The Road Ahead

7 IMPLICATIONS FOR BUSINESS

As documents become more flexible, richer in multi-media content, and less tethered to paper, the ways in which people collaborate and communicate will become richer and less tied to location. Almost every sphere of activity—business, education, and leisure—will be affected. The information highway will revolutionize communications even more than it will revolutionize computing. This is already starting in the workplace.

Because the most efficient businesses have an advantage over their competitors, companies have an incentive to embrace technologies that make them more productive. Electronic documents and networks offer businesses opportunities to improve their information management, service, and internal and external collaboration. The personal computer has already had a huge effect on business. But its greatest impact won’t be felt until the PCs inside and outside a company are intimately interconnected.

Over the next decade, businesses worldwide will be transformed. Software will become friendlier, and companies will base the nervous systems of their organizations on networks that reach every employee and beyond, into the world of suppliers, consultants, and customers. The result will be companies that are more effective and, often, smaller. In the longer run, as the information highway makes physical proximity to urban services less important, many businesses will decentralize and disperse their activities, and cities, like companies, may be downsized.

In just the next five years the communications bandwidth available in urban business areas will grow by a factor of 100, as network providers compete to connect concentrations of high-use customers. Businesses will be the first users of these high-speed networks. Every new computing technology was adopted first by businesses because the financial benefits of advanced information systems can be readily demonstrated.

Managers of both small and large businesses are going to be dazzled by the capabilities information technology has to offer. Before they invest they should remember that a computer is just a tool to help in solving identified problems. It isn’t, as people sometimes seem to expect, a magical universal panacea. If I heard a business owner say, “I’m losing money, I’d better get a computer,” I’d tell him to rethink his strategy before he invests. Technology will, at best, probably delay the need for more fundamental changes. The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.

Instead of rushing out to buy the latest and greatest equipment for every employee, managers in a company of any size should first step back and think about how they would like their business to work. What are its essential processes, and its key databases? Ideally, how should information move?

For example, when a customer calls, does all the information about your dealings—the status of the account, any complaints, a history of who in your organization has worked with the customer—appear immediately on a screen? The technology for doing this is quite straightforward, and, increasingly, customers expect the level of service it affords. If your systems can’t provide product-availability information or quote a price immediately, you risk losing out to a competitor who is taking better advantage of technology. For example, some car companies are centralizing service information so that any dealer can easily check a vehicle’s entire service history and watch for recurring problems.

A company should also examine all of its internal processes, such as employee reviews, business planning, sales analysis, and product development, and determine how networks and other electronic information tools can make these operations more effective.

There has been quite a shift in the way we think about and use computers as business tools. When I was a kid, my image of computers was that they were very big and powerful. Banks had a bunch. Computers let big airlines keep track of reservations. They were the tools of large organizations and were part of the edge big businesses had over the small guys who used pencils and typewriters.

But today the personal computer, as the name suggests, is a tool for the individual, even in a large company. We think of and use a personal computer very personally to help us get our job done.

Those doing solo work can write, create newsletters, and explore new ideas better with a personal computer. A Luddite might ask, “If Churchill had used a word processor, would his writing have been better? Would Cicero have given better speeches in the Roman Senate?” Such critics have a notion that because great things were achieved without modern tools, it is presumptuous to suggest that better tools might elevate human potential. We can only speculate on how an artist’s output might be helped, but it is quite clear that personal computers improve business processes, efficiency, and accuracy. Consider the average reporter. There have been great journalists through history, but today it’s much easier to check facts, transmit a story from the field, and stay in touch electronically with news sources, editors, and even readers. Plus, the inclusion of high-quality diagrams and pictures has become easier. Just look at the presentation of science topics. Twenty or thirty years ago it was unusual to find top-quality scientific illustrations anywhere except in science books or a glossy specialized magazine such as Scientific American. Today some newspapers present science stories well, in part because they use personal-computer software to produce detailed drawings and illustrations rapidly.

Businesses of all sizes have received different benefits from personal computers. Small businesses arguably have been the greatest beneficiaries, because low-cost hardware and software have permitted tiny outfits to compete better with large multinational corporations. Big organizations tend to be specialized: one department writes brochures, another deals with accounting, yet another handles customer service, and so forth. When you call a large company to talk about your account, you expect a specialist to get you an answer pretty quickly.

Expectations for small-business operators used to be different, because they couldn’t hire specialists. When an individual opens a business or a shop, she is the one creating brochures, doing the financial work, and dealing with customers. It’s kind of amazing how many different tasks a small-business owner has to master. Someone running a small business can buy one PC and a few software packages, and she will have electronic support for all the different functions she is performing. The result is that a small business can compete more effectively with the big boys.

For a large company, the biggest benefit of personal computers comes from improving the sharing of information. PCs do away with the huge overhead large businesses incur staying coordinated through meetings, policies, and internal processes. Electronic mail has done more for big companies than for small companies.

One of the first ways Microsoft began using information tools internally was by phasing out printed computer reports. In many companies, when you go into a top executive’s office you see books of bound computer printouts with monthly financial numbers, dutifully filed away on a shelf. At Microsoft, those numbers are made available only on a computer screen. When someone wants more detail, he or she can examine it by time period, locale, or almost any other way. When we first put the financial reporting system on-line, people started looking at the numbers in new ways. For example, they began analyzing why our market share in one geographic area was different from our share somewhere else. As we all started working with the information, we discovered errors. Our data-processing group apologized. “We’re very sorry about these mistakes” they said, “but we’ve been compiling and distributing these numbers once a month for five years and these same problems were there all along and no one mentioned them.” People hadn’t really been using the print information enough to discover the mistakes.

The flexibility that comes from having the information available electronically is hard to convey to a nonuser. I rarely look at our financial reports on paper anymore, because I prefer to view them electronically.

When the first electronic spreadsheets appeared in 1978, they were a vast improvement over paper and pencil. What they made possible was putting formulas behind each element in a table of data. These formulas could refer to other elements of the table. Any change in one value would immediately affect the other cells, so projections such as sales, growth, or changes in interest rates could be played with to examine “what if” scenarios, and the impact of every change would be instantly apparent.

Some current spreadsheets let you view tables of data in different ways. Simple commands permit the filtering and sorting of the data. The spreadsheet application I know best, Microsoft Excel, includes a feature called a pivot table that allows you to look at summarized information in nearly countless ways. It’s number-crunching made easy. The summarizing criterion can be changed with the click of a mouse on a selector or by using the mouse to drag a column header from one side of the table to another. It’s simple to change the information from a high-level summary report to an analysis of any data category or to an examination of the details one by one.

Monthly a pivot table is distributed electronically to all Microsoft managers containing sales data by office, product, and sales channel for current and previous fiscal years. Each manager can quickly construct a personal view of the data for his or her requirements. Sales managers might compare sales in their region to budget or the prior year. Product managers can look at their products’ sales by country and sales channel. There are thousands of possibilities just a click and a drag away.

Increases in computer speed will soon allow PCs to display very high quality three-dimensional graphics. These will permit us to show data in a more effective way than today’s two-dimensional presentations. Other advances will make it easy to explore databases by posing questions orally. An example might be, “What products are selling best?”

These innovations will first show up in the mainstream in the high-volume office-productivity packages: word processors, spreadsheets, presentation packages, databases, and electronic mail. Some proponents claim these tools are so capable already that there will never be a need for newer versions. But there were those who thought that about software five and ten years ago. Over the next few years, as speech recognition, social interfaces, and connections to the information highway are incorporated into core applications, I think individuals and companies will find the productivity enhancements these improved applications will bring extremely attractive.

The greatest improvement in productivity, and the greatest change in work habits, will be brought about because of networking. The original use for the PC was to make it easier to create documents that were printed on paper and shared by passing around the printed output. The first PC networks allowed people to share printers and store files on central servers. Most of these early networks connected fewer than twenty computers together. As networks get larger, they are being connected to one another and to the Internet so that every user is able to communicate with everyone else. Today, communications are mostly short text files, but eventually they will include the full richness of the documents discussed in chapter 6. Increasingly, companies that want to provide the benefits of document-sharing to every employee have installed extensive networks, often at substantial cost. For example, Microsoft’s subsidiary in Greece pays more for its connection to our worldwide network than it pays in salaries.

Now electronic mail is becoming the primary tool for exchanging messages. Print conventions have also evolved. If you want a sentence to end with a chuckle to show that its meaning is intended to be humorous, you might add a colon, a dash, and a parenthesis. This composite symbol, :-), if viewed sideways, makes a smiling face. For instance, you might write, “I’m not sure that’s a great idea :-)"—the smiley face showing that your words are good-natured. Using the opposite parenthesis turns the smiling face into a frowning face, :-(, an expression of disappointment. These “emoticons,” which are half cousins of the exclamation point, probably won’t survive the transition of e-mail into a medium that permits audio and video.

Conventionally, businesses share information internally by exchanging paperwork, placing telephone calls, and/or gathering around a conference table or white board. Plenty of time and plenty of expensive face-to-face meetings and presentations are required to reach good decisions this way. The potential for inefficiency is enormous. Companies that continue to rely on these methods exclusively risk losing out to competitors who reach decisions faster while devoting fewer resources, and probably fewer layers of management, to the process.

At Microsoft, because we’re in the technology business, we began using electronic communication early. We installed our first e-mail system in the early 1980s. Even when we had only a dozen employees, it made a difference. It quickly became the principal method of internal communication. E-mail was used in place of paper memos, technology discussions, trip reports, and phone messages. It contributed a lot to the efficiency of our little company. Today, with thousands of employees, it is essential.

E-mail is easy to use. To write and send an electronic message, I click on a large button labeled “Compose.” This brings to the screen a simple form. First, I type the name of the person or people to whom I am addressing the message or choose the name from an electronic address book. I can even indicate that I want the message sent to a group of recipients. For example, because I frequently send messages to key employees working on the Microsoft Office project, in my address list I have an addressee called “Office.” If I choose that entry, the message goes to everyone concerned. When the message is transmitted, my name will appear automatically in the “From” space. Then I type a short heading for the message, so the recipients will have an idea of what it’s about. Then I type the message.

An electronic message is often just a sentence or two with no pleasantries. I might send an electronic message to three or four people, saying nothing more than “Let’s cancel the 11:00 A.M. Monday meeting and use the time individually to prepare for Tuesday’s presentation. Objections?” A reply to my message, in its entirety, might be as succinct as “Fine.”

If this exchange seems terse, keep in mind that the average Microsoft employee receives dozens of electronic messages a day. An e-mail message is like a statement or a question at a meeting—one thought or inquiry in an on-going communication. Microsoft provides e-mail for business purposes, but, like the office telephone, it serves many other purposes, social and personal. For example, hikers can reach all the members of the Microsoft Hiking Club to try to find a ride to the mountain. And certainly a few romances around Microsoft have benefited from e-mail. When my wife, Melinda, and I were first going out, we took advantage of it. For some reason people are less shy about sending e-mail than communicating on the phone or in person. This can be a benefit or a problem, depending on the situation.

I spend several hours a day reading and answering e-mail to and from employees, customers, and partners around the world. Anyone in the company can send me e-mail, and because I am the only person who reads it, no one has to worry about protocol in a message to me.

I probably wouldn’t have to spend so long if my e-mail address weren’t semipublic. There is actually a book called E-Mail Addresses of the Rich & Famous, which includes my e-mail address as well as ones for Rush Limbaugh and Senator Ted Kennedy. When John Seabrook was writing an article about me for The New Yorker magazine, he conducted his interview primarily on e-mail. It was a very effective way to have a dialogue, and I enjoyed the piece when it appeared, but it mentioned my e-mail address. The result has been an avalanche of mail ranging from students asking me, in effect, to do their homework assignments, to people asking for money, to mail from a group interested in whales who for some reason added my e-mail name to their list. My address is also a target for both rude and friendly messages from strangers, and provocative ones from the press ("If you don’t answer this by tomorrow I will publish a story about you and that topless waitress!").

We have special e-mail addresses at Microsoft for job applications, product feedback, and other legitimate communications. But a lot of that mail still comes to me and I have to reroute it. There are also three e-mail equivalents of chain letters that keep making the rounds. One threatens general bad luck if it isn’t forwarded. Another specifically says the punishment will be that your sex life will suffer. A third, which has been going around for six years, contains a cookie recipe and a story about a company’s having overcharged a woman for the recipe, and so she wants you to distribute it for free. In the various versions different companies are named. Apparently it is the idea of getting back at a corporation, any corporation, that has made that one such a perennial favorite. This is all mixed in with mail that really should come to me, often about important issues. Fortunately, e-mail software is improving all the time and it now includes a feature that lets me prioritize mail from senders I have designated.

When I travel, I connect my portable computer back into Microsoft’s electronic mail system every night to retrieve new messages and send off the ones I’ve written over the course of the day to people in the company. Most recipients will not even be aware that I am out of the ofrice. When I’m connected to our corporate network from a remote site, I can also click on a single icon to see how sales are doing, to check the status of projects, or to access any other management databases. It is reassuring to check my electronic in-box when I’m thousands of miles and a dozen time zones away, because bad news almost always comes through on e-mail. So if nothing bad is waiting there, I don’t need to worry.

We now use e-mail in all sorts of ways we hadn’t anticipated. For example, at the beginning of the annual Microsoft Giving Campaign, which raises money for charity, employees receive an e-mail message encouraging them to participate. The e-mail message contains an electronic pledge-card program. When the icon in the message is clicked, the pledge card appears on the employee’s screen and he or she can pledge a cash gift or sign up for a payroll deduction. If the latter option is chosen, the information is automatically entered into Microsofts payroll database. From the electronic form employees can direct their gift to their local United Way or to another nonprofit organization. If they want to, they can choose to have their donation go to one or more of the charities the United Way supports, and can even access a server to obtain information about those organizations or about volunteering in their community. From start to finish it’s completely electronic. As the leader of the company, I can analyze summary information day by day to find out if we are getting good participation or if we need to have a few more rallies to get out the message about how important we think the giving campaign is.

Today, besides company-operated, text-based e-mail systems, the kind Microsoft operates for its own use, there are commercial services such as MCI Mail and B.T. Gold (operated by British Telecom). There are also offerings from all of the commercial on-line systems such as CompuServe, Prodigy, and the Microsoft Network. These perform some of the same functions that telegrams and, later, telex systems once did. Users connected to these e-mail systems can send a message to virtually anyone who has a standard Internet e-mail address. Both private and commercial e-mail systems include “gateways” that transfer messages sent by a user of one mail system to a recipient on another. You can get a message to almost anyone who has a PC and a modem, although for certain communications privacy is a problem because transmissions across the Internet are not very secure. Some commercial services, such as MCI, will also deliver a message by fax, telex, or traditional mail if the recipient doesn’t have an electronic mailbox.

Future advances in electronic mail will streamline lots of activities we may not even realize are inefficient. For example, think about how you pay bills. More often than not, a company prints out a bill on a piece of paper and puts it in an envelope that is physically carried to your house. You open the bill, check your records to see if the amount and details seem appropriate, write a check, and then try to time when you mail it back so that it arrives shortly before the due date. We’re so used to this process we don’t even think about how wasteful it is. Let’s say you disagree with a bill. You call the company up, wait on hold, and try to get through to the right person—who may not really be the right person at all. In which case you have to wait for someone else to call you back.

Very soon you’ll check your PC, wallet, or television set the information appliance of your choice—for e-mail, including bills. When a bill comes in, the device will show your payment history. If you want to inquire about the bill, you’ll do it asynchronously—at your convenience—by sending e-mail: “Hey how come this charge is so high?”

Tens of thousands of businesses in the United States already exchange information via an electronic system called Electronic Document Interchange, or EDI. It allows companies that have contractual relationships to execute specific kinds of transactions automatically. Dealings are highly structured—reordering products or checking the status of a shipment—which makes conventional EDI unsuitable for ad hoc communications, although many companies are working to combine the benefits of EDI and e-mail into a single system.

The asynchronicity of e-mail and EDI is one of their advantages, but there is still a place for synchronous communications. Sometimes you want to call someone up, talk directly, and get an immediate response rather than leaving a message.

Within a few years there will be hybrid communications systems that combine elements of synchronous and asynchronous communications. These systems will use DSVD (and later ISDN) telephone connections to permit the simultaneous transfer of voice and data, even before the full information highway is in place.

It will work this way: When companies post information about their products on the Internet, part of that information will include instructions for how a customer can connect synchronously with a sales representative who will be able to answer questions through a voice-data connection. For example, if you’re shopping for boots on Eddie Bauer’s home page (an electronic catalog) and you want to know if the boots you like are appropriate for use in Florida’s Everglades or on a glacier, you’ll be able to click a button to get a representative to come on the line and talk to you. The representative will see immediately that you are looking at the boots and will have whatever other information about yourself you have decided to make available, not just your clothing and shoe sizes, style and color preferences, but your athletic interests, your past purchases from other companies, and even your price range. Some people will choose not to make any information about themselves available. Eddie Bauer’s computer may route your inquiry to the same person you spoke to last time, or it may route you to someone who has expertise in the product displayed on your screen, in this case, boots. Without preamble, you will be able to ask, “Do these boots work well in swamps like the Everglades?” or whatever your question is. The representative doesn’t have to be in an office. He can be anywhere as long as he has access to a PC and has indicated he is available. If he speaks the right language and has the right expertise, he can help out.

Or if you decided to change your will, you’d phone your lawyer, and she might say, “Let’s take a quick look at that.” She would then call your will up on her PC, and it would appear on your screen as well as hers courtesy of DSVD, ISDN, or similar technology. As she scrolls through the document, the two of you would discuss your needs. Then, if she was particularly adept, you might even watch her do the editing. However, if you wanted a hand in editing the document instead of just watching it run on your lawyer’s computer, you could join in and work together. You would be able not only to talk to each other but also to see the same image on your computer screens.

You won’t need to have the same software. The application just has to run on one end of the connection, the lawyer’s end in this case. On your end, you would need only an appropriate modem and DSVD software.

Another important use of voice/data connections will be to improve product support. Microsoft has thousands of employees whose job is to answer product-support questions about Microsoft software. In fact, we have as many product-support people answering questions about our software as we have engineers building it. This is wonderful, because we log all that feedback and use it to improve our products. We get lots of these questions by e-mail, but most of our customers still telephone us. These phone conversations are inefficient. A customer calls in to say his particular computer is configured in a specific way and is giving a certain error message. The product-support specialist listens to this description, and then suggests something, which it takes the caller a few minutes to do. Then the conversation resumes. The average call takes fifteen minutes, and some take an hour. But once everyone is using DSVD, the product-support specialist will be able to see what’s on the caller’s computer screen (with the caller’s explicit permission, of course) and examine the caller’s computer directly rather than having to rely on the caller to explain what he is seeing. This will have to be done carefully, to ensure that no one’s privacy is invaded. The process will reduce the length of the average call by 30 or 40 percent, which will make customers a lot happier and will cut costs and product prices.

The picture transmitted during a DSVD (or ISDN) telephone connection won’t necessarily have to be of a document. One or both people participating will also be able to transmit still images of themselves. If you are calling in to buy a product, you might expect the company’s service representative to be there, smiling. But you, as the customer, might choose to transmit only your voice. You can select images of yourself dressed appropriately for the occasion, so it won’t matter what you are actually wearing. Or you might decide to have available several pictures of yourself, one smiling, one laughing, one contemplative, and maybe one that is angry. During the course of the conversation, you could change the image to suit your mood or the point you were making.

Electronic mail and shared screens will eliminate the need for many meetings. Presentation meetings, called primarily so participants can listen and learn, can be replaced with e-mail messages with spreadsheets and other exhibits enclosed as attachments. When face-to-face meetings do take place, they will be more efficient because participants will already have exchanged background information by e-mail.

It will also be easier to schedule meetings because software will handle it. For example, if you want to sit down face-to-face with your lawyer, your scheduling program and hers will be able to communicate across the network—even the phone network—and pick a date and time that you both have free. Then the appointment would just show up on your respective electronic calendars.

This will also be an efficient way to schedule restaurant or theater reservations, but it raises an interesting issue. Let’s say a restaurant isn’t getting much business, or tickets to a show aren’t selling well, or your lawyer doesn’t want you to know that you’re her only client. Such companies and individuals might instruct their scheduling programs just to respond to meeting requests. Your scheduling program wouldn’t be able to ask your lawyer’s program to list all the times she is free. However, if it asked for a specific two-hour block, the response would be: “Yes, we can schedule you for Tuesday at eleven o’clock.”

Clients will expect their lawyers, dentists, accountants, and other professionals to be able to schedule appointments and exchange documents electronically. You might have a quick follow-up question for your doctor—for instance, whether a generic version of a drug is acceptable. It is hard to interrupt a doctor, but you’ll expect to be able to trade e-mail with all of the professionals you work with. We’re going to see competition based on how effectively one professional group has adopted these communications tools and how much more accessible and efficient this makes them. I’m sure we’ll then begin seeing ads in which a firm will tout how much more advanced it has become in the use of PC communications.

When the information highway is available, people won’t be limited to audio and still images, because the highway will also transmit high-quality video. The meetings they schedule will more and more often be conducted electronically, using shared-screen videoconferencing. Each electronic participant, wherever he or she is, will look at a different physical screen: a video white board, a television set, or a PC, but each screen will show much the same image. Part of the screen might show someone’s face, while another part might display a document. If anyone modifies the document, the change will appear almost immediately on all the screens. Geographically distant collaborators will be able to work together in rich ways. This is synchronous or real-time sharing, which means that the computer screens will keep up with the people using them.

If a group were to meet electronically to collaborate on a press release, each member would be able to use his or her PC or notebook computer to move paragraphs around and drop in a photograph or a video. The rest of the group would be able to look at the result on their individual screens and see each contributor’s work as it is actually happening.

We’re already accustomed to watching video meetings. Anyone who tunes in to television news shows, such as Nightline, which feature long-distance debates, is seeing a videoconference. The host and guests may be separated by continents, yet they engage in give-and-take as if they were in the same room, and to viewers it almost appears that they are.

Today, in order to videoconference, it is necessary to go to a specially equipped facility with special phone lines. Microsoft has at least one dedicated videoconference room in each of its sales offices around the world. They’re used quite a bit, but the setting is fairly formal. These facilities have saved us lots of traveling. Employees in other offices “sit in” on staff meetings, and customers and vendors have “visited” us without traveling to our headquarters outside Seattle. Such meetings will become very popular because they save time and money and are often more productive than audio-only phone conferences or even face-to-face meetings, because people seem to be more attentive if they know they are on-camera.

I’ve noticed that it does take some getting used to, though. If one person is on a videoconference screen, he or she tends to get much more attention than others in the meeting. I first noticed this when a bunch of us in Seattle were videoconferencing with Steve Ballmer, who was in Europe. It was as if we were all glued to The Steve Ballmer Show. If Steve took off his shoes, we’d all look at each other’s reactions. When the meeting was over I could have told you all about Steve’s new haircut but I might not have been able to name the other people who’d been in the

room with me. I think this distortion will go away as videoconferences become commonplace.

It’s currently fairly expensive to set up a videoconference room—it costs at least $40,000. However, desktop systems that attach to PCs are coming, and they will reduce the cost—and the formality—dramatically. Our facilities are generally connected with ISDN lines operating at 384,000 bits per second, which provide reasonable picture and sound quality for about $20 to $35 an hour for connections within the United States and about $250 to $300 an hour for an international connection.

The cost of videoconferencing, like that of almost every other computer-driven service, is going to drop as technology and communications costs do. Small video devices using cameras attached to personal computers or television sets will allow us to meet readily across the information highway with much higher quality pictures and sound for lower prices. As ISDN connected to PCs becomes popular, videoconferences will be as standard a business procedure as using a copier to duplicate a document for distribution is now.

Some people worry that, by eliminating the subtlety of human dynamics in a meeting, videoconferences and shared screens will give corporate gatherings all the spontaneity of a congressional photo opportunity. How will people whisper, roll their eyes at a tedious speaker, or pass notes? Actually, clandestine communication will be simpler at a video meeting because the network will facilitate individual communications on the side. Meetings have always had unwritten rules, but when the network is mediating videoconferences, some rules will have to become explicit. Will people be able to signal, publicly or privately, individually or collectively, that they are bored? To what degree should a participant be allowed to block his or her video or audio from others? Should private side conversations, one PC to another, be permitted? Over time, as we use these facilities, new rules of meeting etiquette will emerge.

Home videoconferences will naturally be somewhat different. If the conference has only two participants, it will amount to a video phone call. That will be great for saying hello to your kids when you’re out of town or showing your veterinarian the way your dog or cat limps. But when you’re at home, chances are you’ll keep cameras off during most calls, especially with strangers. You may choose to transmit a canned photograph of yourself, your family, or something else you believe expresses your individuality yet protects your visual privacy. It will be something like choosing a message for your answering machine. Live video could be switched on for a friend or when business required it.

All of the synchronous and asynchronous images I have discussed up to this point—photographs, videos, or documents—have been pictures of real things. As computers become more powerful, it will be possible for a standard PC to fabricate realistic synthetic images. Your phone or computer will be able to generate a lifelike digital image of your face, showing you listening or even talking. You really will be talking it’s just that you’ve taken the call at home and are dripping wet from the shower. As you talk, your phone will synthesize an image of you in your most businesslike suit. Your facial expressions will match your words (remember, small computers are going to get very powerful). Just as easily, your phone will be able to transmit an image of your words issuing from the mouth of someone else, or from an idealized version of you. If you are talking to someone you’ve never met, and you don’t want to show a mole or a flabby chin, your caller won’t be able to tell if you really look so much like Cary Grant (or Meg Ryan) or whether you’re getting a little help from your computer.

All of these electronic innovations—e-mail, shared screens, videoconferencing, and video phone calls—are ways of overcoming physical separation. By the time they become commonplace, they will have changed not just the way we work together but also distinctions now made between the workplace and everywhere else.

In 1994 in the United States there were more than 7 million “telecommuters” who didn’t travel daily to offices but instead “commuted” via fax machines, telephones, and e-mail. Some writers, engineers, attorneys, and others whose jobs are relatively autonomous already stay at home for a portion of their work hours. Salespersons are judged on results; so as long as a professional salesperson is productive, it doesn’t much matter whether he or she is working in the office, at home, or on the road somewhere. Many people who telecommute find it liberating and convenient, but some find it claustrophobic to be at home all the time. Others discover they don’t have the self-discipline to make it effective. In the years ahead, millions of additional people will telecommute at least part-time, using the information highway.

Employees who do most of their work on the telephone are strong candidates for telecommuting because calls can be routed to them. Telemarketers, customer-service representatives, reservation agents, and product-support specialists will have access to as much information on a screen at home as they would on a screen at an office. A decade from now, advertisements for many jobs will list how many hours a week of work are expected and how many of those hours, if any, are “inside” hours at a designated location such as an office. Some jobs will require that the employee already have a PC so he can work at home. Customer-service organizations will be able to use part-time labor very easily.

When employees and supervisors are physically apart, management will have to adapt, and each individual will have to learn to be a productive employee on his or her own. New feedback mechanisms will have to evolve too, so that both employer and employee can determine the quality of work being done.

An employee in an office is assumed to be working the whole time, but the same employee working at home might be credited (perhaps at a different rate) only for the time he or she is actually performing work. If the baby starts crying, Dad or Mom would click “Not Available,” and take care of the child with unpaid minutes away from the job. When the employee was ready once again to focus on the job, he or she would signal availability, and the network would start delivering work that needed attention. Part-time work and job sharing will take on new meanings.

The number of offices a company needs might be reduced. A single office or cubicle could serve several people whose inside hours were staggered or irregular. Already, the major accounting firms Arthur Andersen and Ernst & Young are among the companies that have replaced large numbers of expensive private offices with a smaller number of generic offices, which can be reserved by accountants who are in from the field. Tomorrow, a shared office’s computers, phones, and digital white boards could be configured for that day’s occupant. For part of a day an office’s white-board walls would display one employee’s calendar, family photos, and favorite cartoons, and later on the same whiteboard walls would feature the personal photos or artwork of a different employee. Wherever a worker logged on, his or her familiar office surroundings could follow, courtesy of digital white boards and the information highway.

Information technology will affect much more than the physical location and supervision of employees. The very nature of almost every business organization will have to be reexamined. This should include its structure and the balance between inside, full-time staff and outside consultants and firms.

The corporate reengineering movement starts with the premise that there are better ways to design companies. To date, most reengineering has focused on moving information inside the company in new ways. The next movement will be to redefine the boundary between the company and its customers and suppliers. Key questions to reexamine include: How will customers find out about products? How will customers order? What new competitors will emerge as geography becomes less of a barrier? How can the company do the best job of keeping customers happy after the sale?

Corporate structures will evolve. E-mail is a powerful force for flattening the hierarchies common to large companies. If communications systems are good enough, companies don’t need as many levels of management. Intermediaries in middle management, who once passed information up and down the chain of command, already aren’t as important today as they once were. Microsoft was born an Information Age company, and its hierarchy has always been relatively flat. Our goal is to have no more than six levels of management between me and anyone in the company. In a sense, because of e-mail, there are no levels between me and anyone in the company.

As technology makes it easier for a business to find and collaborate with outside expertise, a huge and competitive market for consultants will arise. If you want someone to help design a piece of direct-response advertising, you’ll ask a software application running on the information highway to list consultants with certain qualifications who are willing to work for no more than a certain rate and have an appropriate time period free. Software will check references for you preliminarily and help you filter out people who aren’t qualified. You’ll be able to ask, “Have any of these candidates worked for us before and gotten a rating above eight?” This system will become so inexpensive to use that you’ll eventually rely on it to find baby-sitters and people to cut your lawn. If you’re looking for work as an employee or contractor, the system will match you with potential employers and be able to send your résumé electronically with the click of a button.

Companies will reevaluate such employment issues as how extensive a legal or finance department they should keep, based on the relative benefits of having expertise inside an organization versus outside it. For particularly busy periods a company will be able to get more help easily without adding more employees and the associated office space. Businesses that successfully draw on the resources available across the network will be more efficient, which will challenge others to do the same.

Lots of companies will eventually be far smaller because using the information highway will make it easy to find and work with outside resources. Big is not necessarily good when it comes to business. Hollywood studios are surprisingly small in terms of permanent employees, because they contract for services—including actors and often facilities—on a movie-by-movie basis. Some software companies follow a similar model, hiring programmers as needed. Of course, companies will still reserve many functions for full-time employees. It would be immensely inefficient to have to bid for the time of an outside professional whenever a company needed something done, especially if the outside consultant had to come up to speed. But a number of functions will be dispersed, both structurally and geographically.

Geographic dispersion will affect much more than corporate structure. Many of today’s major social problems have arisen because the population has been crowded into urban areas. The drawbacks of city life are obvious and substantial—traffic, cost of living, crime, and limited access to the outdoors, among others. The advantages of city life include access to work, services, education, entertainment, and friends. Over the past hundred years most of the population of the industrialized world has chosen to live in urban areas, after consciously or unconsciously balancing the pluses and minuses.

The information highway changes that balance. For those who have a connection to it, the highway will substantially reduce the drawbacks of living outside a big city. As a consultant or employee involved in a service-related field, you will be able to collaborate easily from virtually anywhere. As a consumer, you will be able to get advice—financial, legal, even some medical—without leaving your house. Flexibility is going to be increasingly important as everyone tries to balance family life with work life. You won’t always have to travel to see friends and family or to play games. Cultural attractions will be available via the information highway, although I’m not suggesting that a Broadway or West End musical will be the same experience in your living room as it is in a New York or London theater. However, improvements in screen sizes and resolutions will enhance all video, including movies, in the home. Educational programming will be extensive. All of this will liberate those who would like to abandon city living.

The opening of the interstate highway system had a substantial effect on where in the United States people chose to settle. It made new suburbs accessible and contributed to the culture of the automobile. There will be significant implications for city planners, real estate developers, and school districts if the opening of the information highway also encourages people to move away from city centers. If large pools of talent disperse, companies will feel even more pressure to be creative about how to work with consultants and employees not located near their operations. This could set off a positive-feedback cycle, encouraging rural living.

If the population of a city were reduced by even 10 percent, the result would be a major difference in property values and wear and tear on transportation and other urban systems. If the average office worker in any major city stayed home one or two days a week, the decreases in gasoline consumption, air pollution, and traffic congestion would be significant. The net effect, however, is hard to foresee. If those who moved out of cities were mostly the affluent knowledge workers, the urban tax base would be reduced. This would aggravate the inner city’s woes and encourage other affluent people to leave. But at the same time, the urban infrastructure might be less heavily loaded. Rents would fall, creating opportunities for a better standard of living for some of those remaining in the cities.

It will take decades to implement all the major changes, because most people remain comfortable with whatever they learn early and are reluctant to alter familiar patterns. However, new generations will bring new perspectives. Our children will grow up comfortable with the idea of working with information tools across distances. These tools will be as natural to them as a telephone or a ballpoint pen is to us. But technology isn’t going to wait until people are ready for it. Within the next ten years we will start to see substantial shifts in how and where we work, the companies we work for, and the places we choose to live. My advice is to try to find out as much as possible about the technology that will touch you. The more you know about it, the less disconcerting it will seem. Technology’s role is to provide more flexibility and efficiency. Forward-looking business managers will have lots of opportunities to perform better in the years ahead.