Watts next?

Entrepreneur, April, 1997 by Robert McGarvey

Entrepreneur: A 500-year plan!?

Wacker: I studied more than 300 companies that had been in business between 150 and 600 years. What did these companies have in common? Number one, they had access to money. The main reason for business failure remains undercapitalization.

Secondly, they had a great understanding of all their stakeholders, which includes employees, customers, prospects, the media and the government. Third, they had a tolerance for diversity in the organization, a willingness to try new things.

The fourth thing - and this blew me away - is that none of these companies still make their principal source of revenues from the business for which they were originally created. Only one company that will be on the Fortune list of the 100 biggest companies at the beginning of the 21st century was also on the list at the start of this century, and that's General Electric. And GE today makes 42 percent of its revenues from financial services.

Entrepreneur: What did you learn during your time as a panhandler?

Wacker: One thing I learned is that there is this cornucopia of stuff. If you look at a penthouse on Park Avenue and a tenement apartment in the South Bronx, they both have the same stuff. The poorest household today has more stuff - television, VCR, radio, microwave - than the average household had in 1971.

There has been a homophylyzation of stuff - that's the tendency of things when touching to become like what they touch.

Recently, I was in Vietnam, and I wanted to buy my wife something unusual - but I couldn't find anything I couldn't buy in Macy's! When I look at that, I start talking to companies about why a promise becomes so critical. Your products cannot differentiate you; your promise can. Put Coke next to Pepsi, and people prefer Pepsi [in a blind taste test] - but Coke out-sells it 4 to 1. Coke has unfailingly learned how to support its promise.

Entrepreneur: Today's changes seem more profound, more fundamental than those in prior decades. Are they really?

Wacker: Every 500 years there's been a renaissance. From the birth of nations in about 1000 to the discovery of the new world in 1500 to the Age of Enlightened Anxiety in 2000 - that's the new renaissance, and what we'll see in this renaissance is an economy built around intellectual property more than physical property.

Entrepreneur: What will prosper in this new economy?

Wacker: The first industry to be created in the Information Economy will be the privacy management business. If TRW is a company that once did defense contracting and made automobile parts and overnight became a credit management company, some business will overnight become a privacy management company in the Information Economy.

The other big change is that now our individual lives have huge economic value. Everything you do in your life will be chronicled, catalogued, stored, recalled, assembled and then sold. In fact, I believe someone in every household will have the job of chronicling the activities of everybody in the household, then selling them to businesses for a quid pro quo.