Recently, "Future Shock" and "The Third Wave" authors Alvin and Heidi Toffler published "Revolutionary Wealth," a book that describes how wealth is rapidly moving to Asia/Pacific. We sat down with Alvin Toffler to get his views on wealth, outsourcing, the future of IT and IT practitioners. Alvin Toffler was interviewed by Gartner Fellow Ken McGee on November 27, 2006 "Revolutionary Wealth" Gartner: For those who have not yet read your new book, "Revolutionary Wealth," what are the main ideas that you are trying to get across? Alvin Toffler: The book argues that the coming of what we call the third wave - and others might call it knowledge economy and so forth - has made much of economics obsolete; that the metrics - the assumptions of economists - have to be reexamined in the light of the changes brought by the growing dependence on knowledge; and that the impact of the rising knowledge economy, the rising component that is knowledgeably a component of the economy, is getting bigger and bigger and bigger as muscle power becomes less and less (important). As that happens, it changes what we call the deep fundamentals. We define "deep fundamentals" as essentially those variables that have to be confronted by every economy from hunting and gathering through present agriculture, the industrial age and certainly now. Those deep fundamentals are time, space and knowledge. (We also discuss) the historic wave of change that sent political and economic power moving westward from China 500 years ago to Europe, especially Britain. Then wealth moves across the Atlantic to the United States for the last several decades. Now the wealth has been moving at high speed across the Pacific to Asia. Gartner: When you say the wealth is moving on, you're not suggesting that wealth is leaving somewhere else, but you're essentially saying new parts of the world are experiencing new wealth, right? Toffler: Yes, or attaining wealth, and we don't know how, a hundred years from now, it'll all be distributed. It'll be changing all along, but it may well be that countries that are now poor become very rich - and including tiny ones like Finland or Ireland or whatever. So the point is that (wealth is) on the move; it's not stable. Time, spatial and knowledge relationships are no longer fixed in place with a slow change. They're rapidly changing. Prosumers Gartner: You're rather critical about economists and the manner in which the art/science is practiced, what it measures, but particularly what it doesn't measure. In that regard, after the discussion about deep fundamentals, you talk about the "prosumer." Can you provide a very brief definition of "prosumer" please, but also, why is it important to capture prosumer activity from an economic perspective? Toffler: We invented the word prosumer many years ago in my book The Third Wave. It's a composite of production and consumption, obviously, and we argue that there was, prior to the invention of money, people who lived without money. Everybody was a prosumer, growing their own lunch, sewing their own clothes, building their own shack and so on. So it was a pre-monetary or a nonmonetary economy. However, more and more prosuming populations (moved over to) become part of the (consuming or) money system. So there were fewer and fewer people living off their own production. But prosuming hasn't gone away. In fact, we now know and we understand the importance of this goes back at least to the '60s or earlier, and Gary Becker, the Nobel prizewinning economist, was one of the first ever to make the case about this. We track 10 or a dozen pathways by which the activities of people in the nonmonetary economy have impacts on the money economy, and we argue that you can't understand what's going on in the money economy unless you also take into account the interactions between these two. Gartner: Are you surprised that prosuming, if quantified, might rival the size of the money system (more than $50 trillion)? Toffler: Yes, now that's not our guess; that's somebody else's guess, but nobody really knows. Nobody really knows, I think, because nobody monitors this appropriately. Gartner: Do you think we will reach a point where prosuming will be measured? Toffler: Yes, I do. It's inevitable because it's growing, instead of it disappearing, which is what the early assumptions were, including ours. It's growing. IT Issues Gartner: That's a great segue to my next question. As technology helps the knowledge engine, if consumers and prosumers are using IT tools to do whatever they're doing, if companies and governments are using IT tools and as this third wave relies less upon coal and iron ore and more and more upon IT, do you see a day when IT, because it is such an integral part of our life, actually becomes regulated by governments, in particular, software? Toffler: Well, whether it warrants it or not, we know that different governments are a lot less open than our own to information exchange, and I would imagine if we have something on the order of 190 members of the U.N., 180 of them would like to control the information you would include in the pathways. So the answer to me is that we can expect that kind (of) development, yes. Now that doesn't even presuppose the growing importance of the system. Even if it doesn't get any bigger and more important than it is now, there are governments that want to censure elements of it. Gartner: But surely as this third wave continues to envelop the rest of the world, our reliance upon IT just increases and increases. Toffler: Yes, and I would imagine the governments are going to want to tax it, and they're going to want to control it. Gartner: So if we are indeed in (this third wave), what is your view about the future of IT? Toffler: Well, I think it's going to become so universal in so many ways and on so many different levels that it's going to be like the air we breathe. It's just going to be everywhere. Gartner: What about your view of the future of IT practitioners? Toffler: I'm not sure I'm qualified to answer that. But we may just see a multiplication of (Linus) Torvalds. Why do we have to have professional paid software guys when there are people willing to do this for free? I also think there's going to be a great boom when we stop thinking about companies and start thinking about restructuring governments - and completely restructuring these gigantic pyramidal bureaucracies that we rely on and that no longer function. So I think that there's going to be a huge market for software in new kinds of organizations. Now, I'm not sure whether it'll still be called software or what, but as you no doubt read in the book, I expect to see one big institution after another collapse just like the Katrina experience with FEMA and the government and so on. That our corporate structures are designed for the industrial age - and that made sense then and Max Weber wrote about it in 1910 and so forth and so on - but they're clearly inappropriate to the systems that are now growing up, economic, social, cultural and all the rest. Gartner: Do you view that to be the same with management science? Have the management sciences been taught and practiced in a primarily services-based economy, or have they been taught and practiced in the manner of an industrial-based economy? Toffler: Well, okay. What you have now with a lot of companies that are using what we would call "third-grade technologies in second-grade waves," so even insurance companies having people type out there, forms and so on. And you had people reduced to doing rote and repetitive work, even in companies that used high technology. My assumption is that the number of people doing rote and repetitive work will continually be reduced because we can make machines that do that. China and India Gartner: You spend a great deal of time in the book talking about China. What are the aspects of China's sudden emergence that surprise you most? Toffler: Well, I'm certainly surprised by the speed; I'm surprised by the Four Seasons Hotel in Shanghai. I'm surprised by the reaction of the outside world of finance and corporations to the opening (of China). I'm surprised, basically, by the pace at which all of this has unfolded. Gartner: Is there an author of change in a place like China, in a place like India, where one person can point to someone and say, "Here's the person who started the ball rolling"? Toffler: Well, some people would say that Mao did it. Mao did it by causing the Cultural Revolution, which was so horrific that there was a backlash against it and so on. But that doesn't answer your question in a useful way. Gartner: Maybe it would be better for me to frame the question this way. I don't think the evolution of the IT outsourcing industry in India just happened. It seems to me that that had to be the product of someone having an idea. "Hey, you know what? Let's train our students. Let's invest in the schools in India. Let's train our students in IT, computing science and so on." It seems to me that had to start somewhere with somebody. Who were those people in India and China? Toffler: The guy who comes closest to that, I think — there's a guy named Zhao Ziyang, who became chairman of the Communist party but then got kicked out during Tiananmen Square. And it's interesting. I don't know if you've seen the Washington Post piece about the book in China? Well, his name, one of the things they deleted was his name. He has become a nonperson. But he's the guy who said, "Read 'The Third Wave.'" And it was in response to his statement, in 1983, that you must read 'The Third Wave'; people were still afraid. The book apparently was published — and all of this without royalties, goes without saying. Gartner: But tremendous economic growth also happened in India. Toffler: India later. And bear in mind, the Chinese had the additional drawback of the language different from our own, and yet they got it. And who knows, there may have been other Westerners going over there - that we're not aware of - who are also influencing them. Well, I can tell you, and it's immodest. I'm embarrassed to tell this story, but it was absolutely true. We go to China, people come up to us and say, "You changed China." And my answer to that is, "Look, you guys have been around for 5,000 years. I'm not sure that that's an accurate statement." Business Issues Gartner: You described when different organizations move at different speeds and the de-synchronization phenomenon (that results). Which examples of de-synchronization do you find you're most concerned about? Toffler: I would say those having to do with national security and various other important government agencies. I think that they're out of whack, and if this country could not find New Orleans (Louisiana) on a map, this tells me all kinds of other institutions that we rely on would also not have found New Orleans on the map. Gartner: You also described various organizations and institutions that go at different speeds by writing, "Key public institutions are out of step with the whirlwind of change that surrounds them. Nowhere is this more evident than an inability of the U.S. Securities and Exchange Commission to cope with skyrocketing speed and complexity of private sector, financial institutions it is supposed to regulate." My question is, can you see a day when the speed simply has to be increased pertaining to the number of times per year a public corporation reports its financial performance? Toffler: That's a good question. No, I see a day when it will have to be continuous flow everyday. General Questions Gartner: Since "Future Shock," which trend or development actually came about that you first saw way back then — and that today you're most proud of? Toffler: Well, first, I mean, the very core of "Future Shock" was acceleration of change. At the point, not very many people were thinking or writing about that, and today nobody debates it. And the same thing I think is true of the third wave, which said that we would be producing an economy increasingly based on knowledge and all the social-political consequences that that implied, and the idea that the "knowledge economy" is now global. Governments discuss it; everybody talks about it. But when we were writing it, that was not the case. I think if what we wrote helps bring hundreds of millions of Chinese peasants off the farm and into miserable lives in the city that were better than what they've had on the farm, that's something I'm proud of. I think we contributed to improving, economically improving, large numbers of people - by the way, not by design. It's not something we even knew happened. So that certainly makes us feel good. I think that there are words that we put in the dictionary because they're useful. Gartner: When you think about 50 or maybe even 100 years into the future, do you foresee anything that makes you say, "I'm pretty certain that XYZ will occur, and thank goodness I won't be here to see it"? Toffler: No, I don't think that way. I think that may be because I have a kind of cornball optimism.