The Punctuated Acceleration of Value

Today’s Information is Tomorrow’s Wealth

Oscar Wilde once remarked that he could never become a communist because “it takes up too many evenings.”

I know what he means. I’ll never be an economist for the same reason. Take tonight for example. I COULD have been watching the game, or playing with my kids or sleeping. But instead, while flipping through the channels, I stopped for a minute at one of those smarty-pants book shows on C-SPAN.

The guy, whose name I don’t remember, was making a point at just that moment about the phenomenon of “punctuated acceleration” and how it appears in every complex system, from earthquakes in Peru to the real-estate market. It’s apparently part of “chaos theory,” in which believers insist that even apparently random actions within the universe have a kind of predictable rhythm, if you just wait long enough to see it. Like, you know, forever.

Accelerated punctuation is part of that. It, basically, is a big boom-and-bust cycle. The usual example is an earthquake—the plates of the Earth slowly create tension in geographic time that builds and builds until—pow!—everything changes in real time.But the earthquake example misses one of the fundamental lessons of punctuated acceleration: That “progress” in a complex system (such as an economy) may seem to be merely a series of spikes and crashes at random intervals. But the overall net gain incrementally grows with each spike. For instance, stock markets famously go through bear and bull cycles, with an occasion earthquake such as the dot.com spike.

But with each spike, the decline back to normalcy isn’t quite total. There is enough momentum to return the system to some spot just a little bit higher than before, and off it goes toward the next climb. And with each great swing of this spike and crash pendulum, a little bit of upward progress is maintained. The overall effect, if you took an average, is slow, steady, healthy progress.

This is basically why I wouldn’t even THINK about buying a new house right now (even though my family could use the space). The prices for houses in my area (eastern coastal Maine) are definitely at “peak” status right now. Lots of reasons for that, and all are irrelevant. If history can be trusted, prices will top out, and return to some more reasonable level. A little higher than last year, maybe, but not at the inflated level of today.

Why am I telling you this? I usually use this column (for which I am eternally grateful to my partners Paul and Kathy and to KMWorld, by the way) as a sort of intro and summary of the content in the following pages. But I am breaking with that for this issue. Because, as I barely listen to the talking head on C-SPAN, I can’t help but realize that a cycle of punctuated acceleration has defined the information industry for as long as I can remember, and probably traces back to the earliest moments of the information age ... telegraph, railroads, telephone, the whole magilla.

Take, for example, (to use Silvio’s euphemism from The Sopranos) “this thing we do.” The modern-day content and knowledge management marketplace started, in my opinion, with the advent of imaging and document-capture technology in the late ’80s. Companies like Sigma Imaging (started by a New York City dentist and some ex-Kodak guys) propelled the concept of document imaging to paper-intensive and time-sensitive customers (in this case, the Blue Cross/Blue Shield market) as a means to reduce paper handling and, I kid you not, to recover some of the square feet of floor space occupied by filing cabinets. Remember, in New York, square feet actually means something.The market sort of bubbled along, with “file-cabinet replacement” as the primary value proposition, as though all of corporate America was gonna clean out the attic and have a big yard sale.

But then a renaissance of understanding blossomed, almost overnight. Because someone noticed that great economies and productivity gains could be achieved by the simultaneous and (nearly) instant access to what was in the documents, shared among several workers at just about the same time. Suddenly, the value proposition of imaging changed from one of “getting rid” of something to one of “getting value” from something. The ability to handle the physical paper itself lost its glamour; the value became tied to two things: first, the process; then, later, the content.

The Advance of Process Automation

Process management took center stage in the document technologies with the emergence of workflow tools that automated not just the capture of document images, but the delivery and routing of those digital documents within a company. Restricted to departmental apps (such as insurance claims, mortgage loans) that revolved around transactions, workflow was dynamite as a productivity tool. In fact, the speed with which organizations could now respond to customers, settle claims and get paid created an entirely new competitive landscape that ripples through our Customer Relationship worship still today.

Workflow represented a rapid shift in the evolution of document management—a punctuation. Smart people who recognized it at the time, such as Bruce Silver and Delphi’s Tom Koulopoulos, were spot-on when they identified workflow as the most significant “real” change in the information business since the typewriter.This marketplace glided on that crest for quite a while. Small, incremental technology steps were taken, mostly aimed at fine-tuning and perfecting the minutiae of imaging and workflow—things like compression and storage management, scanner speeds and feeds, visual workflow tools, better monitors. It was another time of slow but steady progress, the kind that sustains but doesn’t completely nourish.

The next value leap is a little closer to home, and more familiar to the current citizens of the knowledge management world. All the advances in document search and retrieval have led us unstoppably to the conclusion that, with all this information at or near our fingertips, there must be a way to direct it toward our advantage. I mean, there is no way I can have terabytes of customer data, sales trends, customer info and not be able to profit from it. Right?

Sure, I guess ... but how? An awful lot of pre-KM experiments made that assumption without much proof. The “Field of Dreams Syndrome” infected nearly all the efforts to overcome departmental barriers, technological hurdles and cultural realties. We would plow the cornfield under, by god, and build an Elysian Field of knowledge nirvana. With physical barriers removed, the permeability of our enterprises would allow goodness and light to fill each corner.

We built it all right ... but they didn’t come. Why not?

Well, I think it’s because we misread the last few years. Again. We thought it was another period of punctuated acceleration; but it was in fact a time of steady improvement. The systems and support infrastructures we’ve been building were not the end, but the means. I think we’re now reaching the point at which plate tectonics are about to do their thing, and a great rush of value will soon whoosh over us. Again.By the way, I don’t want to leave the impression that we’ve reached the end of the line. There’s far too much evidence that one man’s renaissance is the next guy’s old school. But it’s important to make these leaps without prejudice. I think the themes introduced in this paper and continuing over the next few issues represent one of those periods of punctuated acceleration of value.

New Wealth Creation

Listen. There is a slow, steady drumbeat in the background. You’ll read in this paper that it has many names ... the New Business Intelligence, Lifecycle Management, Internal - External Content Integration. But underlying all these terms and viewpoints is a consistent and persistent truth; that finally, the pieces have all come together that will allow businesses large and small to create wealth and value from their information resources.

Sure ... I’ve been saying that all along, right? Not quite. I’ve been saying that information resources can be leveraged in such a way that certain incremental advantages (in terms of innovation, in terms of competitive advantage, in terms of productivity enhancements) can be gained. And that’s good stuff, and it means life gets marginally better for most of us—some more, some less, and overall it’s a steady incline.

But there’s a huge difference between the preservation of existing wealth and the creation of new wealth. And I don’t just mean dollars, but actual, nourishing wealth. I’ve never believed more than I do right now that New Wealth will be created in the next four to six years. And that it will emerge from the work that you’re looking at right now.

There are tons of examples of brilliant innovators who are, as a friend recently said “not just mining the gold from information, but creating jewelry.” Take the examples close by in this White Paper: companies like Stratify are finding the means to re-define your information stores in such a way that new associations and hidden artifacts emerge as fresh, new opportunities. New opportunities ... that’s not small talk. Ramana Venkata, Co-Founder & Chief Technology Officer of Stratify, told me that he sees the perception of the value of knowledge creation and discovery as “a part of a new corporate ethos.”

Other companies, such as Hummingbird, also residing in these pages, believe so strongly that knowledge is the key to value creation that they base their businesses around the discovery, application and sharing of those knowledge-creating resources.

Now, there needs to be a word or two of caution. Such great punctuations have often been thwarted. Peter Auditore points out in these pages (in the context of Web services, in this case) that the same market leaders who have it in their power to propel us toward our next punctuation also have the means to really mess it up. Competitive squabbling, standards squashing and economic reality will probably dampen some of the enthusiasm I have, and hope you share. It certainly wouldn’t be the first time a great opportunity was messed up by relatively trivial forces.

But that doesn’t mean that skepticism and resistance should prevail. I happen to think that we are standing at the opening of a new era. You might think you’ve heard it all before.

What’s really interesting is that ... we’re both right.

So, anyway, getting back to Oscar Wilde. That innocent channel surfing and the guy on C-SPAN have now turned into the lost evening that you are reading right now. And it’s late, and there’s a lot of stuff to do tomorrow.