. The impacts of the Information Age described above have led to a sustainability crisis in organizations. Breakdowns, disintegration, bankruptcies, crises, and takeovers are on the increase. Throughout the last 30 years, studies point to a growth in the rate of bankruptcies and takeovers and a decrease in the lifespan of organizations (from about 40 years to about 12 years). This is contrary to the trend of a lengthening lifespan for individuals. The hardest hit are new organizations and small organizations, most of which do not reach maturity.
It is no longer sufficient to be efficient, effective, or excellent at one point in time. Organizational health must be evaluated along a longer timescale. Few of the Fortune 500 excellent companies continue being excellent after a few years, and many may no longer be in existence. Sustainability has becoming a major criteria for evaluating the health of organizations.
Human systems of all kinds and at all levels are dividing into those who can deal with the new environmental conditions and those who cannot. This bifurcation is following the cleft of those who have succeeded in adapting to the Information Age and those who have not. In economic and developmental terms, the countries of the world have bifurcated into those who are able to join the global network economy and those who have difficulty in doing so. The ability to consume commodities or to manufacture them is critical to where the network goes. Parts of Africa and Latin America are, at this stage, having great difficulty joining in. The same may be said of ethnic minorities in the inner ghettoes of US cities.
A similar bifurcation process is taking place among organizations. Survival is a matter of being able to function effectively in the new conditions of the Information Age. The complexes described above as introduced by the Information Age have created a new environment for organizations. Conditions are aggravated by the increasing interdependency and uncertainty of a networked world. Among organizations there is a process of bifurcation between those that are able to adapt to these new conditions and those who have great difficulties in adapting.
In the Network Society economy many organizations, especially the young and small, fall to the side.
The social, economic, political systems in which we live are complex and unstable; sooner or later their evolutionary paths must bifurcate. Our world, no less than the world of nature, is subject to phase changes. Bifurcations are more visible, more frequent, and more dramatic when the systems that exhibit them are close to their thresholds of stability— when they live “dangerously.” This is just the behavior our complex societies are exhibiting in the late twentieth century. (Laszlo, 1991)
These are the conditions that organizations are facing in the early stages of the Information Age.
It is probably not by chance that the New Sciences entered the world scene when modern science, after centuries of great achievements, is facing difficulties and coming close to a critical bifurcation point. The linear, mechanistic paradigm of the machine age is breaking down. Under the combined onslaught of the findings of quantum theory, Heisenberg's uncertainty principle, Godel's theorem, the discoveries of the New Sciences, autopoiesis in living systems, and other breakthroughs in science, the mechanistic paradigm that has governed science for generations is realizing its limitations.
The machine-like model of reality, which was the reigning paradigm in science, was the natural offspring of the Industrial Age. With the close of industrial civilization comes the crisis of the scientific paradigm that expressed and represented this era. The breakdown of the Newtonian scientific paradigm is part and parcel of the end of the Industrial Age and the advent of the Information Age. While still relevant in many fields, it has problems in dealing with nonlinearity, complexity, evolution, discontinuous change, and life.
The basic assumptions of the reigning scientific paradigm are now being questioned. Some of these are:
Not only are these basic assumptions underlying modern science being questioned, it has problems solving nonlinear equations, which are in effect the equations that describe most of what is meaningful in this world. Modern science also faces great difficulty dealing with complex, multilayered, nonlinear problems in complex systems. And these are the problems with which the Information Age is confronting humanity and organizations. These are problems of change in organizations and other human systems, of different states in these systems, of how complex systems adapt to their changing environments, of evolution and selection that is not only in the hands of chance. If scientists are having difficulty with the new paradigms, imagine the difficulty of those in corporations and society at large who have no tools—conceptual or methodological— and no experience in dealing with these issues.
This was the state of science when the New Sciences entered the scene. Like the Information Age, it was and is computers, networks, and their associated technologies that have been the catalyst of the development of the New Sciences.
It is computers and their networks that created the conditions that allowed the New Sciences to develop. They gave the New Sciences the ability to simulate and thus address and study phenomena such as nonlinearity, interconnectedness, complexity, emergence, chaos, selforganization, punctuated change, adaptation, evolution, sustainability, learning, fitness, reproduction, selection, and many other important states and processes.
The computer model ... has become a symbol of a leap the new turbulent science is taking—subordinating scientists' traditional concern with prediction, control, and the analysis of parts to a new concern for the way the unpredictable whole of things moves. (Briggs & Peat, 1989)
It is possible to study complexity in general by understanding processes that create natural complexity.
By incorporating them into the designs and programs of computers, scientists are able to simulate even more of the complexity of natural processes, most notably that of living, breathing creatures. (Coveney & Highfield, 1995)
Some of the ways in which computers have contributed to the development of the New Sciences are as follows:
The adaptive problems of organizations in the Information Age were in a sense tailored to the New Sciences. Globalization results in a need to deal with growing complexity and uncertainty. The acceleration in the rate of change, hypercompetition, the crunch economy, the knowledge landscape, the changes in the workforce—all these create problems for organizations, which are complex systems, in changing themselves to adapt better to new environmental conditions and in changing those conditions. They are problems of how to ensure organizational sustainability in a complex, uncertain, interconnected world. They are multilayered, nonlinear, interconnected, dynamic, complex problems, with which modern science has difficulty dealing. These are the kind of problems the New Sciences are attempting to address.
It is as if the New Sciences unfold in coevolution with the Information Age, enabling organizations to confront and cope with the novel conditions of complexity born of the Information Age. On the basis of painstaking empirical work in Santa Fe and other centers, the New Sciences are developing theoretical models on the basis of which it seems to be possible to begin to understand and deal with the complex uncertain con
ditions that organizations are facing.
Taking all of the New Sciences together, it is possible to discern the emergence of the fuzzy outline of a new paradigm that might serve as a base for approaching organizational issues in a world of growing complexity and uncertainty. This new paradigm is in the making, and it is to be hoped that it avoids many of the pitfalls of an organizational paradigm based on Newtonian foundations. It is an approach that appears to be able to deal with the nonlinear, far-from-equilibrium, dynamic, interconnected evolutionary complexes that organizations have to deal with. It is an approach that holds promise for organizations.
The relationship between the Information Age, the New Sciences, and organizations is complex. The Information Age comes on to the world scene as a result of the development of computers and computer networks. The Information Age has many far-reaching implications. Some of these bring in their wake circumstances that make it difficult for organizations to adapt. As a result, sustainability becomes a major criterion for organizational fitness.
Parallel to this, the development of computers and their networks catalyzes the development of the New Sciences. The New Sciences have within them the potential of helping organizations cope with and adapt to the conditions they face in the Information Age. They may contribute to organizational sustainability. Coveney and Highfield (1995) describe it thus:
There is a symbiosis between computing and complexity. Just as chemistry can compute, so computers can unravel the secrets of chemical complexity, ranging from the highly organized to the utterly chaotic. In turn, these chemical processes may be honed in the environment by Darwinian evolution and tempered by a series of contingent and fortuitous events, to generate the seething diversity of the living world, from wriggling bacteria to charging elephants.
To this list can be added “sustainable organizations.”
Acknowledgments to Michael McMaster and Gus Koehler for useful comments on the first draft.
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Briggs, John & Peat, David F. (1989) Turbulent Mirror, New York: Harper and Row.
Castells, Manuel (1996) The Rise of the Network Society, Oxford, UK: Blackwell.
Coveney, Peter & Highfield, Roger (1995) Frontiers of Complexity: The Search For Order in a Chaotic World, New York: Random House.
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