In the 40,000-year history of the modern human race, there have been six ages. If you are older than 45, you have lived through half of them.
The Stone Age lasted about 20,000 years, followed for 15,000 years by the Iron Age. The Agricultural Age lasted 5,000 years and was replaced with the dawning of the Industrial Age about 400 years ago.
Those born prior to Oct. 8, 1955, arrived at the tail end of the Industrial Age and grew up during the Technology Age, which began when General Electric installed the first business computer, says Steve M. Samek, managing partner for Arthur Andersen’s U.S. operations and co-author of “Cracking the Value Code.”
The 40-year-old Technology Age came to an end, by Samek’s accounting, on Oct. 15, 1995. That was the day Microsoft Corp.’s market capitalization surpassed IBM’s for the first time. At the time, Microsoft had one-fortieth the assets of Big Blue.
That moment marked the onset of the Knowledge Age.
The length of each succeeding age has decreased — the Stone Age lasted 20,000 years, the Technology Age a mere 40 years. Correspondingly, in the past two millennia, the sum total of human knowledge has doubled at an ever-accelerating pace. It took 1,500 years for the human race to double its cumulative knowledge. The feat was accomplished 300 years later, then again at the turn of the last century, Samek says, again in 1930 and then in 1945.
We now double the sum total of human knowledge every 18 months — not coincidentally, Samek says, at the same rate as Moore’s Law, which says the amount of data storage that a microchip can hold doubles every year or at least every 18 months. Gordon Moore was the co-founder of Intel.
This has led Samek and his co-authors to formulate four fundamental rules that govern the ages.
1. He who has the assets of the age wins.
In the Agricultural Age, whoever owned the land had the power. In the Industrial Age, the machines were the key.
2. The assets of the new age are first used to fix the old age.
Each age goes through four stages: an introduction, growth, maturation and decline. There is a period of discontinuity as one age flows into the next and “we figure out what’s going on,” Samek says. This struggle is reflected in the recent stock market volatility.
As a benchmark, Samek looked at the S&P 500 average and selected a 1 percent change in either direction as a volatile day. In the 1980s and early 1990s, 50 percent of trading days were defined as volatile.
That decreased to a low in 1995, the end of the Knowledge Age, when it reached 17 percent. In 1999, the figure jumped to 77 percent. Through the middle of June 2000, it stood at a whopping 94 percent.
3. The value of the old age is commoditized in the new age.
During the Agricultural Age, grain was of value. Today, it is a commodity.
4. As the age settles in, competition begins.
At this point, the business models that work are shaken loose from those that don’t.
What does this all mean? Samek says we’re in for a wild ride and it’s imperative to recognize what’s happening in the business world around us. B>How to reach: Arthur Andersen, www.arthurandersen.com
Daniel G. Jacobs ([email protected]) is senior editor of SBN.
