MAIN PAGE | SPEECHES & EDITORIALS | 1999 | INFORMATION AND IMAGINATION
PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | SPEECHES & EDITORIALS | 1999 | INFORMATION AND IMAGINATION
Information and ImaginationLachlan MurdochSenior Executive Vice President, News Corporation Chairman and Chief Executive Officer, News Limited, Australia Monday, May 17, 1999 The Challenges of the Next Century for the Pacific Basin
Good afternoon. It is a pleasure to be speaking to you here in Hong Kong, one of my favourite cities. I would like to thank the Pacific Basin Economic Council for the honour of being asked to address such an important audience on a few of the challenges of the next century — challenges which face the Pacific Basin as much as anywhere else in of the world. I will keep my comments on "Information and Imagination" as close to my own experience as possible — that of the challenges business, and in particular the media, face in the coming years. As I said, Hong Kong is one of my favorite cities. Each time I visit, I am struck by the awesome views of Victoria Harbor, and I am truly invigorated by the energy of the people here. I remember numerous visits as a child, when News Corporation owned the South China Morning Post. I was always fascinated by the movement on the harbour. Looking out of my hotel window and following the container ships, the ferries, the junks and the tour boats — all coming and going, engaging in a seemingly chaotic, but amazingly purposeful, hubbub of commerce and trade, was one of my favorite pastimes. I recognised even then that the hubbub of Victoria Harbour has, in fact, been representative of the abundant commercial energy throughout Asia. Now, as an adult, I recognise that no matter how many boats and ferries and container ships may cross that Harbour today, the fundamental engine of the world economies is dramatically shifting paradigms. What drives an efficient economy today is not just physical trade, but increasingly trade in digital bits. Unlike the ships, the ferries and the junks that ply Victoria Harbour, commerce today is increasingly not visible from any hotel window. More and more of today's commerce is carried by copper wire, by fibre optics and by satellites; zapping through the ether, unseen, unfelt, and at the speed of light. This is the digital revolution. In the six minutes it takes the Star Ferry to cross this Harbor, something like 350 million email messages will be sent around the globe The 10 trillion bits of information which move every second on the internet make the 5000-odd movements recorded each 24 hours on Hong Kong Harbour look relatively insignificant, although no less scenic. The world out there on the harbour is a world we all understand and are comfortable with. But what we are seeing today is a revolution that is changing this world and is changing our lives. The question is: what kind of world will this information revolution create? Will our lives be changed for the better, or for the worse? And how can businesses — how can we — take leading positions in this changing environment? Now I have been asked to speak on information and imagination, and in doing so I hope to shed a little light on these questions. Although I must admit, even for someone like me who spends their life in the media and entertainment industries, information and imagination appears a wide-ranging topic. These two things, if I can call them that, information and imagination, are of course the key ingredients in my industry. And while information and imagination touch all of our lives every day, the relationship between them is not easy to define. Information is little more than raw data. It is neither good nor bad, it is amoral; it is passive rather than active, yet our accumulation of it is expanding at an exponential rate. The vital component in building this ever-growing, apparently inexhaustible, bank of dull information, is the ubiquitous computer, which allows us to store and retrieve information, edit and display it and increasingly, to package and trade it. I have heard that to cope with the movement of this vast amount of information from computer to computer, we must now triple the internet's bandwidth capacity every year. But no matter how much information our computers can store, or what incredible feats they are now capable of, no-one has yet managed to build a computer with imagination. Imagination is restricted to human beings and, I'm told, a few close relatives. And the importance of imagination has been recognised by some of the greatest minds of the last 100 years. Thomas Edison said: "To invent, you need a good imagination and a pile of junk." And Albert Einstein said: "Imagination is more important than knowledge, for knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution." Imagination is not an emotion, it's not something you learn. It's something that we have as children and too often we lose as adults. The average four-year-old has more imagination than the average 44-year-old does — perhaps it is something to do with children not needing permission to create imaginary worlds, events or playmates. Imagination is the first and most important step in the creative process. At News Corporation, we strive to be among the world's most creative companies. We harness imagination and inventiveness to turn a whole range of raw material — raw information — into world-class daily newspapers, record-breaking movies, high quality sports and news programming, and much, much more. So if information is just raw data; imagination is the ingredient that adds that magic. It is the ingredient that makes a product stand out from its competition. This creative process of blending information and imagination is what drives us at News Corp. As we look forward, we see a constantly changing world; a world of new opportunities, and new responsibilities; a world shaped by technology, but driven by people whose intelligence, imagination and intuition will continue to be the most valued commodity. This afternoon, I want to briefly explore how technology is changing my world; how I believe business must adapt to those changes, and ultimately how we must tackle some of the responsibilities that these changes bring. I hope you will find this relevant to the broader theme of this conference, which is to identify the challenges that face the Pacific Basin over the next 100 years. 100 years — I find that length of time hard to comprehend. Albert Einstein refused to predict the future, he said, "because it comes soon enough". Making predictions is a dangerous and presumptuous business. Technology is changing the business landscape so quickly that it is hard enough to predict the next five years, let alone the next 100. I believe that sometimes it is wise to look back before looking forward, to see what lessons we can learn from the past. Let's face it — it's only 15 years since 1984, a significant milestone for people in that dangerous habit of predicting the future. 1984 ... the year George Orwell predicted some 35 years prior that the fate of man was to be suppressed by an intrusive industrial technology. A technology that suppressed human creativity and individuality. In 1949, Orwell viewed technology as an extension of a grey and impersonal industry era, which from the context of his own experience, is understandable. But what has happened in reality is that technology is freeing us from an impersonal industrial world, rather than extending it. Futurist Michael Finley argues that while the tyranny of the factory inspired a bleak view of the future, something happened to prevent the nightmares of both George Orwell and Aldous Huxley from coming to pass. Technology took a sharp turn away from standardisation and towards individuality and diversity. So Orwell was wrong, but that's the danger of prediction. Yet if we take 1984 as a benchmark in terms of technology, what do we find? Consumer technology as we now know it was in its infancy. How many of us had a computer on our desks in 1984? Although the first Apple Macintosh was released in that year, Windows were still something you opened to let fresh air into the house; fibre was something you found in carpets and curtains. We didn't have mobile phones. The word "fax" was just entering our lexicon, as were audio CDs, the Internet and Atari games. Nintendo and Sega were still years away. And the internet was a high-tech communications vehicle for the rarified worlds of defence, research and higher education, which would not be widely used by years to come When we look back across the intervening years, we are amazed by the way our lives and our businesses have changed. Today's adult has marveled at 15 years of rapid advancements, but the child born in 1984 has a different reality. Today's 15 year old does not marvel at these changes, but takes them as given. PCs are a fact of his or her life — and rather than gazing admiringly at his home computer, he is more likely to be taking the box apart to add another 32 meg of RAM to run an interactive game, or do his homework. In order to compete today, we all need to be that 15-year-old. We need to stop being amazed by technology and stop fondly remembering "how it was before". Our challenge is to accept that in this period in history, change is the norm; change is the only constant. Ironically, while business is wrestling with an environment that is turning conventional corporate wisdom inside out, consumers are taking change in their stride. Rather than tossing out the old, and replacing it with the new, they are simply adding each new option to their range of choices, That world of expanding choice will certainly continue to be the way of the future. They said television would kill radio; that video would kill the cinema; that the internet would kill newspapers. None of those things has happened. In fact, each new technology has simply provided the consumer with additional options. The information and entertainment world of today is a complex mosaic. And consumer choices will grow far beyond what we are currently seeing. It is difficult to understate the dramatic effects technology has had on our lives over the past few decades. And I think that we have seen that consumer information technology has shifted some of the underlying principles that today's traditional business's are founded upon. Traditional business is founded in the industrial era. And again industrialisation has meant standardisation. Industrial technology allows mass products for mass markets. Businesses founded on such technology are now forced to evolve with the changing landscape around them. Henry Ford's Model T may only have come in black, but last month I ordered a Ford F250 truck in my chosen color, with oversized alloy wheels, V1 0 engine, supercab passenger compartment and state-of-the-art CID player — all before it went into production. My truck was made to order. Today's technology allows customisation. It also allows business to profile their customers and track their purchasing patterns and product preferences. Technology gives business the opportunity to give more to the individual and to target the consumer in a way that pre-dates the mass market. To some people, this personalisation may appear to be intrusive, yet it is not entirely new. If you think of the example of the old corner store, the local shopkeeper knew almost as much about his customers as they did. He knew whether they drank tea or coffee; he knew which brand they preferred; which paper they took. He knew that they bought rice or cereal or flour every week, but jam only once a month. He would almost be packing their groceries into a box as soon as he saw them enter the shop. He would advise them about new products, or special offers, and provide small gifts for their children. In other words, he gave them good service. The advent of supermarkets removed a significant element of that personalised service, while offering other advantages such as much greater choice and often improved prices due to bulk buying But supermarkets are now beginning to offer the best of both worlds. The same wide aisles of produce in a physical location, combined with smart technology that allows the modern shopkeeper to track a customer's buying pattern and to offer a level of service that many people thought was long gone. When you add the ingredients of better inventory management systems, electronic couponing and internet shopping, standards of customer service will further increase. Now I'm no expert in supermarket shopping — I use this example merely to illustrate the way that technology can enhance everyday life, not just hi-tech business Other companies like Dell Computers have led the way in combining mass purchasing power with personalised service. Nowadays, you can order a competitively priced computer system to be built with "exactly the features you need", as they say. Then, you can keep track of the building and shipping process via an order tracker on the company's website. This process exemplifies the relationship between hi-tech and high touch. Hi tech allows us to be more efficient and more exact, building and marketing products specifically for our customers. But now, hi-tech business solutions also allow us to be more customer focussed — to build high touch relationships with thousands or millions of customers in the most efficient, the most personal and ultimately the most effective way. Just like the corner shopkeeper, in the media world, The News Corporation is tackling the very same issues. From a single afternoon newspaper in Adelaide, we have grown in less than half a century into a global media organisation covering newspapers, magazines, books, radio, television, film, video and the internet. We distribute most of our products through traditional mass technologies, like the rotary printing press or the broadcast tower. But while the efficient traditional mass distribution technologies have helped to drive our growth, it is the creative people within our company who deserve most of the credit. Our editors delve into a vast pool of information and craft it, shape it, and prepare it with vigour, ingenuity, creativity and pride. Our filmmakers take an idea and mould it, using their imaginations to create the impossible. Of course creativity is not restricted to our editors or our filmmakers. We strive to build a creative culture through every level of the company, from the executive floor to the shop floor. News Corporation is the Number One supplier of network TV in the world. Our movie studio is Number One in worldwide market share. We've made the most successful movie of all time in Titanic. We've created the world's premier sports broadcasting enterprise with leadership in five continents in network, cable and satellite TV. And all this has been achieved in a climate of constant change and increasing choice. In fact, I would argue that our success has been due primarily through the offering of more choice to the consumer. But now, the dramatic consequence of this proliferation of choice is the fragmentation of the mass markets we have long enjoyed. We recognise, as I think most media companies now do, the importance of niche or highly specialised markets. But we retain our confidence in a bright future for mass media. Mass media, be it newspaper, television, radio or film, offer the audience a common experience; an experience in which people share. This desire for human bonding is the only way to explain the phenomenon of the massive crowds today queuing to be the first to watch Star Wars, The Phantom Menace. No-one wants to miss out; to be excluded from an emotion or shared experience. The same is true of television where weekly dramas are discussed around the office water-cooler or among small gatherings of friends. Who could deny that it is a lesser experience to watch a film alone, rather than in a packed cinema? Or to barrack for your favorite sporting team in an empty stadium, rather than in a full one. Those who share in a common experience become members of a richer community, be it a community of fans, of colleagues, or even of a local neighbourhood. Let me give you one example that to me represents why mass media over more specialised media is so important to a community. A year or so ago, I was at a dinner party in Sydney with a group of friends. One of the guests was a young professional who worked in the online industry and believed he got all the information relevant to him through the internet. However, that morning, Sydney's best newspaper, The Daily Telegraph, had broken a story on the atrocious lack of resources at one of our suburban schools. The Telegraph had used a picture of the hard-working students who our educational system had failed — a powerful photograph. Everyone at dinner had an opinion on that story, except my friend who had placed his faith in his own highly customised, niche media. He was isolated from the group and embarrassed not to have been aware of clearly the most important news story of the day — a story that ultimately led to reform in the state's education system. You see, what journalists, editors, filmmakers, TV and radio producers do, is to offer a way through the information smog that surrounds us today. They offer common experience and a sense of community to individuals. This is a job we take very seriously and one that places upon us profound responsibility. We tailor our products for different regions, different societies, and different sensibilities. The issue we face in doing this, is to preserve the balance between service to the individual, responsibility to society, and privacy. We believe that our editors, through their filtering and creative processes, add the values of credibility and context to the information they present to their communities each day. This element of credibility has always been important, but it is becoming more so with the explosion of new media and the unfettered proliferation of information. In Australia last month, on-line investors were offered a once-in-a-lifetime chance to triple their money by the year 2000, through the Millennium Bug Insurance Website More than 10,000 people visited the site, and more than 200 gullible investors handed over sums from 10,000 to 400,000 Australian dollars — to people they have never even heard of. However, it was a hoax — luckily for them perpetrated by the Australian Securities and Investment Commission, who left them red-faced, but not out of pocket. It was an April's Fools Day demonstration of the Commission's greatest fear — that investors could be taken in by the largely unfiltered information that is the World Wide Web. The media, in seeking to inform, entertain, and profit from their audiences, have very real and weighty responsibilities. First, we have a creative responsibility: an obligation that recognises that we must use our imagination to create quality programming. We go into homes around the globe, adding value, bringing news and knowledge, and entertainment, to our audiences. We bring faces, and voices, and families into people's homes. And we take it very seriously. We must, to be worthy of that trust. We have to be very careful about allowing our own definitions of quality to take precedence over those of our diverse audiences in diverse societies. We have a moral responsibility, yet there is no rule book; no roadmap; no code for spelling out what's right and wrong for everyone in the world. Inevitably, we don't always get it right. But we believe our audiences can trust us to be sensitive to specific moral, social or religious beliefs among our highly fragmented global markets. Not only is this vital to our commercial survival, but we have a responsibility to the broader community, wherever it may be found. And as bandwidth expands, the information smog will get thicker. And it will be up to media organisations such as ours to ensure that high quality, highly relevant and highly imaginative content forms the creative basis of the information highway. Technology has made information an infinite commodity; a commodity which offers us all enormous opportunity. But the rarest and most valuable commodity remains the human imagination. As I said earlier, there is an inherent danger in making predictions. But today there is one prediction that I'm prepared to stand by. That those of us here today, who commit to and encourage imagination, will lay the foundations for success over the next 100 years. Thank you. |