"The Internet was supposed to knock off established businesses," Bill Gates opined recently. But the real impact of the Internet revolution, he said, "is so much less than a lot of people think." Hey, Bill, we're there.
Yes, the Internet is a force of nature, a hurricane of information at our fingertips. We message, chat, and search. We book travel, monitor bank accounts, research insurance policies, compare products, and one-click our way from books to buffalo steak. But those who rely on the Net to escape the worst trials of daily consumption know only too well that the revolution didn't happen. Internet users now appear to spend nearly 10 hours a week online—most of it taking care of stuff for themselves and their families. For today's time-starved women and men, this is hardly a solution. Instead of giving us back our time, the Net takes more of it.
What's worse, with all that information, the Net hasn't improved consumption in the ways we need most. In a study that compared patients' ratings of health care in five English-speaking countries, the United States ranked last or second-to-last in patient safety, patient-centeredness, efficiency, effectiveness, and equity. Patients say doctors don't listen, aren't accessible, and don't give enough time. The Internet has filled the information gap, with 80% of Internet users doing health searches, but it has done little to transform the delivery of health care.
What will change things? Gates says the answer lies in more powerful software that provides rich information across every boundary and device. We need those breakthroughs, but is that enough to ignite the economic revolution once promised by the Internet? I don't think so.
This kind of wishful thinking has great credentials. For decades, historians were mesmerized by the "industry" in industrial revolutions. Power looms and steam engines got much of the credit for the first industrial revolution in 18th-century Britain; the assembly line was the symbol of mass production in the early-20th-century United States. We know now that in those economic revolutions, technology wasn't the star, but one member of an ensemble cast. New consumers played a key role, too. In the 18th century, rising incomes created new demand. In early-20th-century America, new urban masses needed to buy goods once produced in their homes and villages.
If there was a star in those earlier dramas, it was something far more audacious than a new machine. It was an idea of Copernican stature, powerful enough to reorder the known universe of producing and consuming. I call it a "new enterprise logic." Eighteenth-century entrepreneurs like Josiah Wedgwood pioneered consumer marketing and invented much of what came to be understood as "factory work." They reconceived the commercial process, consolidating many fragmented activities under the control of a single owner. This laid the foundation for more than a century of "proprietary capitalism" and explosive growth.
More than 100 years later, Henry Ford played a similar role when he discovered the then-unknown economics of mass production. Instead of custom-making each expensive car to the specifications of a wealthy buyer, he made one kind of car at an ever lower price, relying on volume, not margins, for profit. Ford's unprecedented idea became the cornerstone of the second industrial revolution and the century of managerial capitalism that followed.
So here's the news flash: Revolution can't be automated. It is brewed in a perfect storm of new markets, new technologies, and a new enterprise logic. That third force—the Copernican idea—was missing from the Internet revolution. We had people hungry for a new consumption experience, and a technology capable of delivering it. But instead of a new enterprise logic, the old adversarial business model prevailed. Internet companies scrambled for survival at their customers' expense, selling private information, chasing us with ads, conning us with low prices and high fees, and secretly monitoring our behavior. They settled for a new distribution channel when they could have made a real revolution.
Wishful thinking is being thought again. Carnegie-Mellon recently hosted the kickoff of the "100 by 100" consortium, whose goal is 100 million homes with Internet speeds of 100 megabytes a second. Another group at MIT is developing "next-generation Internet architecture." These efforts are vital, but there's something missing: the new enterprise logic that can finally harness the Internet to a fundamentally new conception of commerce. Without that, the only revolution we'll see is the one produced by a revolving door.
Shoshana Zuboff is a professor at Harvard Business School and the coauthor of The Support Economy (Viking, 2002).
A version of this article appeared in the Table of Contents - April 2004 issue of Fast Company magazine.