The Internet Changes Everything — Except Four Things

At the e-G8 Forum in Paris this week, the Internet was venerated as a revolutionary force changing everything. French President Sarkozy, who commissioned the forum to provide recommendations to the G8 heads of state, was extravagant in his praise, calling it a new world and the eighth continent. Internet moguls from Facebook, Google, and Groupon were more subdued in their claims, undoubtedly cautious that France, Japan, America, and other sovereign nations are trying to plant their flags and impose their rules on the new world.

The fact of change is unmistakable. Every aspect of traditional industries is affected by Internet tools and social networks, as I proposed in my e-G8 talk for the plenary session on digital reinvention. The economic potential is starting to be measured. A McKinsey Global Institute study unveiled at e-G8 estimated that Internet economic output is bigger than Spain and growing faster than Brazil. Web-intensive SMEs grow twice as fast, export twice as much, and are more profitable than non-Web-enabled, the McKinsey study concluded.

The theme of empowerment of individuals and small enterprises resonated throughout the forum. Christine Lagarde, French finance minister, said that digital technologies would drive 5.5% of future growth of France and help people become self-employed. John Donahue, eBay CEO: 17,000 people are employed by eBay but 1.3 million earn a living from it. There was much talk of empowerment. While not taking credit for Arab Spring, Sheryl Sandberg, COO of Facebook, noted that Facebook should be thought of not in terms of 500 million users but many more millions of overlapping communities based on mutual interests. Groupon CEO Andrew Mason says that Groupon empowers local small business owners.

But with all the talk of revolution, disruption, and really big change, I was struck by the things that are not changing — or at least, not yet.

1. A great customer experience differentiates winners from losers. From the BBC to Groupon, experts and executives feel that the winners are differentiated not by the technology but by the quality of the experience they offer customers. For example, for Groupon to move from its social action origins to a coupon company that is perhaps the fastest-growing company in history, Groupon has to be the coolest, most customer-friendly, Andrew Mason said.

2. The human side is critical to the use of technology. Sunil Mittal, of Bharti Airtel, claimed that the biggest barrier to the spread of promising mobile and e-health services is the professionals. The same issue was raised about education. Rupert Murdoch praised Harlem Village Academy for extraordinary results for children from disadvantaged communities and wondered why there is so little progress in education worldwide. Adoption of new tools and incorporating new technologies into business or organizational models requires visionary, responsive leaders willing to change and to use the tools themselves.

3. Money needs to change hands. The Internet spreads faster when content is free, some said, but others argued vociferously that creators need to be paid. This was an oft-repeated tension, unresolved at e-G8. Even copyright laws were controversial when sharing of content is a social experience (which was a main theme of Facebook CEO Mark Zuckerberg). For all the freedom and ease of the virtual world, people still need to earn a living from what they produce.

4. Government and business still talk past one another. Christine Lagarde argued that the winner-take-all nature of Internet businesses poses risks of new monopolies controlling everything. That was one of many reasons that government officials want to protect citizens from Internet risks, from piracy to child pornography. But Google's Eric Schmidt said that if the Internet is left alone, entrepreneurship will blossom. Schmidt felt that governments are not ready for the huge shift of power to individuals in the Internet age. For every problem — piracy, bandwidth, security — he argued that a private sector technology solution would be better, faster than a government solution. But if Internet proponents want credibility with the public as well as the public sector, then those solutions must come quickly, along with many social responsibility efforts.

It is interesting to reflect on one of the McKinsey findings: that telecoms are capturing most of the wealth being generated from the Internet. For all the new world hype, the old world has a major role to play. And sometimes focusing on what is not changing help us figure out how to best master changes. We still need to find, delight, and excite customers. We need business models that pay people fairly for their work. Businesses must make a credible case to government that they act in the public interest. And the best asset for mastering change is still that old classic: leadership.

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