The Global Human Capital Journal

Curmudgeonly Looking into the Past to Divine the Future—That Nagging Privacy Issue—Debunking the Elephant

The Big Switch is a valuable book that reflects what has become Nick Carr’s trademark role, heckling IT and Web enthusiasts, albeit from good seats. Carr seems to relish his role as “the fly in the ointment” of the idealistic IT-enabled world that Web missionaries espouse. Although this book has shortcomings, I recommend it for two reasons. First, Carr makes a convincing and useful argument that the “electrification” of business and society (the Edison part) has valuable lessons for the “computerization” transformation of business and society (the Google part) that is currently unfolding. This parallel provides context to think about some of the disruptions around your business, society and career. Second, Carr raises serious questions about possible privacy implications of computerization. He palpably weighs in on the dark side and seems to want the world to change course from the “googlization of life.” If you haven’t read The Long Tail, I would read these books in proximity because they are very complementary and both quick, important reads.

As usual, I will outline the book’s chapters before giving my interpretation and insights in Analysis and Conclusions.

Book Overview

Part 1, One Machine, describes the development of man’s mastery of physical power during the industrial age, highlighting the contribution of electricity. Carr weaves an interesting story that reads like a novel, although he provides solid research and notes.

Chapter 1, Burden’s Wheel

• Carr points out that economics force change; touches on the innovation of harnessing water power to drive machines and factories.
• Industry carries the context of physical and industrial power, but it morphs to information power in the computer age.

Chapter 2, The Inventor and his Clerk

• Juxtaposes Thomas Edison, the inventor, and Samuel Insull, the businessman.
• How Insull envisioned the potential of the system, the network, and ultimately built what became Commonwealth Edison.
• Edison saw the business as designing and manufacturing the machines to create electricity.
• Insull saw more potential in creating a pervasive system, the network.

Chapter 3, Digital millwork

• A very short treatment of the development of the computing industry.
• Carr does it reasonable credit in few pages. Although much of the story will be familiar to people in the business, everyone will learn some pleasing new nuggets.
• He goes from IBM punchcards for the 1890 U.S. census through the now-emergent utility age, via stopovers in client/server.

Chapter 4, Good-bye Mr. Gates,

• Parallels Bill Gates with Thomas Edison: like Edison, Gates is caught up in the machines, he doesn’t appreciate the network.
• Brief mention of “the cloud,” recognizes the importance of Salesforce. It doesn’t go as far as to describe GrandCentral, which was the root of the Web services storehouse that Salesforce is now leveraging.
• Ties “computing” to “electricity” throughout, using interesting examples.

Chapter 5, White City

• How pervasive electrification changed industry, business and culture, thereby unleashing a new S-curve of industrialization; this reduced manual blue collar jobs, increased machine operation-based blue collar jobs and created new white collar managerial jobs; the latter were needed to manage information and communications.
• Now each machine had its own power and motor, which unshackled them from leather belts and shafts. This led to a huge burst of productivity and rising wages even as prices of products fell.
• Companies became much larger and more complex, with integrated processes that required more coordination. This led to the rise of knowledge workers and mass education.
• How electricity transformed society. On the consumer front, electricity enabled home appliances while it demanded standardization at all levels of the electrical system, so it could act as one machine. Few people are alive today who remember that electricity at the dawn of the 20th century was like “I.T.” in the 1980s and 1990s, cobbled together components that required innumerable “electricians” to ticker and keep them running.
• On the cultural side, idealists and advertising promoted a vision for egalitarianism and leisure. But it didn’t materialize; the irony of “home appliances” was that, far from liberating the housewife, they increased standards for “cleanliness” and removed the rationale for servants, so housewives worked as hard as before, if not harder.

Part 2, Living in the Cloud, will be very much a review for people in the business from a history viewpoint, but its standout value is the philosophical, societal and political questions it raises. Where Part 1 focused on parallels between electricity and computing, Part 2 shifts to discussing their differences.

Chapter 6, World Wide Computer

• Discusses the nature of software and how it differs from manufactured products: software is more abstract, (today it is) networked/distributed and carries little/no marginal costs for multi-use. At least floppies and CDs were a product that cost something, but downloading is virtually free.
• Moreover, web-based software is programmable even though most people no longer have to be programmers.
• An anecdote illustrates the differences between Web 1.0 websites and Web 2.0 blogs. A (Ford) Mustang aficionado with a failed Website tries again; he builds a blog on WordPress, also using Flickr for photos, YouTube for videos, Last.fm for music, MyBloglog for promotion, Feedburner for distribution and Adsense to make some money. He succeeds in building traffic the second time.
• Further examples of the shift from the “real” world to virtual worlds: how banks, theaters, schools, stores, libraries and playgrounds are rapidly becoming virtualized, and the trend is accelerating. Cars are becoming multimedia centers (VW and Ford examples).
• Mobility and iPhone-like devices enable people to “live inside” World Wide Computer. This sets the scene for his reservations about these trends in the rest of the book. He writes that the path may turn out to be “something less than a new Eden.”

Chapter 7, From the Many to the Few

• Touches on famous startups YouTube, Skype, Craigslist and PlentyOfFish, which profit from free content produced by people in their spare time, a trend that he likens to the hobbies of yesteryear.
• The dark side here is that software (websites) and these volunteers are ultimately displacing workers. He discusses the concept of increasing returns to scale (data products don’t entail increases in materials costs as products did during the industrial age). This is opposite to industrial age’s diminishing returns to scale, which held that, the more products you made, the more costs you incurred.
• This results in falling costs for consumers, but it also displaces workers. His main example is the media business, which is deflating fast. He likens the trend to how electrification replaced manual workers with machines, and eventually led to a shift from blue collar to white collar workers.
• Unlike during the industrial age, World Wide Computer is not creating new jobs because people aren’t necessary, even though cited scientists admit that “non-routine cognitive tasks” are still too complicated for computers to handle.
• Moreover, YouTube’s members do all the work, for free; ditto for Wikipedia, Yelp and others. It’s a market of free labor whose scale, scope and sophistication is growing quickly.
• Carr discusses the idealism of “the gift economy” and egalitarian ideals. How crowdsourcing and volunteers replace workers.
• Net-net: the industrial age concentrated wealth in a small number of companies that hired workers; the information economy is concentrating wealth in small numbers of individuals who don’t need workers.

Chapter 8, The Great Unbundling

• Summarizes how “the bundle,” information products like newspapers, is shattering.
• Points out that electrification led to shared media experiences while jobs in big companies brought people together in a mass culture.
• Mass culture is fragmenting today, due to low distribution costs and virtual goods (unfortunately, he doesn’t reference Coase and transaction costs, how these are economically viable when the organization can outperform “the chaotic world out there”; actually, it is a good problem to have, the “world out there” is becoming far more efficient, which is destroying the organization’s competitive advantage.). He warns against the possibility of inferior “quality” of Wikipedia (versus Britannica, which he doesn’t mention by name, nor does he disclose that he’s an advisor to the company).
• How newspapers financed “quality” journalism with ads that people saw because they had to buy the bundle. How journalists are now writing for the search engines (implying lower quality).
• Culture is fragmenting, which can lead to polarization; Google’s personalization of content enables people to read only what they want; will it lead to intolerance? He implies it will.

Chapter 9, Fighting the Net

• A weak chapter gives short shrift to a very important subject.
• It mentions some threats from the Internet: bots, terrorists using Google maps in Iraq.
• The fragility of the Net because it’s also a target.

Chapter 10, A Spider’s Web

• By far the most valuable chapter, as it discusses what the digital breadcrumbs we are leaving everywhere might mean for what we regard as “privacy.”
• Cites the story of Thelma Arnold, who was revealed in a 2006 New York Times article. Reporters Michael Barbaro and Tom Zeller, under direction of editor David Gallagher, analyzed “anonymized” AOL search data that had been released for research purposes. Like most Internet companies, AOL has a user agreement that says that users’ privacy is safe because, although AOL tracks everything members do, it does not tie member activities to their identities. However, by triangulating searches of “4417749,” the reporters were able to identify Thelma Arnold, who ended up on the front page of the New York Times.
• Carr explains that, by putting together disparate data, maps and other myriad digital breadcrumbs, it isn’t too difficult to determine identity from anonymized data.
• References research, “You Are What You Say: Privacy Risks of Public Mentions.”
• Emphasizes that computers were conceived as technologies of control, which monitor and influence human behavior.
• How governments are successfully insisting on control; cites Yahoo and Google in China, where the government sees the Web as a new propaganda channel.
• Meanwhile, corporations are gaining unprecedented knowledge of workers via the Blackberry, and IBM and Google are creating productivity algorithms.
• Suggests that companies will try to control how consumers act; how people already friend products and brands, how the Internet is a marketing channel and research lab.
• Cites ongoing research that MRI our brains to understand how and when we buy.
• The main message is that people are unaware that they are spinning a digital web around themselves with every click.

Chapter 11, iGod

• Revisits Google’s Sergey Brin and Larry Page, who are working toward a technology meld with the brain, like HAL 9000 without the bug.
• Reportedly, Messieurs Brin and Page want to improve the brain by using a search engine to understand the world and morph to AI (artificial intelligence).
• Cites Ray Kurzweil, who predits that AI will supercede biological intelligence by 2040, and ongoing research into neural interfaces between brain and computer.
• John Battelle calls the Internet “a database of human intentions.”
• How Google makes us all a kind of mechanical turk that is unknowingly weaving the Semantic Web.
• So far, humans have will, but machines do not, so the latter can’t be spontaneous (requires will) or deal with ambiguity.
• However, people are becoming dependent on World Wide Computer.
• Is it changing how we think? How our brains work?

Analysis and Conclusions

Key Points

• I have reviewed The Big Switch due to Chapter 10, which raises key questions that all organizations and people must consider. The genie is out of the bottle, and I predict that, within five years, software will be free online that will create profiles from deep data mining to put everyone’s profile online for free (all your online searches and activity). Scott McNealy’s notorious comment (“Privacy? You haven’t got any privacy, get over it”) was literally true but it was practically too difficult to act on; however, Moore’s Law and cloud computing continue to slash the cost of computing, so it will be pervasive and free. And retroactive.
• World Wide Computer does not have a will, so people and organizations will do well to recognize what is emerging and act to make it serve them. Many “consumers” are quite passive, which is a choice, whether conscious or not.
• As I have predicted for years, services will emerge that separate us from our online activities. We will pay to get off the grid under certain circumstances.
• The data and profiles are being built one click at a time, and not clicking is not really an option for most people. Soon, what you buy will be integrated into the mobile device; it will become more data fields around your identity.
• As I predicted in Geography 3.0, the entire organization of society around large organizations is breaking down and unbundling; I’d love to get Carr’s riff on that idea. Electricity released tremendous energy by giving each machine its own power source; previously, the belts and pulleys were a huge constraint on manufacturing. In the Knowledge Economy, people are similarly shackled to jobs in large, inflexible organizations that are no longer needed. Organizations will become much smaller, but they will be networked with others, just more self-contained and much more efficient. I predict the breakdown of large organizations, when it takes place within an ultra-efficient networked environment, will drive huge productivity surges.
• By the way, employer-sponsored health care is a huge belt because it prevents people from moving to better situations, a significant deadweight loss.

The Elephant in the Room

• The book’s biggest limitation is Carr’s point of view. He does not address his sympathies to publishing and journalism, a legacy business that is deflating and will never recover. He does not disclose his position on the board of Encyclopedia Britannica. This creates a huge blind spot in his peripheral vision and weakens his authority on the entire subject. Media and mass culture seem to be a sacred cow.
• Disclosure: I am personally more critical of mass media: like all human endeavors, it is not all positive. Why should all the means of producing and distributing “facts” and opinions be concentrated within few outlets? I don’t think that people need experts to monopolize communications to make sure “quality” is good. There will always be a place for expert writers, reporters and journalists, but they will compete with other sources for people’s attention. People are ultimately responsible for what information they respect and what they believe. Yes, more choice demands more of people, but it can also make them smarter.
• I read far more diverse content than almost anyone online due to a wide range of client work. It’s really possible to find anything online, as you have doubtlessly experienced as well. Some is shocking or revolting, but other things are delightful and inspirational. It’s the whole spectrum. It’s not sanitized. It’s real.
• It is shocking and alarming to see word of mouth being digitized because all human communication is increasingly visible, and we don’t want to see some of it. It is our will to experience what we want when we have a choice. As a matter of fact, online we are more likely to encounter “different” points of view to challenge our own than offline, a glaring weakness in Carr’s argument.

The Knowledge Economy

• Carr’s point of view weakens his vision for the book’s economics argument. He can’t imagine the new jobs that the information age will create, so he assumes there will not be any. He seems to regard society as a mass of consumers without much imagination.
• CSRA’s social business engagements with commercial and government clients suggest the future. Think about yourself: are you more likely to respond to an interaction with a machine or another person? Social technologies like Twitter or Facebook, which are weaving World Wide Computer, enable people and companies to automate certain aspects of interaction. But, companies consistently discover, much to their chagrin, people don’t respond as readily to machines as they do to other people who care. We all respond to individualized attention and care.
• Read the Gossip, Grooming, and the Evolution of Language review. It will give you a well researched understanding of how sophisticated people are at detecting deceptions, and machines trying “to show they care” are deceptions because they have no will and therefore cannot care. People will always want personal attention from other people for certain things, and they will place a higher value on such attention, which will create opportunities. Service will always differentiate because it is not mechanized. The forms the service takes will evolve, but service will never “go out of style.”
• For example, organizations of all kinds are discovering that “social media” is not a silver bullet; it’s not effective by itself, it requires focus and well designed work processes for people who show they care consistently and authentically. A machine can’t be authentic because it has no will.
• It’s precisely the will that people respond to, and Carr fails to appreciate that.
• I disagree with Carr’s argument about fragmentation, which I’ve oft heard elsewhere. I have worked and lived in many parts of several countries. My experience corroborates Carr’s assertion that most people naturally segregate because they often feel more comfortable living around “people like them.” For most of human existence, people have lived in very tight groups and had limited contact with outsiders. However, especially when circumstances are volatile, people with diverse networks have the advantage because their peripheral vision is wider and they can respond to disruption better. Within groups, there will always be people who serve as bridges to other groups and introduce new thinking to their groups. That’s how networks work. In fact, Dunbar asserts that the main reason that Cro-Magnon displaced Neanderthal was not brain size, but the fact that he traveled more and had more diverse networks.

Privacy

• Having been an Internaut for many years, I have long appreciated Scott McNealy’s remark, which Carr also cites. It’s a cavalier statement uttered by someone who knows the Internet, and it’s utterly true. The Thelma Arnold case shows clearly how this lack of privacy already plays out. I hand it to Carr for using it.
• As subscribers know, I often take an historical perspective of human experience to inform my predictions of the future, as Carr has done in The Big Switch. Looking at history, the concept of “privacy” is a curious one. For virtually all of human existence, people have had precious little privacy. Life in a small town? Life in a hunter gatherer band? You’ve got to be kidding! Although I don’t relish my prediction that anyone will be able to see anyone else’s clickthroughs, we could look at it in different ways.
  • As Carr says, people are increasingly spending their time in “virtual” digital worlds, which are described electronically by their clickthroughs. If you or I walk downtown, our behaviors are observed. We have an offline “clickthrough.” Why is online different?
  • Wouldn’t being observed make people more accountable for their behavior?
• I am detecting, within myself and other people with whom I discuss “privacy,” a kind of dissidence around privacy. Here’s the problem:
  • There is implicit confusion around what Carr brought up in Chapter 11, an “intimate” collaboration between people and their computers. The context is that our interactions with World Wide Computer have been private, and providers like Google and AOL publicly maintain this illusion today.
  • The ultimate privacy is the freedom to think and have our private opinions within our minds; one of our most precious expressions of free will is the will to disclose.
  • Actions reflect opinions and thoughts, but the latter two must be deduced because our minds are black boxes.
  • We understand the context of going downtown. We know we are being observed, so we take that into account when deciding how to conduct ourselves.
  • Online, however, what Carr is saying is that, retroactively, our online actions can be disclosed and thoughts can be deduced, which would change the context and violate the promise.
• The ironic part is that companies or governments can be held accountable to law, but others flout law. I can imagine such a disclosure being open sourced and free online, like Wikileaks or Napster, even if countries’ legislatures pass laws barring governments or enterprises from using such data. In fact, I think there is very little people can do to prevent it, although I’m not a data scientist.
• As I have advised clients for years, assume that everything is being recorded, and act accordingly. If there are activities you want to pursue using a computer but don’t want to generate data in the cloud, use your own machine(s) offline.
• In closing, I agree with Carr that the mechanization of information processing poses new challenges, and it will certainly produce surprising outcomes. That’s why the book is so important. Yes, for all of human existence, we have had little privacy, but people have been observing us, and people are inherently less efficient than machines at recording, storing and distributing data. Machines have no will—and no mercy.

The post Book Review/The Big Switch: Rewiring the World from Edison to Google appeared first on Christopher S. Rollyson and Associates.

This post originated at CSRA's blog. Please share your thoughts and comments here. Thank you.