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Devil's Advocate: The true information age
It's not so glorious...

By Martin Brampton

Published: Tuesday 12 April 2005

The coming of the information age promised many things - most of which were supposed to make business and our lives better. But Martin Brampton fails to see the upside of how it's really played out.

In last week's column, I baulked at the assumptions made in a recent Economist Intelligence Unit (EIU) report regarding who controls change in companies. Now I have got past the preface to some of the conclusions. The report suggests we are moving towards a true information age. Are we?

The strange thing is, the problems that are supposed to be solved by the true information age seem to be ones we have only recently created. The talk is of understanding customers, improving corporate governance and making organisations reflect the characteristics of the internet.

There are numerous examples of customer disinformation. Take financial organisations. For years they sought to attract new business by creating deposit accounts with headline-grabbing interest rates. But no sooner had they attracted a bunch of customers than the interest rate started to slide. Worst off were the most loyal customers, who simply left their money in the account first recommended to them.

Naturally, over time this caused a good deal of resentment. The customers started to fight back and now there is much less loyalty to the financial organisations and much more switching of funds. This all increases overheads and the providers bewail the problem of customer churn. Yet what did they expect? Likewise, on the borrowing side, a growing customer group forever moves debt from one credit card's introductory offer to another.

The 0870 scams are also generating increasing resentment as more people become aware that the so-called 'national rate' costs more than an ordinary call by a margin sufficient to pay owners of such numbers four pence a minute. And this for numbers that were heavily promoted to the public as costing the same as any other long-distance call.

As for corporate governance, it is highly topical. The background to that is curious. Historically, companies were largely run by a privileged elite. Breaking into this elite was difficult and family or old school connections seemed to count for more than mere merit. But dismantling that system has not led to quite the hoped-for democratisation.

Instead, the more fluid approach to who runs companies has been accompanied by a more ruthless attitude towards the rules governing them. The information given out by companies has been increasingly manipulated in the interests of executives, right up to the point where Enron, an apparently rich and profitable company, turned out to be a bankrupt shell.

In all these cases, it is far from clear that we are gaining in economic efficiency. Undermining customer trust may lead to more competition, but it also increases the cost of customer acquisition and retention. Consumers have to put more effort into making more decisions, to no real advantage in many cases. Companies have brought upon themselves hugely intrusive and costly regimes for corporate governance.

What, then, is meant by the claim that organisations should become more like the internet? It is far from clear what characteristics are to be emulated. Is it the large number of sex-related sites? The apparently ever-growing volume of software designed to cause damage? The tidal wave of unwanted advertising for doubtful products and outright frauds? Or the emergence of pernicious fascist sites?

Perhaps the greatest gain from the internet has been ease of access to a huge amount of information. Yet whether this is information or data is often in doubt. The claim is that with the aid of IT, organisations can be much better informed. But if the information is only used to generate more confusion or to overcome confusion that has been deliberately created, what have we really gained?