More than ten years into the widespread business adoption of the Web, some managers still fail to grasp the economic implications of cheap and ubiquitous information on and about their business. Hal Varian, professor of information sciences, business, and economics at the University of California at Berkeley, says it’s imperative for managers to gain a keener understanding of the potential for technology to reconfigure their industries. Varian, currently serving as Google's chief economist, compares the current period to previous times of industrialization when new technologies combined to create ever more complex and valuable systems—and thus reshaped the economy.
Varian spoke with McKinsey’s James Manyika, a director in the San Francisco office, in Napa, California, in October 2008. Watch the video or read the transcript of his comments below.
Hal Varian on how the Web challenges managers
Google’s chief economist on how technology empowers innovation.
On flexible innovation
We’re in the middle of a period that I refer to as a period of “combinatorial innovation.” So if you look historically, you’ll find periods in history where there would be the availability of a different component parts that innovators could combine or recombine to create new inventions....