Communication is business

Article on communication commissioned for City Speakers International Newsletter.

Communication is business

By Quentin Langley

Dateline 24 May 2004

Communication is changing. That means business is changing, and the rest of the world will follow. Most people think the Internet – at least as a commercial proposition – arrived in the 1990s. I think it is still in the process of arriving, and we have yet to see one per cent of its potential.

The claim that communication is business may seem overstated. But ask yourself, why do we have firms? Why isn’t everyone self-employed? If you, as an entrepreneur, have a need to hire someone, no-one you could possibly find is right for all circumstances. All potential employees have sick days and holidays. There is always someone with a different skill set who could do one part of the job better. So why not have a pool of freelancers, drawing on it according to talent and availability? You will be able to control freelancers more effectively, and flexibly staff for ups and downs in the workload. Why not, to put it bluntly, outsource everything?

The answer is that, although there is probably someone out there somewhere who could do part of the job better than the person in front of you, you may not be able to find them. And if you could, you would spend a great deal of time briefing your extensive pool of freelancers. You have more control over contractors, but management is not just – or even principally – about control. It is about communication. And it is easier to communicate with one full-timer than three part-timers.

Of course, no real life situation is exactly like another, and one reason people hire full-timers rather than outsource is inertia: that’s what we have always done. The Inland Revenue does not approve of outsourcing or self-employment and will try to reinterpret your contracts in its own interests. On the other hand, the increasing burden of regulation associated with employment causes more firms to look at outsourcing.

But just as the biggest reason to have employment at all is communication, so is the biggest impetus to change the nature of employment. Communication has changed completely in the last ten years. Governments did not cause these changes and cannot prevent them from continuing.

Electronic communication utterly changes the way in which businesses operate. As someone who tried to run a virtual company in the early 1990s – when the technology wasn’t quite right for it, I should know. Today my website is programmed by a guy in Belgrade. We have never met, and probably never will.

The nearest analogy we have to what the Internet has yet to do to the world lies in the railways. The railways didn’t invent Iowa. The American prairies were there before the railways, but they were isolated, and there was no way of getting the corn from Iowa to market. There have been bright, talented people in Belgrade and Bangalore for centuries, but they have been isolated too.

Today, those talented people with much lower living costs than anyone in the west, are your suppliers, customers and competitors.

The full implications of these changes are unknown, but here are a few of my predictions:

 Global economic growth will accelerate. The gap between rich individuals and poor individuals will stay the same or increase, but the gap between countries will shrink.

 By 2050, 90% of the world’s population will have a standard of living equivalent to today’s middle class American.

 Developed countries will be able to match the growth rates of the Asian tigers – 6-8% a year, provided they keep taxes fairly low.

 Companies will easily be able to move from one jurisdiction to another, so western tax rates will fall. The welfare state experiment will be abandoned before 2050.

The day after tomorrow is not going to bring tsunamis to Manhattan, but it will change the world in which we all do business.

Copyright © Quentin Langley 24 May 2004

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