Free The Future of Success by Robert B. Reich

Internet browsers, which Microsoft offers at no extra cost. Yet these won’t be boons over the long run if they wipe out competitors. And Microsoft’s strategy will be even more costly if it discourages future entrepreneurs who would otherwise create even better and cheaper software appliances: voice-recognition devices, video mail, three-dimensional Internet, and whatever else lurks just beyond imagination.
    This trade-off isn’t new. Every period of rapid technological change creates opportunities—and needs—for new products to help people use and make the most of new inventions. In the early 1880s, when lightbulbs were first invented, bulbs and sockets came in 175 different sizes. The threads on hoses, screws, and other industrial parts that were supposed to fit into one another were almost as varied. By the time a portion of Baltimore was already in flames, the city’s governors discovered, too late, that almost none of its fire hydrants and fire hoses matched up with one another.
    Common standards were needed. But rather than one company setting them, the standards were set by emerging industries as a whole, and made freely available to all comers. A standard for lightbulbs and sockets emerged in 1884, the two-prong plug and socket shortly thereafter. Standards for industrial threads were developed by the first decade of the twentieth century (a bit late for that section of Baltimore). In the early 1920s, Herbert Hoover, then secretary of commerce, created the National Bureau of Standards to hasten the development of all sorts of industry standards, free of charge. It was one of Hoover’s finest achievements (several years later, he had the misfortune to be President when Wall Street crashed, and is remembered for little else). As a result, America got the best of both worlds. Uniform standards, combined with a lot of innovation and competition, created a steady steam of inventions that now fill homes and serve businesses.
    Stickiness can be excessive if it slows technological change. Hence, it’s important for laws and rules to prevent this from occurring. Even without the antitrust decree, Microsoft would still lose its highly sticky position if a competing language (like Java) or operating system (like Linux) gained enough followers. But in the meantime, it’s not unreasonable that a product like Windows, which has become a basic standard, should be licensed by a different company from the one that sells software applications which run on it, or that it be available to everyone free of charge. It has become part of our common language, like aspirin. 9
    REPRISE: INNOVATE OR DIE
    A brief summary is in order. The first principle of the new economy is that choices are widening and it’s becoming ever easier for buyers to switch and get a better deal. The second principle is that such breadth of choice and ease of switching is rendering all sellers less secure and more vulnerable to competitors—thus spurring innovation.
    The American economy is moving from a system of stable, large-scale production to one of speedy and continuous innovation. Big brands are guiding customers to sellers who offer them the best deals. Rivals are doing whatever they can to “unstick” buyers and offer even better deals. Governments are turning their sights on excessive stickiness—private standards or protocols for interconnectivity that become so universal they stifle new ideas.
    The winning competitors are quickest to provide lower prices and higher value through the intermediaries of trustworthy brands. But “winning” is temporary, and the race is never over. Those in the lead dare not stop innovating for fear of falling behind. The result is similar to the ideal Joseph Schumpeter envisioned, before the era of large-scale production made him cynical about entrepreneurship. We’re witnessing an explosion of innovation, leading to better products and services. Productivity is rising, and inflation is moderating. Buyers are