Identifying the benefits of the superhighway is difficult, because potential beneficiaries don't yet know what it is. One thing is sure, says Robert Heller, plunging into huge investments on the basis of intuition is a route to disaster.
Contrarians are not always right. But going against the stream is more likely to breed bonanzas than joining the throng. Received views are not always wrong, either. Conventional big-company wisdom, though, has some spectacular catastrophes to its discredit.
The information superhighway has many characteristics of the road to ruin taken by, say, financial institutions which wasted fortunes on one-stop shopping fiascos. The danger signs include gigantic mergers and hideously expensive acquisitions; seduction by the large and overweening vision of globalism; anxiety to enter the race before all the prizes have been pre-empted - but great vagueness about precisely what those prizes are.
According to one major survey, quoted by the Financial Times, 'there is no identifiable set of consumer services or revenue streams which will justify the infrastructure cost of the information superhighway either in the US or in Europe'. Surveys are no better at predicting the future than chief executives, but this sentence has fastened on one hard fact: you can't identify the potential benefits of the information superhighway, because potential beneficiaries don't know what it is.
Another survey, conducted by James R Adams and Associates among 1,000 top managers in large companies, found that nearly three-quarters had heard the phrase. To the question of what it meant, however, 'the most popular answers (17% each)' were 'not a lot' and 'worldwide information'. Surprisingly, only three people mentioned the Internet, which is up and running and is already providing both valuable services to business and livings to specialist companies.
The Internet's fantastic expansion and versatility prove beyond any doubt that the technology of cyberspace marks another great leap forward in the world-changing saga which began with digital computing.
Digital computing is a valuable precedent. Once IBM had belatedly entered that race, the potential rapidly became as obvious and widely recognised as that of the superhighway. Great companies paid hundreds of millions in entry fees, in product development, marketing costs, operating losses and acquisition expenses.
Then, as now, the cry of necessity was raised. Feeling that computing capability was indispensable, Xerox paid a third of its own market capitalisation for a minicomputer firm that was in the wrong technology and the wrong market. At the same time, the buyer amazingly ignored the invention, in its own research centre, of the personal computer. Other IBM challengers did likewise: NCR, Burroughs, Siemens, Philips, Bull, etc, all jumped on the mainframe bandwagon, only to fall off into huge losses.
IBM apart, the correct technological and market path was followed by small specialists, and even IBM misread the market so badly that minnows, now grown into sharks, stole the profits and the lead - with Intel and Microsoft setting the agenda. According to Fortune, Microsoft's Bill Gates envisages 'a world of online commerce'. Most of the 'real traffic' along the superhighway 'will be in business', which means 'every kind of commerce ... from the usual consumer services to managing factories, inventories and corporate databases, to trading stocks and verifying credit cards'.
The flow of information and communication should not only be larger, but better and faster. The managers in the Adams survey, while vague about the superhighway, apparently (if still vaguely) share such hopes. A quarter of those questioned expected 'a great deal of good' from the superhighway and a further third 'some good'. Nobody expected a negative impact on their companies over the next decade.
That hope, however, depends on whether their employers have joined the rush along the new road. Many of today's rushers, blithely convinced that, if you're buying the future, you're getting it cheap, will discover that financing Big Bang futurology costs too much in the here and now. Matsushita and Sony are licking multi-billion-dollar wounds after learning the hard way that adding software (Hollywood films) to hardware sounded more sensible futuristically than it actually was - at the price demanded and paid.
That's the acid test of investing in the future. What earnings will be required on the capital expended in order to cover its cost? Until it's covered, as Peter Drucker notes in the Harvard Business Review, the investment 'does not create wealth, it destroys it'. The propensity to plunge into major investments on the basis of intuition, rather than informed analysis, is one sure route to that result.
In theory, the information superhighway will discourage such aberrations, because of the speed and effectiveness with which managers can draw on internal and external sources of intelligence before making major decisions - like how to invest in the superhighway. But top-class information and analysis would very probably confirm that the glittering prizes are again likely to be won by innovative, new and dedicated specialists, not by established, greedy generalists. Which won't put the latter off their hunches. Nobody wants to be the last lemming over the cliff.