Riding the third wave: A conversation with Alvin Toffler

 Tom Johnson and Lawrence Bennigson-Anonymous. Strategy & Leadership. Chicago: Jul-Sep 1999. Vol. 27, Iss. 4/5; pg. 4, 7 pgs

Abstract (Summary)
In this interview, Alvin Toffler, Tom Johnson, and Larry Bennigson talk about the forces driving change and how business leaders can stay abreast of the threats and opportunities arising out of these changes. The biggest strategic threat to many successful businesses will come from the external environment that tends to be outside the peripheral vision of corporate leadership. Culture, religion, politics, environment, and ethics are all going to interpenetrate one another to an extent never before seen. They will, in turn, penetrate business in all sorts of strange new ways.

Abstract In this interview, Alvin Toffler, Tom Johnson, and Larry Bennigson talk about the forces driving change and how business leaders can stay abreast of the threats and opportunities arising out of these changes. The biggest strategic threat to many successful businesses will come from the external environment that tends to be outside the peripheral vision of corporate leadership. Culture, religion, politics, environment, and ethics are all going to interpenetrate one another to an extent never before seen. They will, in turn, penetrate business in all sorts of strange new ways.

[Headnote]
Keywords Globalization, Culture, Values, Economic indicators, Change, Strategy

S&L: What will society and the economy be like in the twenty-first century?

A.T.: They will be fundamentally different from just about everything we've known for the past 300 or 350 years. For the first time, we are creating a technological civilization that is not industrial.

It's not another stage of industrialism. It's not simply "post-industrial" or "post-modern." To call something "post-anything" is not descriptive. It just locates the phenomenon in linear time, but doesn't tell you anything else about it. What we're living through is the rapid emergence and spread of a whole new way of life, and a totally new way of creating wealth.

S&L: Is it technology that is driving this change?

A.T.: This historical change is not just technologically driven. Culture, religion, family structure, social institutions, values - all are in the process of changing each other through complex feedback with one another. And technology is part of this overall interactive system.

Technology impacts our values. But the reverse is just as true. For example, our value system determines where we put our research money. Do we just spend it for a big buck, or for a big military bang? Do we pump it all into low risk, commercially oriented R&D, or do we support basic research? Our values as a society determine the answers. But technology, in turn, once developed and applied, reshapes values.

S&L: What other forces are driving change?

A.T.: Because we've written a lot about technology, my wife and I have frequently been accused of being technological determinists. But, as what I've just said suggests, we are not. At home, we have a whole shelf full of books offering alternative determinisms. There is the technology crowd that says technology drives everything. There's another group of people who say, "No, it's the energy system that determines everything." There's a rising theory that says, "No, it's disease over the course of centuries that has determined the shape of society." There is a wide variety of proposed alternative determinisms, if you want to call them that.

The person who seems to me to have said the most sensible thing about this is my wife. I call it her "salience theory." She asks a simple question. Why should we assume there's always one particular driver in command - or worse yet, think that the same driver dominates throughout all of history? Sometimes it's technology, although never by itself. At other moments other drivers may be salient. And the relative dominance of different forces fluctuates especially rapidly in periods of revolutionary change like our own - when change is non-linear, complex, and heavily subject to chance.

S&L: How do digitalization and the Internet fit into this upheaval?

A.T.: There is something really interesting here when we look at society as a "civilizational system." In talking about digitalization and connectivity, we normally think of them in terms of connecting people to one another. And that's true. But from the point of view of the social system, there's another level of connectivity.

Because of this dense, digital, communication infrastructure, it's not only people and organizations that are connected more tightly, but the different sectors or spheres of the society as well.

The "infosphere" is more tightly connected to the "technosphere," and the "technosphere" is more closely connected to the "sociosphere" or the "powersphere" of society, and so on, radically multiplying the interactions among them.

And these tighter relationships have practical implications for strategy and leadership. It means, among other things, that smart decision makers, no matter how focused on the bottom line - or on so-called core competencies, or on a particular deal, or on the stock market - have to take account of all kinds of "outside" factors that once could be safely regarded as irrelevant. These could be social and environmental factors, the changing culture, race, ethnicity, geopolitics, even things like religion and values.

T.J.: So what do all this speed, complexity, and unpredictability imply for strategy?

A.T.: None of this, in my opinion, weakens the case for strategy. It forces us to think about it in a new, more holistic way, and, above all, as always tentative and transient.

A lot of otherwise very smart people are denigrating strategy today, arguing that it is an obsolete idea. They say that because things are changing so rapidly, a company can't really have a strategy; it just needs to be adaptive or agile. This is an attempt to substitute agility for strategy. But if you don't have a strategy and you rely on agility, you will be permanently reactive and will wind up as part of somebody else's strategy.

Agility is vital - but toward what end?

L.B.: As technology interacts with the other drivers of change in our society, what role should business play in making value-based decisions?

A.T.: In our society, business plays a very powerful lead role. In part, that's because of its political influence. But it also has to do with disparate rates of institutional change in society.

Compared with the education system, or, for that matter, the political system, business changes most quickly and flexibly. For example, just compare the rate at which technology changes in business with the rate at which it changes in your kid's classroom.

Because of the particular scorecard business uses and because of hypercompetition, business is compelled to change very rapidly if it's going to survive and meet its short-term profit goals. Moreover, the acceleration of change, which affects everyone, is an especially powerful factor in business, and business, in turn, produces endless innovations whose sole purpose is to save time and make events move even faster.

Other institutions change at a slower pace, and each has a distinctive rate. Together they produce a kind of rhythm or collective pace of change in society. But business is usually in front of the pack in both creating change and adapting to change.

S&L: If business takes the lead in creating these changes, what impact will it have on other social institutions, such as health care, schools, religion, or government?

A.T.: First, business attempts to marketize everything - to reduce everything to a suitable, saleable form. And that has created a cultural backlash against the market economy, against capitalism - and business - on the grounds that it reduces everything to what Marx called the "cash nexus." Do we want a society in which literally everything is for sale? How about human beings? Do we want to measure every individual's worth simply by her or his success in the marketplace? These are old questions given new prominence today by the resurgence of essentially anti-capitalist religions.

But business, for all its frequent excesses, even if it runs the risk of driving other forms of motivation and evaluation to the sidelines, is also at least partly responsible for accelerating wealth creation and helping to raise a substantial part of humanity out of peasant misery.

In the nineteenth and early twentieth centuries, leftists said that the working class was the vanguard of revolution. However, long before that, Marx himself said that the bourgeoisie was the vanguard of the capitalist revolution. It was, in fact, the vanguard of the industrial revolution, and now, again, driven by competition and the need to be responsive to customer demand, business is playing the revolutionary role.

L.B.: This puts business in the de facto role of pioneering organizational and other changes that may or may not be relevant in the larger social system.

A.T.: Worse than irrelevant - harmful. That's why business, in its rush to short-term profit, needs competition, not only in the marketplace. It needs competition in society from countervailing, critical forces as well, including civil society groups representing unmet needs in society - usually needs that cannot be profitably filled by business.

T.J.: How strong will that competition become in the years ahead?

A.T.: In my opinion, very. Not only strong, but also powerfully networked and able to organize quickly around all sorts of issues that businesspeople rarely even think about. Occidental Petroleum is pressured to stop drilling somewhere in Colombia because it is some indigenous group's burial ground, and over a thousand members of the group threaten to commit mass suicide by throwing themselves over a cliff unless it stops. In response, American students protest outside Occidental's headquarters in Los Angeles. That is just a hint of what may lie ahead.

T.J.: Are companies prepared for this? Do business leaders understand the new tight connections in society?

A.T.: No, they are not well prepared. Of course, I'm generalizing. Not all business leaders are alike. The problem is that most of them are forced to operate within very narrow constraints - you do have to make those quarterly returns. And management consultants are constantly haranguing business leaders to "focus." The fact is that all too many executives and leaders are, if anything, so over-focused they ignore the external environment.

Yet it is becoming ever more clear today that what's needed is a broader, not narrower, focus. To use your term, Tom, what's needed more and more is "widescan." That's because the main threat to many successful businesses comes not from within their industry, but from somewhere outside their limited peripheral vision, from "left field," as it were.

T.J.: You focus too narrowly on the book publishing business, as most publishers have, and you miss Amazon.com. Then you run scared and have to play catch-up. Focus on cutting costs and competing in the traditional brokerage business, and you miss Schwab. Focus on cutting costs in your travel business, and you're not ready for Priceline.

So you've always got to be looking over your left shoulder and expecting a surprise on your right. Andy Grove was right about "only the paranoid survive" but what's changing are the things you need to be paranoid about.

A.T.: That makes sense to me because, as I've suggested, the challenges won't all be commercial, but also political, social, religious, and so forth. They will be unexpected and what the military calls "asymmetrical."

Culture, religion, politics, environment, ethics, are all going to interpenetrate one another to an extent never before seen, and they will, in turn, penetrate business in all sorts of strange new ways. That will happen with increasing frequency precisely because of the tightened linkages I referred to between the different sectors of society.

The point is that business is going to be less insulated than ever before from all sorts of pressures that now are regarded as irrelevant to the bottom line. And, I would add, not all these are necessarily adverse. On the plus side, there will also be new markets and new opportunities for alliances and what we've elsewhere called "deep coalitions."

L.B.: That concept has been applied to world politics, and since you introduced it I know the military has done some thinking about it. But it's not yet been applied to business.

A.T.: What we call a "deep coalition" is a coalition not just at one level, but at multiple levels of the system. For example, the Gulf War coalition that Bush put together was essentially all nation-states - the USA, the UK, Saudi Arabia, and so forth. But the relative power of states is declining and various non-state players are becoming more and more important on the world stage.

As these become even more powerful, we'll see new, "deep coalitions" or alliances that combine not just nations or states, but other non-state players as well. For example, a deep coalition in global affairs might include three countries, Greenpeace, a religious group, and three multinational corporations. Deep coalitions are multi-leveled and multi-dimensional - not just alliances of similar entities.

In Brazil, some years back, I was speaking with the governor of the Amazonas, who was the particular bete noire of the environmental movement because he wanted to permit what he regarded as very small-scale development within the Amazon. The rain-forest folks, on the other hand, wanted to prevent all further development.

I asked him where he thought the pressure was really coming from - why there was such a big campaign against rain-forest development. His immediate answer nearly knocked me out of my seat. I thought he was going to say Greenpeace or some environmental coalition. Instead, he said: "Malaysia."

"Malaysia?", I asked, shaking my head in incredulity.

"It's obvious," he replied. "They don't want us to mine tin. They're in the tin business." The implication was that Malaysia was in an alliance or coalition with certain environmental organizations operating in Brazil.

I'm not suggesting that his statement is true. It may just be his paranoid fantasy. But one can easily imagine a country financing environmental organizations in another country in order to prevent a specific corporation from developing a particular project somewhere.

Now just for a moment take that same idea and apply it to business. If I'm right that business in the twenty-first century is going to find itself entangled with all sorts of issues, adversaries, and allies that it never had to bother with before, one can extend the idea of alliances.

In addition, enormous literature now exists about strategic alliances, joint ventures, public-private partnerships and the like. But it's not too much of a stretch to suggest that, in days to come, we may also see deep business coalitions that bring together not just firms and government, but NGOs (non-governmental organizations), churches, and the like - multi-layered partnerships that are put together for competitive advantage.

And if we want to go even further, we might want to study the future of "deep competition." Deep competition goes beyond two companies in competition with each other; it extends to a situation in which a company organizes and joins non-business allies for competitive purposes.

Take that just one step further. When the stakes are high enough, a company might find its strategy opposed not just by a rival company or even a group of companies, as is often the case in the computer and IT industry, but by a deep, multi-layered coalition that includes such non-business partners as trade associations, surreptitiously supported civil society groups, and other types of players, licit and even, in extreme cases, illicit. Think of it as "deep competition."

In other words, I think the business landscape in the decades ahead is going to be wild and strange, and most business leaders are so completely preoccupied with their traditional troubles that they are unprepared for what lies ahead. They've got their heads down, their noses to the proverbial grindstone, and their eyes focused straightforward when a lot of the action will be on the sides, or will come at them from above as well as below.

T.J: That's a dark picture of what might develop.

A.T.: Leaving aside illicit liaisons, so to speak, whether it's good or bad depends on what purposes these deep coalitions serve. The strategy or project involved may be not only lucrative, but socially valuable. And the fact that companies are allied with NGOs in fields like health or environment, for example, may help assure that. So deep coalition and deep competition are neither good nor bad in and of themselves. They are simply ways governments, companies, and other organizations will respond to the high-connectivity world in which all the conventional industrial boundaries are erased.

T.J.: All that implies a much wider concept of corporate strategy than we've been accustomed to. And it changes the job of the leader and the kind of preparation needed for business leaders in the twenty-first century.

In my experience, after years of work in defining strategy with top managers, a very common failure is what I call "narrow-scan" - many of them work so hard at their own particular set of problems they have little knowledge about real life outside their corporate frames of reference. And that's not true just of business. Top government officials we have worked with had never set foot in the private sector and were amazed at how many things they could learn from business management that apply to their own organizational problems.

A.T.: I fully appreciate the enormous pressure on the individual manager today, but it's just not enough to read the Wall Street journal, follow the stock market, read a few trade magazines, and turn to the sports pages. It's not enough to rely on TV for the news - or even the usual sources on the Web.

A current management buzzword is "think outside the box." And I'm all for it. But there is more than one box that limits our views. In today's increasingly interlinked and global world, it's especially helpful to get outside our own national culture - read the Turkish Daily News, or the Nikkei Weekly from Japan or, for that matter, China Daily. They're all in English. Or go to foreign Web sites. And you'll get at least part way out of the cultural box that the US and UK business and financial media create with their shared cultural assumptions and largely uncritical free-marketism. The world out there is changing fast, and it looks very different from these alternative perspectives. I think getting outside this larger box will help strategic thinking and leadership at home.

L.B.: What exactly do you mean by "uncritical free-- marketism"?

A.T.: Free markets are among the greatest tools ever developed for creating wealth - but they can't do everything and they can't fit into every country and culture in the same way or to the same degree they do here. Unfortunately, there are ideologues who regard markets not as powerful instruments for promoting wealth creation, but as objects of religious worship. Doing that blinds one to their true nature and the links between markets and culture, values, and social justice.

L.B.: Business clearly has the potential for revealing new, possibly more effective ways of doing things, but also the potential for doing harm as well. What responsibilities, then, does a business have in this time when business - especially global business - is so powerful? Is the drive toward freer markets, spearheaded by western business, going to succeed?

A.T.: Not easily. And not quickly. If global business means liberalization, the battle is only just beginning. We're already seeing a backlash against both globalization and liberalization. But it is important for us to disentangle these two concepts. The Clinton Administration, Wall Street, and the IMF have been selling these two things as a package deal. But the fact of the matter is you can globalize without liberalizing, and you can liberalize without globalizing. And I think they need to be teased apart.

There is a growing clamor around the world against this combined package. But what they're really angry at is premature liberalization - liberalization in the absence of any attention paid to the readiness of institutions for these changes or any buffers to handle the social impact.

A perfect example was the Russian fiasco in which American macroeconomists trooped into Moscow and told the Russians that we could help them turn their communist economy into a market economy in 365 days - without considering that there was no legal system, no notion of enforceable contracts, etc. The economists are just beginning to learn that there are certain preconditions that are necessary for liberalization.

Even now their conception of what preconditions are necessary is naive and superficial in my view. There's a lot more to wealth and wealth creation than many economists suppose, although the award of the Nobel Prize to Amartya Sen recently points in a healthy direction.

These necessary preconditions go far beyond the legal system or even the existence of trust in society. There are social preconditions - religious and cultural - if liberalization is to work. We need an expanded view of how economies work. They're not simply Newtonian black boxes in which you push the button over here, and it always comes out the right way over there.

L.B.: Business organizations are already powerful because, compared with other institutions, they adapt to change more rapidly. In addition, they have access to resources, including technology, and can deploy those resources in new ways. What happens when you add to all that the ability to form "deep coalitions" and engage in "deep competition"? Does that increase the power of business in relation to other groups?

A.T.: I think it invites a counter force. The backlash against the growing power of the corporation within the global economy is mounting, and I believe the main intellectual opposition may well come from the Catholic Church and other religious organizations, including parts of Islam, instead of from the traditional left wing.

Religion is saying what it has been saying all along especially since the industrial revolution - that there are some things more important than material success. With the rise of corporate power on the global level and the concomitant resurgence of religion, that message is going to resonate much more loudly than in recent decades.

T.J.: Before we leave the question of corporate power, what do you think about the argument that consumers are gaining power vis-a-vis the firm?

A.T.: What's happened in recent years is a power shift among the stakeholders in corporate America. First, over the last few decades we've seen a significant decline in the power of organized labor. And within labor, manual workers have lost power; knowledge workers have gained. Second, we've seen a tremendous decline in the power of management compared to the power of investors and the financial markets.

In the 1930s and again in the 1960s the economist A.A. Berle wrote about "power without property" - the rising power of managers as more and more corporate shares came to be held by institutional investors who refused to impose controls on management. If the portfolio manager didn't like the way a firm was being run, he didn't bother kicking out the managers, he just sold his position.

The 1980s and 1990s changed all that. Investors became aggressive in defense of their interests. In the hot new industries, stock options were used to pull the interests of stockholders and managers together. At the same time, stock ownership in the US widened enormously, as pension plans grew and ordinary, non-professional investors swarmed into the securities markets. Online investment accelerated the widened base of share ownership. As a result, as organized labor lost power, shareowners (including millions of union members) gained relative clout.

Today we hear more and more about customer power, and the new technologies - especially the Net, with its incredible ability to provide comparative pricing - enhance consumer power. Similarly, with the Net, customers who wind up with "lemons" can almost overnight find one another and, before you can spell "product liability," start a class-action suit.

So what we're seeing is a continual shifting and shuffling of the relative power of stakeholders. I would suggest that, as more and more of the economy comes to depend on knowledge, knowledge workers, especially those with rare skills, will gain power - and these same people will also be the key consumers in the economy.

L.B.: Not long ago you gave the keynote address at the US National Space Foundation conference in Colorado Springs. You cited some fascinating data about how technology is changing things in distant corners of the world.

A.T.: The first example originates with the World Bank. There is a tiny village in Peru called Chincheros, which is made up of about 50 families. They are now online. As a result, they are able to sell their vegetables in New York City. The village income has tripled, from US$500 a year to US$1,500 a year.

Another example involves PCs in China. Peasants bought 100,000 PCs in Hebei Province in 1998. Peasants! The spread of access to the Internet is making political forces in China very nervous, because it cannot be easily controlled. It has been said that in the 1920s Stalin was opposed to the, spread of telephones in Soviet Russia because it meant that people could talk to one another without going through his office.

T.J.: The person who claims to have installed the Internet into China was a guest at one of our Toffler Associates sessions here in the USA. He said the Internet is spreading like crazy and will continue to spread with considerable support from the government.

A.T.: Of course, at this point, the government is hoping it can control the system by controlling the ISPs but, as the communication structure elaborates, differentiates, and spreads, it's going to be harder and harder to control in traditional ways. That doesn't rule out the possibility that they will invent imaginative new forms of censorship and mind control.

T.J.: Let's turn the earlier question around and ask: What happens to government in the future?

A.T.: I think doubts about the ability of governments to run things will grow as Second Wave economies mature and Third Wave knowledge economies replace them. Even the Chinese today recognize that their state-owned enterprises are expensive dinosaurs. That suggests that the role of governments will be to provide the necessary legal framework and other supports for business.

Their function, in the advanced economies, though not necessarily elsewhere, will increasingly be to guide, rather than execute. They can fund or incentivize certain limited activities that are beyond the capability of business, singly or as consortia. For example, in many countries, commercial support for basic research is drying up. Companies, driven by competition, are shifting funds to research that pays off quickly, rather than risking funds on fundamental research that might have a bigger payoff but which entails greater risk and would take a long time. Government can provide seed money to get things started, then back off.

The Internet is a clear case in point. A lot of people today forget that the Internet was originally funded and created by ARPA, the Advanced Research Project Agency of the US Department of Defense. It was needed by the military. It was paid for by the government. Later, a different government agency, the National Science Foundation, created the Electronic Information Exchange System. It was only after further development that the private sector began to see longterm cost savings or profit potential in it and began to move into it.

Once that happened, the government essentially stood aside and let competition drive further development. Its purchases of computers and network equipment for military purposes continued, and its attempt to build SDI, a strategic missile defense system, helped advance software development in general.

But as the technology developed, the government did not censor the Net. It did not create a state-owned entity to run it. It did not set up a state-owned industry to build computers or lay wires and cables across the country and into our homes. Nor, when foreign manufacturers began cloning US products and selling them cheaply, did the USA keep them out of the American market. In short, the government allowed unregulated business to develop computers and the Net, after its earliest stage. At that point, the spread and development of the Net and all the associated technology simply skyrocketed. By contrast, the cable industry, which is heavily regulated, has developed at a comparative snail's pace.

Pilots know that the faster the plane, the lighter the pilot's touch must be. Student pilots are repeatedly warned not to "over-control" the airplane. When I advanced from a simple, slow, single-engine Cessna to a fast, complex, Aerostar twin, I found it slippery because I was too heavy-handed. And during my one brief experience in an F-16, the touch required at 800 mph was feather light - the slightest pressure could point the nose down or up faster than I could compensate for it. Needless to say, one of the best Air Force test pilots let me have the controls for only a brief moment. But that was enough to underscore the principle.

I think there's a lesson here for governments.

L.B.: Al, you have pointed out the severe, historical conflicts that arose between the agricultural way of life and an industrialized way of life. Here we are with a Third Wave way of life coming over the horizon. Should we anticipate this kind of conflict emerging again?

A.T.: Conflict is the flip side of change. You can't introduce a whole new way of making wealth, and a whole new way of life based on it, without conflict. Of course, not all conflict is bad - some is creative and constructive. But massive change is all too often accompanied by massively destructive conflict as well.

When the Industrial Revolution came to the UK and began to take real form, there was a 50-year political struggle between Disraeli, representing the landed interests of the UK, and the emergent commercial and industrial class in the cities. But the Brits managed to contain that conflict within a political frame.

In the USA, on the other hand, we had the worst war in history up to that time - our Civil War. It was not simply a battle to abolish slavery. There was a deeper struggle between a Second Wave industrializing North and a backward, slave-based, First Wave South.

You had the rising commercial and industrial elite of the North against the agrarian slave-owning elite of the South. That was a classic example of what we call "wave conflict" - a new wave of change creating a new elite with new needs. The emergent elite threatens the economic, political, even cultural leadership of those who rose under the older wealth-creation system. In the USA, once the North won, the country was on its way to becoming an industrial power.

You can see that pattern everywhere. Just about three years after the end of the American Civil War, the Meiji revolution occurred in Japan. It was not nearly as bloody, and again the Second Wave "modernizers" won and launched Japan on the path to industrialization.

In Brazil, the first wave of modernization occurred right after that in 1870, and there was a bloody, internal, political battle. But in that case, the First Wave agrarian forces won and delayed any further attempts at modernization for 50 years.

All across the world, you can see evidence of what we call wave conflict, even today. So your question is right on point. Once again a completely new wealth system is emerging, and a new way of life or civilization with it. And again we see the first signs of conflict - thankfully not violent yet - between those who are creating the new system and those who regard it as a threat to their economic interests and, even more important, their familiar way of life.

Right now, the conflicts within the US are relatively minor. At the lowest level - in business, say - we still have accounting systems and taxation systems that favor companies with hardware over knowledge-based firms. We still depreciate technology over many years, while, in the Third Wave sector of the economy, the equipment can be obsolete within months.

Watch what happens when the full impact of e-commerce begins to undermine millions of existing firms with huge investments in retail real estate, for example. For all the Internet winners, there are going to be plenty of Second Wave losers, and they have a lot of residual political clout. They'll use that to slow down ecommerce development.

Or watch US trade policy and ask who benefits? I think you'll find a lot of Second Wave-Third Wave tensions that are not yet recognized as such.

The bitter resistance of teachers' unions and education bureaucracies to the reconceptualization and replacement of factory-style mass education is another example of Second Wave groups trying to hold on to Second Wave institutions.

Nor is the internal political battle over between Second Wave nationalists and Third Wave globalizers. Culturally, we see deep differences between those who want to impose a Second Wave uniformity of values and attitudes on a country moving toward Third Wave heterogeneity.

Then look at the global level, and you see a struggle by the USA to impose intellectual property protection on First and Second Wave countries, some of whose leaders hardly understand why that should be all that important. After all, it isn't in agrarian or industrial countries. It is important, however, in Third Wave knowledge economies.

I'm not comparing these conflicts to those that accompanied the arrival of the Industrial Revolution. They haven't reached the same level of intensity - yet. But they could. And anyone who thinks the next few decades are going to be smooth and conflict-free is in for an unpleasant surprise.

T.J.: This ties in directly with your concept of "trisection."

A.T.: Absolutely. For at least a century or two, world power has been divided between Second Wave or industrialized countries on top and First Wave or agrarian, peasant countries on the bottom. This was the fundamental structure of the geopolitical order. In fact, this division was even more important than the usual divisions characterized as East-West or NorthSouth. Power, in short, was bi-sected.

Now with the emergence of the Third Wave, knowledge-based economies and societies, global power is increasingly tri-sected: Countries with primarily peasant economies on the bottom; countries with cheap-- labor, manufacturing economies in the middle; and countries with emergent, knowledge-based economies on top. The transition to this new system is the single greatest change in the distribution of power on the planet. If we're not careful, some serious conflicts could erupt that could make those we've known recently look small by comparison.

When you put this profound new reality together with all the other interrelated changes taking place - in technology, in communications, in culture, in family structure, in values, in fact, in every aspect of life - we get back to the very first question: What will the economy and society of the 21 st century be like?

S&L: So, Al, what will the economy and society of the 21st century be like?

A.T.: Different from anything we've known before.

[Sidebar]
"Business is going to be less insulated than ever before from all sorts of pressures that now are regarded as irrelevent to the bottom line."

[Author Affiliation]
Alvin Toffler is the author of such influential books as Future Shock, The Third Wave, Powershift and Creating a New Civilization. He and his wife, Heidi, are partners in Toffler Associates, high-level advisors to business and government. Tom Johnson is president and Larry Bennigson is a director of Toffler Associates

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