Commanding Heights of Innovation
Posted by Brian FinnertyAs a dedicated Netflix subscriber, I go through a lot of documentaries and PBS specials that would never see the light of day in my house under normal circumstances. Netflix is such a clever and efficient service - you build an online queue of movies, carefully rank them by preference, watch your wife change everything, and see what the postman delivers every few days. When a DVD arrives in your mailbox, you are almost obliged to watch it unless the first 20 minutes are completely unbearable. This has happened with a few Adam Sandler movies, but it’s generally not a problem.
Last night I watched a great DVD called “Commanding Heights: The Battle for the World Economy”, based on the book by Daniel Yergin and Joseph Stanislaw. This documentary was recommended by a friend of mine (another great Netflix feature is the ability to share your DVD queue) who pays attention to things like the global economy and free markets. Anyway, this particular DVD passed the Adam Sandler test and I found myself engrossed from the outset. It begins by exploring global economic conditions at the turn of the 20th century and examines all the major technical innovations that transformed the world back then. To appreciate the magnitude of these innovations, viewers are encouraged to picture a wealthy London gentleman who wants to order tea from India and exotic Indonesian spices. Rather than writing a letter to the king, he simply orders these goods and services with his new telephone and reasonably expects door-to-door delivery by the burgeoning shipping industry in a matter of weeks. And it wasn’t just the telephone - telegraphs were bouncing all over the world with important messages transmitted across national boundaries in seconds. Cars, televisions, commercial aviation, antibiotics, space travel - when these human achievements are listed out in historical format, you can really appreciate the scale of innovation across a few generations.
This started me thinking about the parallels between the turn of the 20th century and the turn of the 21st century. Substitute the rise of the telephone with the rise of the Internet, which is clearly one of the commanding heights of today’s economy. Indian tea and Indonesian spices are no longer the exclusive territory of wealthy gentlemen in capital cities with international shipping contacts. People in many countries across the world can search massive databases, run real-time price comparisons, and order the most obscure or exotic items online. Shipping and fulfillment is almost an afterthought - you pay a little more if you want it to arrive a bit faster. If it’s a birthday gift, Amazon will gift wrap it nicely for you prior to delivery and your grandma will never know. Today, all shapes and sizes of companies are moving their sales and distribution model online, delivering software as a service rather than packaged on a CD or sold on a shelf. The gap between purchaser and supplier is getting ever smaller and products can evolve within a wide network of users sharing a common interest. Even at the most ordinary level, daily tasks like buying groceries or reading the paper are transformed by this new economy of software services. For example, I don’t need to walk to my video store to see if they have ”Commanding Heights - Part II”, only to be told by a sulky teenager that it’s out of stock and I owe $10 in late fees on “The Waterboy”. The world economy is changing and it’s all about software and it’s all about service.
