3 FUTURE BUSINESS The Third Market In a changing world, retailers have a choice. Set nets for the well-heeled, who are fussy, demand top service, and want the best -- this is where the highest per individual sale profit resides. This is the first market. Or else deal with that segment of the market that makes most of its decisions on price alone. That's the second market. Today there is a new kid at the counter, the third market, better known as the entrepreneurial movement. It might yet save America. In times when large companies are shrinking like cheap shirts and laying off staff, when such giants don't know how or where to move or how to play the much faster business game, why are there a million small American companies growing at an annual rate of 15 percent? How have the huge companies, which once had all those markets tied up, got into such a fix? What have they to offer now, when all their executives who have spent their lives learning to play business/baseball have nothing to offer but the same old, worn-out products and poor service? Why can't they learn the new, much faster game of business/jai alai? The same reason an elephant with arthritis can't out-run a gazelle. These small companies are producing 44 percent of all business-to-business sales, according to a report prepared for Wilson L. Harrell, former publisher of Inc. magazine. Eighty percent of all new jobs created during the past decade have come through the actions of these entrepreneurial companies. Some have grown at lightning speed. With products and services for the Information Age there is often little relationship between cost and selling price, so profit margins border on the magnificent. In the software field, once development costs have been covered, the actual cost of reproducing software copies -- whether on computer programs, disk books, CD-ROM, audiotapes or videotapes -- resides in the minimal wholesale costs of a disk ($.19 to $.35) or a tape ($.50 to $10), and packaging ($.50 to $10). Retail price can run from $20 to $5,000, depending on what the product can do for you. Almost always the product is price insensitive. It is usually better and quicker and costs less than whatever it is replacing. People, at least for now, are so impressed with comparisons with the past (computer vs. typewriter, ultra-compactness vs. bulk, speed vs. snail mail, brainpower vs. muscle power) that price, once consumers understand what the new product or service can do, becomes a fourth or fifth priority. Will some larger companies see the writing on the screen and follow these leaders of relatively small businesses to success? The General Business Systems Division of AT&T is converting some of its branches into franchises! IBM, admittedly belatedly, chopped a fifth of its Canadian operation and one hundred thousand employees from its staff worldwide to survive. Not only is IBM now a much better company, it provides better service. These are not isolated cases. It is happening everywhere. Globalization means competition can come from anywhere -- and everywhere. Like it or not, it's this sense of urgency that drives the successful -- here or in Kuala Lumpur. Nuggets Amid Chaos Whenever decisions are made amid massive change, panic, or chaos, some turn out to be faulty. These may include the divesting by corporations under stress of once-promising research and development projects because they would not produce profit in time to solve an immediate monetary crisis. Opportunities get ignored when corporate resources are in short supply. Decision makers may be so wrapped up in attempting to save the ship that they fail to notice a more viable vessel drifting by. Forty percent of the Fortune 500 big names of a decade ago no longer exist. Some of their patents, projects, products, and the debris from their collapse could be updated, modified, or re-invented for today's marketplace. In some cases the market now could make a winner out of yesteryear's loser -- for an entrepreneur ready to take advantage of the situation. Look at what's happening with office space. Most cities are experiencing an abundance of empty buildings because of corporate downsizing, reductions in the numbers of employees and space formerly required to operate in the corporate playground. Around the world, this vacancy rate, as reported by local boards of trade and real estate organizations, is running around 20 percent. The true figure is probably closer to 30 percent because many larger companies have downsized from, say, three to two floors in an office complex and now have a floor empty, which doesn't show up in the real estate statistics. This space is transparent. No one sees it but the company trying to sublet it. Building owners want to rent their own empty space, not space belonging to some responsible company they have on the hook for another five or ten years. The company subletting is a little embarrassed that it doesn't need what its top executives decided some time ago would be necessary for the next decade. Education and experience never taught them to prepare for surprises. The next surprise they hear may be personally more fatal: "Sorry, but we have to let you go. Corporate restructuring, you know." That's the dark view. Let's look at the opportunity. As fewer and fewer people go into a city to work in emptying office towers, they work from home. Their office space has already been built: it was the den, now converted to a far more productive office. No additional structural investment or rent is required. New work-at-home equipment (appliances for productivity) must be installed, but at minimal cost, since the necessary wires connecting them to the world of cyberspace generally are already in place. Less gas is used as rush-hour traffic drops when fewer people drive downtown. That means less pollution, fewer accidents, and lower car insurance premiums. Suburban traffic and rural traffic will increase slightly, but those roads never had a full load. Not only do transportation costs drop dramatically, but such things as dry cleaning and fancy clothing bills also shrink. Expensive restaurant lunches and at least a portion of daycare payments can also be saved. The more stationary workplace means more traffic from package delivery or mail-order companies and less business for downtown office suppliers. This creates still more empty space and reduces office rental rates, although not enough to compete with work-at-home rents several magnitudes lower. What happens to urban planners? Some cities have hundreds of expensive planners on staff trying to create a crisis they can sell to the public: "We must preserve our green space. Roads will be gridlocked in ten years. Our cherished values will disappear." Not so. Technology will make many of today's problems vanish. Need I repeat all those worries from the past that somehow disappeared? Nuclear conflagration, oil shortages, global warming, etc. Don't react emotionally to planners' dreams. They cannot predict what will happen in times of rapid change. They are simply trying to save their own jobs now that a more enlightened and sophisticated public is asking embarrassing questions. We are not on the Titanic. We haven't hit an iceberg. The universe will continue to unfold. But there will be surprises. Ask planners, "What surprises have you built into your model?" Have they considered the effect on agricultural land when biotechnology allows a three-story, five-acre building to grow more produce than a two-hundred-acre farm? Have they considered the changes in value of their precious farmland by the introduction of the new Boeing 747-400 cargo series jet? Have they considered what happens when Japanese companies open food factories in northern China where there is plenty of cheap land, fresh water, and skilled farm labor available for $1 a day? With the new cargo jets, food harvested in the morning in China can be delivered to North America the same day. The Dutch have been doing this for a decade. Flowers picked in the early morning in The Netherlands are delivered in New York the same afternoon -- at half the cost. Technology today makes the laws and breaks the laws. Planners have problems anticipating what the next invention or innovation will be, so they are unable to cover the exigencies that will modify social structure. Today the only effective planning is training for change. The best five-year planning belonged to the U.S.S.R. and General Motors. Where did it get them? Outsourcing Yesterday and tomorrow live side by side in Plano, Texas. Alongside a field containing a few grazing buffalo lies another field formerly known for its corn. Today it holds the largest private digital/fiber-optic/satellite communications network in the world, EDS. The control room makes the one at the Space Shuttle's Mission Control look like a covered wagon. Here there is, according to USA Today, ©enough computing power to balance 5.4 billion checkbooks -- one for every person in the world -- in one second." There are also robot magnetic tape switchers that make thirty-five thousand physical transactions in a day! EDS was formerly Electronic Data Systems, Inc. of Dallas, Texas. It was created by legendary and charismatic founder H. Ross Perot, who sold out -- for a reported $742.8 million in cash -- to General Motors in 1984, after telling GM Chairman Roger Smith he wasn't running the business very well. It appears to have been a win-win sale. It made Perot a billionaire, and EDS has since exploded into a $7-billion a year empire, just like Apple Corporation, which is now both a vendor and a client to EDS. Roger Smith, who couldn't change fast enough with the times, is now long gone from GM. What kind of business is EDS? Once upon a time companies and municipalities thought they could do everything on their own. In the Industrial Age this was possible. Cities, towns, and villages collected their own garbage, cleaned their own buildings, towed their own parking violators, repaired their own streets, and ran their own jails and police and fire departments. Companies did the same in their fields. Then both cities and companies found that other organizations that concentrated on only collecting the garbage or repairing the streets, or handling telemarketing, video production, tax accounting, or computer processing were capable of doing a better job for less money. Companies found there were tax advantages, too, like not depreciating your own trucks over long periods of time but being able to write off immediately the monthly fee charged by the contractor. They also no longer had the headache of running their own, sometimes touchy, computer mainframe staff. As well, because some of these companies purchase in greater quantities, they found they had purchasing clout and hence received a better price from the service provider. Today the whole process is called "outsourcing." EDS is the world's largest outsource in the communications field. According to USA Today, ©One in every twenty Fortune 500 companies uses computer service companies such as EDS. By 1993 one in every five companies will need an outside computer service company's help, and EDS should be the largest benefactor." Here's how it works. EDS visits your company, finds out what you are trying to accomplish, and provides the latest equipment and the best communications system to link your many systems, all over the world if necessary, rolling everything into one seamless operation. Since it does not manufacture any computer or other hardware equipment itself (it does create software), EDS has no built-in bias. It is the world's largest user of IBM mainframes (over one hundred of them), but it also uses Apple, or other computer hardware, choosing the best available to solve any particular need. Can you imagine the price that EDS staffers get when they deal? Nobody, but nobody can compete. And if they don't like the quoted price they can go elsewhere. EDS must be doing something right. Since 1984 the company has grown from $750 million a year gross to today's $7.1 billion. It has over seven thousand customers and about 70,500 employees in eighty countries. It enters into leases as long as ten years with clients. When you sign on with EDS, it will usually purchase the equipment you have on hand and, in many cases, hire all your present staff. To show you how much superior training EDS staff obtains and your ex-staff will receive, the company spends $100 million a year on training. One in every five EDS employees is a systems engineer. Only one in every 2,300 other employees is a lawyer. What is that saying? When I view a company like EDS, I look for what's creative behind the large numbers. I found that EDS had won a five-year, $400-million contract in Chicago to solve that city's parking ticket problem. It seems that Chicago was one year in arrears in keying into its computers a backlog of twenty-four million parking tickets. First, that showed me at least that EDS was finding necessary business clues and then converting those clues into contracts. Other competitors were on the Chicago trail, but only EDS came up with a sample presentation using hand-held personal computers that would issue tickets and transfer the data to the city's computer each day. This was one more sign of innovative thinking. The most common excuse for not paying a ticket in Chicago has been the claim that the Windy City winds had blown tickets away before the drivers returned to their vehicles. The EDS proposal included tickets with an adhesive. EDS also provided an electronic imaging system that can produce an image of the ticket on a computer screen. This enables the city to hold neighborhood hearings instead of using costly court time. Before EDS took over, only 10 percent of the tickets were paid within a year (remember, the city was a year behind in issuing such tickets). Now it's up to 47 percent and climbing. Revenues from parking violations are expected to increase 62 percent in 1993 to more than $60 million. EDS obviously did what the city could not do by itself, and justice is no longer denied by being delayed. EDS is a self-operating subsidiary of General Motors. Once 70 percent of its total billings were with the parent company. This has dropped to below 50 percent as new, independent outsourcing business became the growth market. It's a business with a bright future. Electronic Labor In an age of instant round-the-world-communications, old thoughts, old possibilities, and apparently stable procedures become subject to rapid change. Today it is not the raw materials and the manufacturing plants that are essential. It is the information about a product or service that is most important. Production costs of hardware and software are high in North America because of our high wages. The blunt fact is that now that we have to compete with the world we are overpaid and we underproduce. In the rest of the world almost all costs are lower. And we are naive if we think others can't do it just as well and at lower cost. It was only a matter of time until labor was "imported" electronically. That day has dawned. In a small way this has been happening for some time. Some North American companies started years ago to send keyboard punching operations overseas, mainly to the Caribbean, where wage rates for the dull, routine jobs were a fraction of what had to be paid in North America. CyberSoft in the Philippines, via its North American marketing base in San Francisco, offers computer data entry. Prices start at seventy-five cents per thousand computer keystrokes, with a guaranteed accuracy rate of 99.95 percent. That kind of proficiency is not available in North America. In the Philippines most jobs become a matter of living. Workers force themselves to learn more, faster, and to make no mistakes. That makes them competitive in a world looking for the right attitude. CyberSoft has learned how to make this attractive to North American software developers and other companies looking for low-cost data entry. This company has more than two hundred highly educated and well-trained personnel, providing an inexpensive long-distance work force. CyberSoft is progressing beyond straight data entry. Need a map digitized? Technical manuals, geological well logs, or medical journal inputted? This company is doing it all. China too is entering this field with rates running between three and eight cents a page for data inputting. China has a unique system that puts two people on the project. Both input simultaneously. Then a cross-checking software program similar to a spelling checker catches any differences. Computer programming is another area of electronically imported labor. Software developers have found high-grade programmers elsewhere -- at twenty cents for every U.S. dollar. Overseas programmers were first used in England, where competent programmers were available at half the cost of their North American counterparts. A larger labor source is now India. Eastern Systems Technology of Madras has set up a U.S. subsidiary in California to sell offshore software development. A second Indian company, Raba Contell of New Delhi, has also entered the field. Although foreign competition might also come from Singapore, Hong Kong, or even Japan, the lack of a language barrier is India's big advantage. Many of those involved in India have been educated in the United States or Canada. They know the requirements here, according to Ram Mani, president of Eastern Systems, a computer science graduate of Stanford University and a Silicon Valley consultant for the past eight years. Experienced software engineers can live in India on a fraction of what they would be paid in North America. An Indian software engineer with three to five years' experience and a master's degree makes less than $1,000 a month but can enjoy a luxurious lifestyle on that income. In Palo Alto a small three-year-old company operating out of a cottage attached to a garage is electronically importing software programmers from Moscow right into the heart of Silicon Valley. How did it happen? Michael DeLyon, a San Francisco area financial analyst, one day had a problem. He couldn't finish a computer program for a client. He knew he was in trouble as he was short of cash at the time and couldn't hire the high-priced local help. What to do? Call "program busters" in Moscow. In Moscow? Yes. DeLyon shipped his inoperative software to a friend in Moscow who returned it via fax. Problem solved. Client happy. Business born. Today, DeLyon's company brings together American companies with software cost problems and skilled eastern European software programmers who feel rich on a quarter of the going rate for such work in North America. Now InterContinental Software has six hundred foreign workers on standby ready to work on a contract basis. In knowledge industries, brainpower is the only raw material. Eastern Europe, always strong in math and sciences, has these resources by the town-full, and at a bargain price by our standards. Selling the idea does take time, according to DeLyon. U.S. companies aren't quick to take the bait, but when they see they can reduce costs by 75 percent they realize that if they don't and others do, they are out of business. Even with such talent at low cost, DeLyon still has competition -- from India, Great Britain, Hungary, and China. I myself have been approached by universities in Nigeria offering to do such programming at even lower cost. But InterContinental Software claims to offer quality, the biggest selling feature in today's marketplace. "We are the wave of the future," DeLyon says. "I'm now ready to tackle Canada." Although importing labor electronically poses still another threat to North American employment levels, it also promises an eventual drop in the price of software as such savings filter down the supply pipeline. It also shows that a new type of thinking will shortly be in big demand here. Are Buildings Obsolete? The period from 1865 to 1890 was the age of the railroad building spree across North America. Everyone got into the act. The iron horse helped open up North America in a manner never before possible, propelling new immigrants westward and economically upward to undreamed-of heights. Shortly after Ford and rubber tires appeared, the railways began to fade. The period from 1975 to 1990 was the age of the building spree around the world. The volume of office, retail, industrial, and even residential floor space reached unheard-of levels. The building boom, along with the construction of the necessary supporting infrastructure, propelled most earthlings to new levels of affluence, even in many developing countries. Could buildings, as we have known them, also vanish in the years to come? All trends suggest the answer is yes. Look at office space. Sydney, Australia, known for never having a vacancy rate above 5 percent, saw vacancy rates shoot up from 2 to 11 percent between 1990 and 1992. In Toronto, vacancies were already at 11.9 percent when another 10.3 million square feet of office space came on stream in 1991. With the Ontario economy reeling from the depression, investors reluctant to make new investments because of recent legislation, and threatening suggestions coming from the socialist New Democratic Party government, office vacancy rates will increase further, perhaps to more than 20 percent. In the United States, real estate excesses have reached new heights. Everyone thought being "King of the Hill" was a great, lucrative, exciting game. Look at the picture today: of the thirty top commercial real estate markets in the United States, twenty have vacancy rates higher than 15 percent. One source says the true current vacancy rate in Los Angeles is 25 percent! Houston and other oil patch cities are running around a quarter empty. Global Finance magazine quotes Daniel Neidich of Goldman Sachs as predicting that "vacancies won't be low enough to attract new development for another eight or nine years." If that sounds bad, look at London, England, where vacancy rates are now at 15 percent, a record in almost any European city. Rents have dropped 35 percent to $29 a square foot, and both rents and vacancy rates look as if they will move lower as surviving lessees seek ways to cut costs. The world's biggest landlord, Canada's Olympia & York Corporation, is under bankruptcy protection in New York, London, and at home in Toronto. In Tokyo, rents have dropped 20 percent, although vacancy rates still hover between the official figure of around 1 percent and the "street rating" of 5 percent. In a country where bank interest ran around 3.5 percent when U.S. rates were galloping along at 10 percent, it is quite a shock to find that this makes a big difference. Now that Japanese interest rates have risen, predictions of a drop in real estate values of up to 30 percent have already come true. An even bigger shock to global confidence comes from Switzerland, where bank real estate loans total SFr 363.7 billion and total bank equity is only SFr 67.3 billion. Here a rise in office vacancies could trigger commercial space bankruptcies with a rise in uncollectible mortgage building loans. This has the potential to trigger a domino effect throughout the Swiss banking establishment. All cities keep track of their vacant commercial and office space. What they do not keep a record of is "invisible vacancies." As mentioned, these are the spaces that become vacant when corporations downsize and put their entire operation on, say, two floors instead of four. They still pay rent for that vacant space, which does not show up on any official record. I suggest that these vacancies could add as much as 10 percent to a city's official vacancy rate. This will eventually show up in the sluggish rental of existing visible vacancies, because the original renters of "invisible vacancies" are willing to offer rental at almost any price. It will also draw potential lessees away from the building owners' rental office because the tenants with space to sublet are desperate to make a deal. The trend may even accelerate as new, unbelievably compact optical storage systems reduce the amount of required storage space. Two floors out of every thirteen in any office tower are occupied with storing manila file folders. With the average floor comprised of 10,000 square feet that adds up to a lot of money, around $1 million for the two floors. All that data can now be stored on one SERODS (Surface Enhanced Raman Optical Data Storage) disk -- one 12-inch disk! And on top of all this is the trend toward small businesses that operate from the home. One recent survey from Canada says that 25 percent of the Canadian work force is now doing some work at home. All indications are that this trend will continue, adding another damper on the rental of traditional office space. In the nineteenth century we overbuilt railway lines and railroad rolling stock. Have we overbuilt fixed capital building assets in the fading days of the twentieth century? Could wealth held in fixed assets go through a devaluation similar to that of the German mark after World War I? Life at City Hall The Industrial Age compartmentalized everything and life was relatively simple. You had a place to live, a place to work, a place to play, and even places to eat (other than your home). The zoning process kept everything neat and tidy, just like your front lawn was supposed to be. Get ready for chaos. Almost all cities now have a problem with illegal suites (apartments) -- people aren't following the rules anymore, for apparently sound reasons. The growing list of court rulings against any "discriminatory" actions does not carry clout. People are no longer terrorized by bureaucracy (if anything, it's the other way around). It makes it tough to get the populace to proceed the way bureaucrats had planned (usually without getting anyone else's opinion). In North America at least 10 percent of the working population (i.e., taxpayers) are working at home. In almost every residential district that is technically illegal. It will get worse (or better, depending on the point of view). Thanks to modern technological devices (most small, highly efficient, capable of worldwide hookups), many new sunrise industries can operate in very small quarters with a surprisingly small staff. In many cases the staff doesn't even have to be at the same location as the official office; they telecommute via phone lines. Such companies increasingly show a growth rate double that of sunset-industry companies. They have lower overhead, show larger per-employee dollar sales, and look at the world as their market. And for more progressive companies that treat workers as partners or shareholders, the workers themselves will be continually looking for ways to increase company sales and keep costs down. What are the implications for big-city real estate? Now that it is unnecessary to pay $30 a square foot to store manila folders, won't space requirements drop? Will the large hierarchy of staff required in the Industrial Age not decrease dramatically as workers, using the latest equipment, become more productive? Think what this will mean to those "easy" taxes paid in one lump from large real estate holding companies. Now city hall has to handle more of the smaller trade. Even the definition of work takes on new meaning. Back in the 1930s work was mainly physical. Computers and most of our other new toys didn't exist then. Fifty percent of current goods and services didn't exist even five years ago. Ninety percent of all you will work or play with by the start of the third millennium hasn't yet been developed. City Hall will have trouble during the next decade supporting many bylaws now on the books. Let's look at manufacturing. I turn newspaper columns into books -- not Gutenberg style, where you can see and feel them, but electronic books. Is that "working"? I sell books but I duplicate my master electronically on a 3.5-inch disk and mail it out. Is that "manufacturing"? If so, I'll send it electronically over the phone -- that can't be manufacturing. I can make motion pictures with color and sound on my Apple Macintosh II computer. Does that make me a television studio? City Hall will become overwhelmed by the volume and complexity of future business. The world is now globalized. Any business can move almost anywhere. How will cities react to the prospect of losing the dynamic entrepreneurship of their brightest and most job-creating citizens? The budget crunches of the '90s are nothing compared to what our municipal politicians will have to deal with in the next century. Desktop Manufacturing When I first mentioned desktop publishing fifteen years ago, I was considered a kook. A few years later, when I wrote about desktop video, people were skeptical but showed some interest. Get ready for desktop manufacturing. Here is how it works. Computer-created designs can be electronically transferred to a "box," a machine that converts the designs to pass through a laser beam that "cures" a liquid plastic inside the box and converts the on-screen design almost immediately into a solid, three-dimensional object. The process originally was designed to make models of a product more quickly than those made by the earlier, partially computerized process. Right now on my computer console stands one of the first samples from that machine, a perfume bottle for Avon. Hundreds of other products have been zapped out in the past couple of years. What used to take five years can now take, with the latest technology, less than one. What used to be done with one machine to make models can now be done with a single computer, hooked up to ten, a hundred, or a thousand machines. This is desktop manufacturing. In other words, workerless factories. Old-style factory jobs are obsolete. Single-worker companies, task forces, and small, owner-operated companies will be the financially viable units of tomorrow. This change will mean horrendous problems for governments. No longer will the major portion of government revenues come from large corporations. Governments will have to deal with thousands of small, almost insignificant, companies, that together will provide much of the wealth of the country. Even politicians will be hard hit. Instead of receiving a few huge political contributions for their election campaigns, they will have to gather countless small donations. Union contributions are already shrinking as unions lose members and become more independent, no longer donating a portion of dues for political action but leaving such political donations up to individual members. With modern communications and ultrasmart manufacturing equipment able to operate almost on its own intelligence, the whole concept of manufacturing takes on new meaning. The value of software today is rapidly surpassing the value of hardware as we have known it in the past. Software is usually provided by knowledge workers working alone or in very small teams. When the software is perfected, and after research and development costs have been written off, profit margins sometimes reach 75 percent or higher. It takes only seconds to duplicate any knowledge program and computer disks cost pennies. Before long, anyone with a desktop will be able to get into the manufacturing business. Business Link A company called Business Link Communications uses all forms of communications, messengers, couriers, and standard E-mail modems. But it keeps pushing the envelope. And it's threatening to blow its competitors out of the water. Operating around the clock, 364 days a year, Business Link can now do a job in Vancouver or Vienna faster than a resident competitor in either city. This may sound unusual but it soon won't be. Their success signals what will occur in virtually every industry that persists in doing "business as usual." Business Link can complete almost any high-quality printing job in three hours (the company calls that "standard"). A rush job takes one hour (extra charge). Compare this with your printer's time schedule. In Manhattan, the company's fleet of foot and bike messengers delivers free around the clock. Delivery anywhere else in North America and fifteen other countries is overnight. In addition to any four-color printing job -- high quality at reasonable prices -- the company offers remote on-screen proofing of artwork, remote technical support, and on-line access to designers' portfolios at multiple sites. Access to the company's bulletin board system for high-speed downloading of font libraries, logos, and utilities is also part of the service. Using such a top-notch service allows you to control a major printing operation from the other side of the continent. Who can compete with that? The speed of the new system is phenomenal, especially in the publishing business. Clients can transmit material at the rate of one megabyte in three minutes direct to their "instant" image-setting facility. This replaces slow modems, messengers, couriers, and systems that used to take days or weeks. The company uses the universal switched 56,000 wide-area network, which enables it to send and receive files twenty-three times faster than the 2400 bps via analog modems. Business Link transmits in three minutes what takes others an hour. Now any desktop publisher can compete with anyone in the world -- by dealing with such a new-style production printing operator. Business Link is using the latest technology to give superior service. Their competitors are still debating if they really want to spend all that money on new, in many cases untried, technology. This is the age of the risk-taker. While you debate the issue, someone else is preparing to steal your customers. Voicewriter Robotronics -- automation in an advanced form -- has been most effective on the factory floor, mainly in the automotive field. Now comes the first major assault on the office. Kurzweil AI (Artificial Intelligence) of Los Angeles has been building an impressive record during the past ten years. The Kurzweil music synthesizer developed under research director and pioneer Robert Moog has astounded music critics with an advanced digital keyboard instrumentation able to reproduce every acoustical instrument and electronic sound. It is literally changing the sound of music. Kurzweil's "Reading Machine for the Blind" is the world's first character recognition system capable of handling virtually any ordinary type style. It may be a bigger advance than braille. Now the Kurzweil AI Voicesystem replaces the most important office ingredient -- the secretary. This innovation will change the office drastically. The executive can dictate directly to an office television set. Built-in software will correct spelling and punctuation and move paragraphs around. A spoken word dispatches the letter at the speed of light to the addressee, usually at a cost less than current postage (especially if sent by the upcoming National Information Utility "Moon Mail"). This innovation will replace at one stroke many office stenographers, secretaries, and mail rooms. For three years I tested the "Voice Entry Terminal" made by the Scott Instrument Company of Denton, Texas. One of the first in the field, this unit worked fine but had a very limited vocabulary. Now Kurzweil has moved into this market with a thousand-word vocabulary of your choice in a self-contained desktop unit. First applications are expected in the fields of medical reporting, Computer-aided Design/Computer-aided Manufacturing (CAD/CAM) command and control, voice mail, basic dictation, and remote inquiry to computer data banks. Coming soon is the Kurzweil Voicewriter with a ten-thousand-word vocabulary. With optical storage reducing the need for paper filing and the Voicewriter reducing secretarial office staff, the question will soon be: Is an office even necessary? The Voice Mail Backlash I have a general bias in favor of technology, yet some technologies create more trouble than benefits, almost from their introduction. Voice mail is a prime example. At a time when customer and supplier service is paramount, voice mail is the run-around, hassle-ridden, pot-holed, gravel road of the Communications Age. The voice-mail time-waster first explains, usually in lengthy terms, how to leave a message. A voice rattles off instructions faster than some people can follow, and tells you to push a number to contact the person you were trying to reach -- often because that person wanted to talk to you and left you a message yesterday! Meanwhile (especially galling on long distance calls) it tells you to wait, leave a message (which was all you were trying to do in the first place), or press unknown digits, the value of which no one has explained. This is inconvenient to the caller, and potentially damaging to the people/company using the voice-mail system. They risk losing clients, customers, and/or suppliers. The caller gets the impression that the instigators of the system consider their time more important than anyone else's. You peasants and outsiders can follow instructions. Leave your message, if you are bright enough to figure out how, and someone may call you back. Perhaps after a half-hour coffee break with other Stone-Age employees. I usually put in a busy day. Yet I answer all calls personally unless I am out of town. The caller wastes no time, my answer is immediate, and both of us can get on to the next matter at hand. If I am out of town, I check messages and get back to callers. Constantly recycling two people's time to make it more convenient for voice-mail receivers is wasteful. My suggestion is this. If voice mail bugs you as much as it bugs me, hang up as soon as you recognize a voice-mail system. Let them call you back. After all, they already called you once. Your time is as valuable as theirs. And don't be bashful -- let them know what you think of a company that uses such a system. They are probably making other transparent mistakes as well. Every new technology has social implications. In the case of voice mail it is already converting dissatisfied phone users into ardent fax advocates. Send a fax instead -- no waiting, message delivered. Perhaps a "telephone hour" will evolve, when people will personally answer phone calls at a pre-announced time, say 0900Ÿ1000 daily, Monday to Friday. Callers who expect a call back should know when they plan to be there to answer the phone. Office-Pool Robots Automation hit the factory floor with faster methods of handling materials and machines. In the process, much of the dirty, dangerous, heavy, or monotonous work previously handled by humans was eliminated. Some of these machines were called robots. The first generation of robots, which were unable to see, feel, or think, are already taking early retirement (without any pension checks). They are being replaced by robots that can see and, to a certain degree, think. But the life span of these new metal drones will not be long either. Third-generation robots, with built-in artificial intelligence, are already on the drawing board. Workerless factories will become commonplace. A few such factories exist already in both the United States (Whirlpool washers) and Japan (Fanuc). "What's that got to do with me?" you ask. "I work in an office. Robots can never replace the human touch in my workplace. Brains, not microchips, will always be needed there." Wrong. Automation in the office is here now. Real automation. A few humans will always be needed, of course, operating in new positions at the executive level, perhaps akin to the communications managers of today. But thousands of stenographic and secretarial positions will be replaced by technoscribes. This new position will result from a dramatic upgrading of old secretarial skills and differ from the workerless factory, in that one human works with the latest computer techniques and a company's best thinkers. It is the brainchild of Bernie Dekoven of Playworks! Inc., a computing group in Palo Alto, California. The technoscribe is the key element in what Dekoven terms "computer-enhanced meetings." The new technique creates a new meeting environment, in which a Macintosh computer is fed data from the discussions at a meeting. It almost instantaneously provides charts, graphs, scales, idea formats, etc., which speed up the meeting and allow participants to see far beyond what might have gone on in a conventional meeting. Think of having the results of your meeting during the meeting! That is the advantage of having a technoscribe. Of course, the technoscribe doesn't have to be in the office. Nor does any of the creative team: they can be at home. Interconnected by terminals, team members could teleconference just as efficiently from anywhere in the world and receive reports of the meeting while it's still in progress.