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Faster

Ever noticed how life just seems to go faster and faster? Regis McKenna has, and he says to hold on, because it?s only going to get faster.

 
CNET News.com Newsmakers
November 17, 1997, Regis McKenna
Faster
Margie Wylie
Staff Writer, CNET NEWS.COM

Ever noticed how life just seems to go faster and faster?

Regis McKenna has, and he says to hold on, because it?s only going to get faster.

McKenna has been a business strategy consultant to Silicon Valley since before the birth of the personal computer industry. In fact, you might say he was one of its midwives. McKenna was there when Intel was born. It was

McKenna who helped introduce to venture capitalists a couple of kids named Steve who had an idea for a personal computer called Apple. In fact, McKenna literally wrote the book on marketing high-tech companies and called it The Regis Touch.

Now, in a new book, McKenna is predicting that technology ranging from cell phones and automated teller machines to pagers and things we still can't imagine is driving the age of the "never-satisfied customer." And he?s warning businesses that they must prepare to be lean, flexible, and friendly--or die.

We chatted with McKenna in his Palo Alto, California, office.

NEWS.COM: Tell us about the concept behind your book, Real Time.
McKenna: Real time is a concept that has been in the computer industry for many, many years. [It refers to] computers that actually capture information and then give you a response almost instantaneously, faster than the human can respond to it.

And that's what our society is moving toward?
Technology is being integrated almost surreptitiously into the layers of our lives, and it's affecting us in ways that are unconscious, too. We have come to demand instantaneous service.

If you stand at a counter waiting for somebody to verify your credit card and it takes 15 minutes, you're very, very upset and very unhappy. I can now bank from my check-out counter at the grocery store; I can bank from my car; I can bank from a plane; I can bank from a cafeteria; on the street corner; from an airport--I can bank from anywhere. So one of the things that happens in a real-time world is services are available to you anywhere, anytime, anyplace. And that will become more and more prolific throughout the world, simply because the infrastructure to create that is becoming more economical.

Over the last 100 years we've put millions--maybe billions--of miles of copper in the ground, in the walls of our homes, and on telephone poles and other types of utility poles around the country. In the future, there's going to be well over 1,000 satellites. When I say "the future," I mean that, within the next decade, there's going to be a tenfold increase in the number of communications satellites put above the earth.

More money will be spent on the infrastructure of telecommunications in the next decade than has been spent since the telephone was invented. So huge amounts of investment in making those pipelines available to people, in making them fatter or broader and able to carry more information, is going to be there. And so, as a result, we're going to see almost unpredictable kinds of human reactions and responses, as well as many good and bad things.

NEXT: Making online service people-friendly

 

  Stats
Age: 58

Claim to fame: Silicon Valley's premier marketing strategist

Best known for: Backing a renegade company called Apple

Night job: Venture capitalist, Kleiner, Perkins, Caufield & Byers

Avocations: Angel investor, author

Books: The Regis Touch, Who's Afraid of Big Blue?, Relationship Marketing, and Real Time

Before Silicon Valley: Philosophy major, trade journalist

 
CNET News.com Newsmakers
November 17, 1997, Regis McKenna
Making online service people-friendly

What should businesses do about this phenomenon?
I think the tendency is going to be to provide more and more self-service solutions for the consumer. So you now basically are your own teller or banker. You can go online either by telephone or computer, or an ATM machine, and you can select your services. You do your own interface services.

Don't you think consumers are going to wonder what they're paying their bank for if they have to do all their own banking?
Oh, absolutely. And, in fact, what you're paying your bank for may be to provide network access. And so Intuit may be my banker.

For example, if you buy a home, there are hundreds, if not thousands, of different mortgage brokerage firms around the country from which you can get a mortgage. How do you know how to select from that infinite variety? The variety is competitive, so it provides you a lower interest. So you want the variety, you want the choice. Yet making that selection requires some sort of an interface. It can be an individual or it can be a computer program, and, depending on your choice, you can go in and easily access the information and make decisions based on that.

There are over a thousand models of cars on the highway today, so if you go out to buy a new car, it's much easier to go online and sort of scan all the spec sheets and see what it is you want before you go out. There are all of these kinds of interfaces that are being created that are making choices easier.

If you ask people if they want more choices in their lives, they will tell you no. But, in fact, people continue to support it. There are a thousand brands of mustard in the American marketplace; there are almost a hundred brands of dog food. But if you take [those choices] away, people won't buy in that shop.

It's a good thing that we support variety, because that is what has made new businesses. If Nabisco were the only cookie company we trusted, we'd never have Mother's or Famous Amos or Mrs. Fields. So entrepreneurism depends upon this choice that we as a society have learned is of high value.

OK, let's say I'm convinced that I have to operate my business in real time to succeed. How do I do it?
Organizations today have become highly flexible, modular, programmable, and high-speed. They have to be in order to compete, because the guy down the street is doing exactly the same thing.

Programmability enables us to design products or solutions for a narrower segment of the market than was economically possible to do before. Most machine tools in the United States produce 50 items or less in any one production run. We can serve you as an individual, we can serve a narrow segment of the market.

In the mass-production era, you got what everybody else got and you liked it--one Ford, it's black, but it's low-cost. Today, you can get any shape, any size, in any form you want. In fact, I heard an executive of Ford Motor Company say that the car today is, per pound, cheaper than a hamburger and you get vastly more functions and serviceability out of the car today than you did 10 or 15 years ago. So your design operations have to be highly flexible.

From an organizational standpoint, programmability also changes dramatically. Probably the most significant thing we've seen happen over the last 10 or 15 years in our organizations is the impact of quality. Quality used to be a box on the organizational chart. When I was in the [high-tech] industry in the early '60s, I can remember having the quality guy fired because we had a quality problem. We never think about that today. We look at the design of the product and the manufacturing of the product, we look at suppliers, we look at all sorts of aspects. And, in fact, the best quality is not having the quality box at all--it's integrating quality into everybody's box.

Then we found out that design and manufacturing couldn't sit opposite of each other and fight, because the manufacturing would say, "You designed it wrong," and design would say, "You don't know how to manufacture it." And so we had to integrate, so we broke down the walls between those two.

How about marketing? What part does marketing play? Do they get involved earlier in the cycle now?
We now have to use marketing as an integrated part of engineering. In fact, I think that was one of the key factors that allowed Intel to succeed in the microprocessor business. When they were competing with Motorola back in the late '70s and early '80s, it was really the integration of marketing and engineering that enabled them to design and develop a strategy for competing with Motorola. Integrating those two functions speeds the operation up and it puts the engineering and the design and the development in touch with what's going on in the marketplace.

Used to be, the customer was always either dealt with through a third party, a sales force, or through a retailer. And so the feedback mechanism, and the feedback from the consumer, changes your organization.

If I am selling computers through retail and I go out and say, "What would you like us to do?" the retailer will say, "I want lower prices, I want more advertising, I want you to give my salesmen kits, I want to make more margins." But if your customers are CIOs in major corporations and you say, "What would you like?" They're going to say, "I want compatibility, I want mission-critical software to be reliable and flexible and extendible, I want to talk across the organization, I want choice so I'm not stuck with one standard." They'll tell you a whole different story than you would hear from talking to retailers. That changes the organization because the people with whom you interface change you.

So, rather than squeezing out dialogue between the customer and the company, the pace of technological change is actually enhancing it?
Yes. What's happening is that, in traditional marketing, the producer was talking at you. Marketing was trying to figure out what was in your head so they could manipulate it to where you think you need their product. Today what we're doing is trying to learn a lot about our customers because we can use these facilities to react and support them with a specific solution, service, or product that adapts to them, not try to adapt them to the product.

What we're trying to do is to get closer and closer to the customer, in order for us to improve, and for them to improve. And dialogue does that.

When you're in a dialogue, I learn something about you and you learn something about me. In the past, the notion was, "I don't care what you know about me. In fact, the less you know about me the better. I just want you to buy my product. I don't want you to know anything about the character and the substance and the nature of General Motors, I just want you to buy my cars. And I don't want you to know anything about the car either, except that it makes you sexy, it makes you feel good, you're heroic and manly and all those other kinds of things. So don't ask me questions about what's under the hood. Don't ask me questions about its reliability. Don't ask me questions about its safety. And don't ask me any questions about the management of the company and how much money they make."

Is the DOJ doing the right thing in pursuing Microsoft?
It's doing the right thing in the sense that it's raising the issues that I think have to be resolved before we move forward. Defining what is antitrust in the age of information is a very complex and difficult subject, but it's going to come up some time. And I think to begin to build case law around it is important. Is it really a viable thing for Microsoft to keep integrating more and more of the functions of the computer into their operating system, so that, once controlling that, they can control all the applications that plug into it? Or are these separate products that allow for new companies and new entrepreneurship to grow? In the last decade, small startup companies employed somewhere between 10 million and 15 million people in the United States--it's the largest employer. If we stifle innovation and look at large companies--they employ relatively few people, in fact, a couple of million less than they did 10 years ago--we will stagnate in innovation, we will stagnate in growth, and we will stagnate in growth of the employment base.

We have to let ideas flourish, we have to fund them, we have to support them. In 1985 to about 1987, IBM so dominated the computer industry that the venture capital communities shied away from investing in any new computer companies. In fact, I wrote a book as a result of that called Who's Afraid of Big Blue? The book said that companies like Compaq, Apple, Microsoft, and others would dominate the industry in the future, and not IBM. I said IBM may even go away. And of course everybody laughed at the book, but it did predict the problems that IBM was going to be faced with, and it was largely because these new companies were bringing technologies that were moving much more rapidly and much more pervasively into our society and were changing things more rapidly than IBM could control. I think, in the end, it probably was better for IBM, and it certainly was better for the consumer.

If, indeed, one company so dominates an industry that it stifles innovation or does not allow for the growth of new ideas, I think we're all going to suffer for that.

Microsoft's reply to that is that the consumer isn't suffering. Prices are low, functionality is high, things are getting better and better for computer users.
I think a monopoly can, at times, appear to be better, and, in fact, it does drive costs down. Under AT&T, the cost of a long distance telephone call continually declined.

On the other hand, the breakup of AT&T has created huge competition in this country. It certainly has stimulated lots and lots of innovation. You would not have seen, for example, Cisco. Cisco would have been forced to sell to Western Electric or to get its products standardized there. It probably would have taken 15 years. As a result, you would not be on the Internet today. You might have been on the Internet 10 years from now, but you would not be on the Internet today.

So the question of "Is it of benefit to the customers?," I think that is highly debatable. New services and facilities that you probably can't imagine today would be made available to you through the ideas and innovations of lots of people out there who will be forced to go through a very narrow defining entity called Microsoft. And to get into the marketplace, you have to abide by that one standard.

Diversity is a mark of our society. We are more diverse as a society today than ever before. In fact, the majority of Californians are now minorities. And diversity in products are very good, too. When you go to the supermarket, you have your choice of over 40,000 different products. Now, you only spend 17 minutes in the grocery store, but when you go there, you want to get things or you want choices--if something is not there, you want to have an option. That's a benefit to the consumer. We don't have many options when we have one source.

NEXT: Coming to terms with techno-anxiety

 
 
CNET News.com Newsmakers
November 17, 1997, Regis McKenna
Coming to terms with techno-anxiety

Is real time a chicken and egg thing? Rising expectations begat rising speed, which begat rising expectations. Where did we start? Where do we stop?
It is a chicken and egg thing, and I don't think it will ever stop. I'll give you an example: A few weeks ago there was an article in the Wall Street Journal about the slow nature of email. One fellow said that he can get from one city to the next by horse faster than his email. And they pointed out that the average email takes 30 minutes to get across the country. Only thirty minutes--and we're impatient! What's the alternative? It takes FedEx at least 24 hours.

That's just the sort of shrinking attention margin that you address in this passage in your book: "Capturing the attention of customers who are increasingly presented with a proliferation of data demands information be clothed as interactive entertainment." I find that frightening.
Did you ever watch the evening news? News has always been entertaining, hasn't it? These commentators are really paid actors, right? They read scripts.

That doesn't mean that's a good thing.
Well, I don't know whether it's good. It's not a question of morality--it's just a question of what is.

What about all the people we're going to have to train to run all of these real-time systems? They have to be highly educated. And if we're all treated to dumbed-down interactive entertainment....
You know, the Ken Burns documentary on the Civil War--was that entertaining or was that history education? I learned a lot from it, and I'm a history buff. We learn in many varied and complex ways, and what the media is going to provide us with is more complexity of information.

Information is more than data. Information is a smile, information is a frown, or a nod, it's a hug, it's a kiss--it's lots of things. And so, as the bandwidth increases, we will be able to--perhaps not quite a hug from computer-to-computer--but we will certainly be able to provide much fuller human expression. And with it, all of the good and bad things that come--the phony smiles and so forth.

There's a vast army of humans, behind all of those ATMs and behind those computer screens, that makes things happen. I'm one of them. It seems to me that our speeded up, overburdened lives are what make us such demanding consumers. It just feeds itself. Is this a good thing?
Well I don't know that it's good or bad. I don't know that there's a value placed on it. It's certainly relative. My father was born in 1898. He drove one of the first automobiles that was on the road. When he used to come out here by jet plane and then I'd take him for rides in the car, he used to marvel at the speed at which things happen.

I've got to tell a joke I heard: The snail went into a police station and said he had just been mugged, and he had been mugged by a turtle. And the policeman said, "Well, can you describe the attacker?" He said, "No, it happened too fast." So everything is relative! We here in the U.S. experience a speed people in other parts of the world don't, because they don't have access to these technologies. These technologies are not integrated into their everyday life. And neither you nor I had much of a choice over whether or not we have microwave ovens or whether or not we have 100 channels of TV. I don't know who makes all of these decisions, but when people ask, "Are we as a society accepting it?" I guess we are, because we use them. But, on the other hand, we also don't make conscious choices about them, because they come into our lives. The average home has 25 fractional horsepower motors in it. Where are they? They've been there for decades and decades. Now the average home in America has well over 100 microchips; I think it's reaching about 200 now. Where are they? We don't know. Everywhere.

A meta layer of technology influences us in these very subtle ways. And it does create the never-satisfied consumer. We are never happy with the response. We want to see them occur faster and faster.

I was in a bank with my granddaughter a few weeks ago. A woman came in with her 9 year-old daughter. There were about four people in line, and she looked, she shrugged her shoulders, and she said, "Come on, we'll come back when it's less busy." And it may have taken her five minutes to wait, but to someone who is used to going right up to an ATM machine and having instant-services response, we now don't particularly like the idea of having to wait with human beings or to have these services done by human beings.

So it's neither good nor bad, it simply is. We have to deal with it. Its worth is irrelevant.
It's not irrelevant. It's relative rather than irrelevant. It may be relevant to certain people, but it's also a factor that we are confronted with.

The one problem is that the speed with which technology moves today is so rapid that all the questions of "Who are we, what are our value systems, what are our ethics?" tend to come after the fact rather than before the fact. There are labs in the United States developing biological solutions for Parkinson's disease and for Alzheimer's using fetal tissue cells. Now is that ethical or isn't it? Well, the technology is there--they're already developing it. Now the questions are being asked after the technology. You don't ask these questions in advance, because you don't know what questions to ask.

But isn't afterwards too late? The genie's out of the bottle.
By and large, afterwards is too late.

One of the things that's happening is that we have one foot in the old world, one foot in the new, and our whole view of life is based upon the last 100 years. I love to read history and I love that period of history in America between 1880 and 1930--that was the period that sets most of our values for today's system, that is how we live, our educational systems, our business systems, our social system. Unfortunately, what we're doing today is creating what 100 years from now people are going to look back at and say, "You know, that created our value systems."

What we did with our education system is we took children out of the one-room classroom where each one was treated individually, and we put them into rows and uniforms, with all the same textbooks, all the same tests, and everybody moved up at the same level. If you deviated, you were expelled, which was a manufacturing term, by the way.

So we set up an educational manufacturing system. That was dehumanizing. Now what we're trying to move to is using the tools of technology to create much more human interaction, much more communication, much more dialogue. To me, we're moving back to the kind of value systems that we had in the 19th century, not the value systems we have in the 20th century, which was a very violent, very very dehumanizing century.

You can have it your own way.

I would contend that, actually, what was not normal was the era of mass production. That is when we really dehumanized people. That is when we treated everybody as if there were no hyphenated Americans, when we really treated people as one and we said, "You don't matter." And that was an aberration.

If I'm a Hispanic-American, I have my own TV stations, I have my own radio stations, I have my own newspapers. I can buy Cheerios with Spanish on the box. I can get a computer with CD-ROMs all in Spanish. So the technology actually enables fragmentation. You can live in our society today, supported almost entirely by technologies, and remain an isolated ethnic group.

People work at home and more people intersperse their home life and their work life, which is the way we used to be on the farm, by the way. Our ancestors used to eat their breakfast together, and then they were out there milking the cows and tilling the fields. And they worked all day long and they worked 14 to 15 hours a day, and then they met at dinner, and then they all went to bed. Whereas today, I literally got up this morning, went for a jog, came back, sat at my computer, answered a number of emails, and went next door and visited my granddaughter, who is 4. We sat beside her computer and played on her computer for awhile, then I came in here for this. And so I'll go home and work, too. The work and play and everything becomes more intermingled. So, while you see these people in these offices, I don't think that's their life. And, in fact, one of the things that we're doing is integrating into the workplace exercise facilities and cafeterias and banks. We're creating a seamless world.

It's certainly the case in Silicon Valley, but when you call up at 3 o'clock in the morning and change your airline reservations, somebody is sitting in a bank of telephones in Omaha, in a drab room attached to a computer with someone monitoring how long they spend on bathroom breaks.
Not necessarily. I called a technical support line and was asking for information. A woman answered. She was giving me some technical help on a piece of software and while she was talking to me a baby was crying in the background. So I asked her, I said, "Are you at home?" Well she brushed it off; she didn't want to talk about it. She was walking around with a headset on, and she was taking care of her child, who sounded very young. She was at home.

Real time changes time and space. When I'm in my car, that can either be entertainment time or it can be work time, depending on what technology I have in my car. It certainly doesn't have to be travel time, or it can be travel time in addition to these other things. But, by and large, we changed the space based upon the connectivity of that space. So there's no reason the home can't be a classroom or an office or a theater. And that becomes a function or a matter of the availability of the technology.

In a totally connected world where time and space are forcibly compressed into the present and the here and the now, how do we get unconnected? When do we go unplugged? Or will that just be considered to be rude--to just turn off?"
Again, it sort of misses the point. I don't think we're going to think about being disconnected. Our worlds will be more seamless. And you can't disconnect...you can't. Let's imagine you want to go to a South Pacific island. How are you going to get there? You're going to get there by jet travel, and I would suspect you're going to make the reservations in one form or another through computers. And in fact, if there weren't computers, you wouldn't be able to make the reservations, even if you go through a human. The jet aircraft today are flying electronic machines. Your car is a driving electronic machine. To even get food to that island is going to require a distribution system that's connected all by information systems. You can't sustain yourself anymore, anywhere, unless, probably, you really go to that remote island and you decide to go back to being a native, and even those people are finding that they are having a hard time. The indigenous people in some of these remote places are having a hard time in the world because of the encroaching of technology in society.

So it's increasingly difficult. I think it's not so much a question of thinking that there's another way to get out of this as it is embracing it and making it part of your life. If you fight it, if you say, "Oh this is terrible! This is not real life," then I think what you're doing is rejecting the world around you.