BUSINESS: The Ultimate Resource May 2006 Upgrade 44

MANAGEMENT LIBRARY
The Death of Distance by Frances Cairncross
Why Read It?
The book sets out the ways in which converging communications technology will reshape business, politics and economics. It is ideal for someone looking to understand the bigger picture, but is not a practical, how to survive the new economy book.

Getting Started
In this book, the author states that distance will no longer determine the cost of doing business, and location will become less important, particularly for screen-based activities. Size will no longer be relevant to business success and individuals will be able to order customized content for one. The value of strong brands will increase greatly in line with huge global markets. Communities of practice will become more common, and companies will be based on networks of independent specialists. Lower start-up costs will mean more new small companies; larger companies will leverage the power of networks to increase brand strength. Information will travel faster to the remotest corners of the world, resulting in a shift from government policing to self-policing. Redistribution of wages will follow the restructuring of business, which will mean there is less need for immigration and emigration. Countries will compete on tax rates, and there will be a rebalance of political power. Global peace should follow.

Contribution
1. The death of distance According to Cairncross, distance will no longer determine the cost of communicating electronically. Companies will organize certain types of work in three shifts, according to the worlds three main time zones. 2. Freedom of location Companies will locate any screen-based activity wherever they can find the best bargain of skills and productivity. 3. The irrelevance of size Small companies will offer services that, in the past, only giants could provide. Individuals with valuable ideas will attract global venture capital. 4. More customized content Improved networks will allow individuals to order content for one.

A & C Black Publishers Ltd 2006

BUSINESS: The Ultimate Resource May 2006 Upgrade 44

5. A deluge of information Because peoples capacity to absorb new information will not increase, they will need filters to sift, process and edit it. 6. Increased value of brands The author suggests that strong brandssuch as products, personalities, sporting events or the latest financial datawill attract greater rewards because the potential market will increase greatly. This will create a category of global super-rich, many of them musicians, actors, artists, athletes and investors. 7. Communities of practice Common interests, experiences and pursuitsrather than proximitywill bind communities together. 8. Changing industrial structure Many companies will become networks of independent specialists; more employees will therefore work in smaller units or alone. 9. More business diversity The cost of starting new businesses will decline, and companies will more easily buy in services so that more small companies will spring up. Global communications will also favor giants by amplifying the strength of brands and the power of networks. 10. Greater proliferation of ideas New ideas and information will travel faster to the remotest corners of the world. Third-world countries will have access to knowledge that the industrial world has long enjoyed. 11. The shift from government policing to self-policing As content sweeps across national borders, it will be harder to enforce laws banning child pornography, libel and other criminal or subversive material, as well as those protecting copyright and other intellectual property. 12. Redistribution of wages Low-wage competition will reduce the earning power of many people in rich countries employed in routine screen-based tasks, but the premium for certain skills will grow. People with skills that are in demand will earn broadly similar amounts wherever they live in the world. Income differences within countries will grow; income differences between countries will narrow. 13. Less need for immigration and emigration Poor countries with good communications technology will be able to retain their skilled workers. These workers will be less likely to emigrate to countries with higher costs of living if they can earn rich-world wages and pay poor-world prices for everyday necessities at home.

A & C Black Publishers Ltd 2006

BUSINESS: The Ultimate Resource May 2006 Upgrade 44

14. A market for citizens The greater freedom to locate anywhere and earn a living will hinder taxation, claims Cairncross. Countries will compete to bid down tax rates and attract businesses, savers and wealthy residents. 15. Rebalance of political power Rulers and representatives will become more sensitive to lobbying and public-opinion polls, especially in established democracies. 16. Global peace As countries become even more economically interdependent, people will communicate more freely and learn more about the ideas and aspirations of human beings in other parts of the globe. The effect will be to increase understanding, foster tolerance and ultimately promote worldwide peace.

Context
The Death of Distance maps out how converging communications technology will reshape the economic, commercial and political landscape over the next few years. It considers the practical ramifications of these advances for the way in which we work and live, and looks at the changing nature of organizations, communities, government authority and culture and languages. The author outlines 30 developments in information and communication technology that will impact on industry and society in the not-so-distant future. Since the book was published some of the specific, technology-based phenomena that she predicted have come to pass. Some developing countries, for example, now provide online services for the rest of the world, such as monitoring security screens, running help-lines and call centers and writing software. Much of the social and political change she anticipated, however, has yet to show through at any meaningful level.

The Best Sources of Help

Cairncross, Frances. The Death of Distance. London: Orion Publishing, 1997.

A & C Black Publishers Ltd 2006