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Practically everybody agrees that new technology and innovation will be key to boosting U.S. economic growth, and our goal is a boost to 4% annually. Less understood is that new technology also is changing the dynamic between company and customer. In time, the very framework of how we conduct business could be turned on its head. Doc Searls runs a project at Harvard known as VRM, which stands for “vendor relationship management.” In an article for The Wall Street Journal, he describes how the Internet and smartphones are beginning to empower customers — the “demand side” — at the expense of companies (the “supply side”). So far, of course, most Internet development and smartphone apps have improved the supply-side half of the transaction equation because businesses have the money and incentive to pay for their development. That’s why we are worrying about the tracking files implanted on our browsers and phones, in many cases without our knowledge or consent, and how much (as well as what kind) of information they are gathering. But things are starting to change. What Searls calls “an early species of VRM tools” includes ad blockers and apps that track the trackers. Moreover, Microsoft is making the “do not track” feature the default option on its new version of Internet Explorer. This move angered digital marketers, Searls writes, but “Microsoft knows which way the wind is blowing, and it’s blowing in favor of customers.” Someday, Searls muses, shoppers might send an “intent-cast” into the marketplace, specifying exactly what they want, and then choose from among responding offers. The original request could include conditions such as not being put on an email list for promotions or ads. The customer-empowerment revolution won’t be complete until people have the freedom “to use our computing and networking powers with any device we like, outside the exclusive confines of ‘providers.’” That won’t be easy, he acknowledges, because “big companies and old industries are notoriously bad at changing their ways and giving up control, even when obvious opportunities argue for embracing openness and change.” Resistance to technology-driven change certainly isn’t a new phenomenon, but it’s almost always futile. The lesson for us is that while new technology and innovation often wreak creative destruction that hurts somebody, getting growth into gear is worth the pain.
2012 Economic Growth Fellow
John Prestbo is retired as editor and executive director of Dow Jones Indexes. Previously he was markets editor at The Wall Street Journal. He has co-authored or edited several books over the past 30 years. The most recent is “The Market’s Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average,” published in 1999 by Dow Jones Indexes. His column, Indexed Investor, appears on the highly regarded “MarketWatch” business and finance website. He received his bachelor's and master's degrees from Northwestern University.Full Bio
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