As I write this, the country is fretting about $5-a-gallon gasoline. There are lots of implications for higher oil prices, some of which we’ve already begun to see: People will drive less. People will drive more fuel-efficient cars, or switch to alternative means of transportation. And taking the bus, a train or a plane will get more expensive. Almost every physical thing we buy will become more expensive due to the increased cost of transporting it.
In doing my research for this column (no, it’s not all off the top of my head), I ran across this quote in Business Week: “The signs are all there for a perfect storm. Global demand for oil is surging, supplies are tight, and geopolitical jitters are sending almost daily shock waves through the markets. As a result, oil prices have hit record highs. Economic growth and hiring already have shown signs of slowing in the U.S.”
The surprising thing? This quote is from the August 30, 2004 issue, when oil was at $45 a barrel. It’s good to remember that, even at more than $4 a gallon, gasoline in the United States is still about half as expensive as it is in Europe. Developing countries will put more demand pressure on existing oil supplies. The future, as far as the cost of moving people and goods from place to place, isn’t bright—unless we reduce our dependence on oil. Can technology help your business cope with higher transportation costs? Maybe.
Your employees are feeling the cost of their commute more than ever. This may translate into increased payroll costs for you to hire and retain workers. One possible tactic is to reduce or eliminate the commute for some or all of your employees via satellite locations or by offering telecommuting. Unfortunately, most companies will have trouble adapting to virtual operations. Still, if you have lots of people who sit in cubicles all day, it doesn’t make a lot of sense for them to drive to work if you have the management and technology skills to make a go of it.
And there’s the rub: Adopting a more virtualized way of working requires investment, which always seems to be anathema to smaller companies. Equipping workers with home computers and secure, high-speed Virtual Private Network (VPN) connections to the office requires investing money. So does training and supporting those remote workers, not to mention whatever upgrades may be required to your existing IT infrastructure. And if you have an existing lease, it may be a while before you realize savings from a reduced in-office workforce.
Plus, you and your managers must be prepared to manage differently and communicate more frequently. Managing a virtual workforce requires clear requirements and deadlines. A company with a marginal workforce (or marginal managers) will have immense difficulty adapting to a workplace in which physically “showing up” isn’t part of the performance and evaluation measures.
Of course, none of this works if your business requires a physical presence of some sort. Salons, plumbing services and restaurants are just a few of the many businesses that will never be virtualized.
Sadly, I think there are no short-term technology solutions to this problem. Savvy business owners should be thinking right now about how their businesses will thrive in a world of $8-a-gallon gasoline, because that world is fast approaching. One way to start is to try and estimate what your costs will do if the price of gasoline doubles. This, of course, depends on how much fuel costs influence the price of a particular good or service, and the answer to that question rests with your suppliers. Similarly, the customers you supply will benefit by knowing how much your product pricing will be affected by rising oil prices. Transparency is one way to reduce customer irritation over rising prices.
Is Google making us stupid?
Nicholas Carr gained fame with his controversial Harvard Business Review article, “IT Doesn’t Matter,” which laid out the argument that investing in information technology (IT) no longer conveyed a competitive advantage to companies, so corporate capital should be invested elsewhere (you can read an excerpt at http://hbswk.hbs.edu/archive/3520.html).
Now Carr has written another provocative essay. This one, in The Atlantic, is titled “Is Google Making Us Stupid?” (http://www.theatlantic.com/doc/200807/google). His premise is that using the Web has lowered our—or at least his—ability to read long-form prose. Rather than absorb and understand a lengthy article that builds an argument by supplying relevant details, we now scan for the bulleted take-aways in an article or book, moving forward as soon as we have the high concept.
Like his earlier article, the Atlantic essay is a worthwhile read—whether or not you agree with his premise. While I still read books, I read more than ever online (just ask my wife). One of the things I like best about my iPhone is the ability to access the Web wherever I am to answer a question using Google or Wikipedia.
If you’re interested in information technology issues, Carr’s blog, www.roughtype.com is updated regularly with interesting and useful posts. Highly recommended.
