The End of the Information Era

Man began to walk upright, created fire, a wheel and later on he added an espresso machine to his list of accomplishments.  Along the way he discovered the opposite sex and breezed through the Agrarian Era, which lasted several thousand years, the Industrial Era which lasted a little more than a hundred years, and the Information Era.  Others refer to the period we no find ourselves as the Intangible Economy.

The Intangible Economy is the perfect name.  Economists are all miffed at the dynamic influencers in today’s global economy.  In the 1980’s, Chrysler’s Lee Iaccoca became a national icon for the America can do spirit.  He took a near defunct member of the Big 3 Auto Makers back to a force to be reckoned with.  “I don’t get ulcers, I give them,” was the mantra that Iaccoca popularized into the American business vernacular. 

Still, I can’t help but muse that less than 25 years later, not only Chrysler, but Ford and GM all are on the verge of bankruptcy filings as Ford reported a $123 million dollar second quarter loss, GM a $3.2 billion loss and now Chrysler is expecting a third quarter loss of more than $600 million.  Remember, these are quarters, not years.

And yet, except for parts of Michigan where unions have guaranteed wages of $50 an hour to high school drop outs that learn how to both vote Democratic  and screw a bolt in the same place on a string of cars throughout an 8 hour shift, economists are miffed.  Why?  Because the economy continues to steam ahead.

Since 1995, imports have risen from 12% of gross domestic product to about 17%. And foreign money finances about 32% of U.S. domestic investment, up from 7% in 1995. In other words, the global economy is a reality.  Don’t believe it? The Fed has raised interest rates 17 times since 2004 and yet l0 year government bonds sit at the exact same 4.6% rate that they were at before the 17 increases.  That’s because foreign investors are making up the difference in the domestic money supply.

What does all this mean to the average Wal Mart shopper? 

It means that the world is connected – really connected.  Money is being created through new jobs in new places that have nothing to do with placing a screw on a bolt for $50 an hour.  So the average Wal Mart shopper gets anything they want at reasonable prices and they can buy houses otherwise unaffordable because the old world economy has given way to the new world economy.  The average Wal Mart shopper doesn’t have to balance a check book because they don’t write checks and they can see every transaction in a balanced check book mode online 24/7.  The average Wal Mart shopper’s children go to schools where math is done on calculators and spelling is done by the computer.  For those Wal Mart shoppers under 30, the concept of a daily newspaper is laughingly pedantic.  And so today’s economic experts call the post-Information Era the Intangible Economy.

And they call it the Intangible Economy because to them, it’s intangible.  Author Leonard Sweet calls everyone on the planet over 40 an immigrant.  And he aptly points out that the language of the new world is a computer and true to all manner of immigrants throughout history, the immigrants learn the language and culture of the new land from their children.  So I continually learn about the computer from my kids and yes I’m over 40.  And I’ve also learned that the Intangible Economy is anything but. 

It is only called the Intangible Economy because those who name it so, don’t know what to call it.  What they fail to see is the rules of engagement in the economics realm have changed just as the rules of engagement in war have also changed.  The enemy in a war on terrorism cuts meat as a butcher during the day and both cheers and grieves his son blowing himself up as a martyr the following day.  And the traditional army can win the war but has no idea how to win the peace.  Likewise, the forces that would normally destroy the economy – rising interest rates, the big 3 automakers on the precipice of financial ruination, and deficit spending from a conservative congress seem to have no effect.

This isn’t an Intangible Economy if you understand it.  It is the economy of the Internet Era.  And the Internet Era is based on the principle of connectivity.  Google is now indexing more than 25 billion pages and it grows by 6 million a day.  Myspace grows within two years to being bought out for $580 million by Rupert Murdoch and Fox just as Youtube grows to a $1.6 billion buyout by Google in the same amount of time.  And none of the Economists who have bought into the concept of the Intangible Economy recognize that neither Myspace nor Youtube ever created something called a profit.

Spelling, math, balancing check books and profits are all the concepts of an era gone with the wind.  It was the Information Era where information meant power. It was the era that lasted less than 20 years and made a company named Microsoft first laughed at by IBM because they didn’t see value in the machine-world values of the Industrial Era worth over $100 billion (Microsoft).  It was the transition to the new era, the Internet Era.

In the Internet Era, every bit of information has a counterpoint.  Whatever is said or counted, someone else sees it differently or calculates it differently and while one party publishes the information in the daily newspaper, the second party publishes their counterpoint to a blog.  And we realize that the pen was never really mightier than the sword but the keyboard and website connected to thousands of loyal readers are at least as powerful as the billions of hard asset dollars known as printing presses.

In the Internet Era, marketing no longer targets demographics when it can own words.  Word ownership marketing delivers clicks to a website and accountability to the advertiser, for the first time in history.

In the Internet Era, companies’ marketing power is measured by it’s Internet Visibility Quotient – it’s website page rank plus inbound links plus Alexa Ranking plus unique visitors.  It is no longer measured by the Nielsen ratings, reach and frequency of its latest TV media buy.

In the Internet Era, the successful business enterprise recognizes the value of appearing on thousands and even millions of other websites.

In the Internet Era, the franchise concept gives way to the Affiliate program marketing model.  And the Affiliate program marketing model has no franchise fees, no sign up fees, no licensee fees and no risk for the manufacturer because all sales come from anonymous clicks on unknown websites and cost nothing until a sale is made because the economics dictate a pay per acquisition arrangement.  In the old world it was known as commission only and it required a salesperson with guts and a savings account.  In the new world it requires connectivity to lots of websites.

In the Internet Era, people watch TV over the top of a laptop because the Internet delivers a power called connectivity that is active where the best TV can offer is a poor edit of Pulp Fiction in a 3 x 4 format that doubles as a warm night light.

In the Internet Era, the successful company seeks out partners on the Internet interested in owning the same category words in different territories.

In the Internet Era, radio has no commercials and thousands of channels and the signal bounces off a satellite, not a tower in the country or atop the tallest building.

In the Internet Era, the quality of a company’s message is no longer as important as the quantity because the day of three television networks has given way to the day of 100 million blogs and 25 billion website pages on the Google index.

In the Internet Era, companies realize that the sites they are on are just as important as the traffic of the sites.  This is where brand meets technology.  Just as the Industrial era gave us the Good Housekeeping seal, the Internet Era has given us Google us. Successful marketing strategies have to place search engine rankings high up on the level of priorities.

Unintended Consequences

Greenspan and his successor, Ben S. Bernanke, have found this out the hard way. To restrain economic growth and cool the housing market, the two Fed heads have raised short-term interest rates 17 times since 2004, for a total increase of more than four percentage points. But even as the Fed tightened up on the domestic money supply, foreign investors made up the difference.