How to Out-Behave Your Business Competitors

Let's pause in our brief rush through history to note a couple of specific industrial age events whose significance to our discussion will become quickly apparent. With the coming of the telegraph to the United States in the mid-1850s, some savvy entrepreneurs tried to strike it rich by stringing up thousands of miles of copper cable connecting both the established mercantile centers of the East and the rapidly developing Midwest. In their helter-skelter pursuit of wealth, the enterprise produced a glut of transmission capacity without the market to sustain the infrastructural costs of its installation. Prices collapsed, as did the fortunes of those who invested. Call it the dot-dash explosion. Suddenly, the cost of transmitting a word of text dropped to a then-unheard-of penny per word. This leap in connectivity and economy had some unintended consequences, as journalist Daniel Gross reported in Wired magazine: "Reporters could file long stories from the Civil War battlefields, fueling the great newspaper empires of William Randolph Hearst and Joseph Pulitzer. Likewise, the spread of the ability to send cheap telegraphs spurred a national market in stocks and commodities and made it much easier to manage international business."4 These were world-altering developments. Half a century later, American Telephone and Telegraph extended that network dramatically when it introduced the telephone, although they were savvy enough to protect themselves by soliciting monopoly protection from the U.S. government in 1913, thus assuring profitability. The telephone was the telegraph on steroids, and its impact on business was similarly huge.

Fast-forward to 1994, and reflect on the birth of the information age. Technology again allowed multifold leaps in the way we did things. Opportunity was everywhere, and though few had a clear vision of where it would lead, inventions, products, and processes made things possible that were previously only a dream. Once again, entrepreneurs jumped in all over the place. A host of entrepreneurs (seemingly ignoring the lessons of the dot-dash era) invested heavily, laying fiber-optic cable around the world. Fiber-optic cable provided a quantum leap in transmission capacity from the copper cable originally installed by Ma Bell and her telegraph brethren. A single pair of optical fibers can carry more than 30,000 telephone conversations for distances of hundreds of kilometers, whereas a pair of copper wires twice as thick carries 24 conversations about 5 kilometers. When you apply new technologies like wavelength division multiplexing (WDM), fiber capacity increases by up to 64 times. With the new technologies on the horizon, scientists believe fiber-optic cable's theoretical transmission capacity to be infinite. Laying fiber-optic cable was like replacing every bathroom faucet with something the size of a missile silo. Suddenly, total global electronic communications consumed just 5 percent of transmission capacity. Transmission prices again collapsed (along with a lot of the companies hatched with the idea of getting rich quick on the back of this new technology), and we found ourselves in a world in which information flowed around the world instantly and cheaply like light through a darkened room.


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