TO glimpse the real effect of today's computer networks, it helps to travel far beyond the high-tech hothouse of Silicon Valley, away from the venture capitalists, inventors and billionaire-wannabe entrepreneurs. To go where Google is just a search engine, not an obsession.
Try Elkhart, Ind., home to Nibco Inc., a century-old maker and distributor of plumbing supplies. A private company, Nibco employs 3,000 workers and generates $500 million a year in sales. It faces stiff competition from Chinese producers.
A Special Section: Networking
Networked computing is allowing workers to automate many tasks. Also, how to set up a wireless network in your home.
Melissa Morgan, a waitresses at the Buffalo Brew Pub in Williamsville, N.Y., uses a networked ordering system that saves her steps and the restaurant money with hourly reports on inventory and sales.
Since the late 1990's, Nibco has pushed hard to increase productivity and improve customer service by using computer networks. The company first focused on its own operations, then established network links to its customers and suppliers. Now, Nibco's inventory, labor and administrative costs are down sharply, and 70 percent of all orders are digitally automated, twice the level of a few years ago.
The second round of Internet innovation appears to be here. Companies large and small experienced soaring productivity in the 90's as the Web made worlds of information available at the click of a mouse, and the Internet drastically reduced the cost of communicating and doing business with someone on the next floor or the next continent. That cost-cutting payoff continues to spread. But in the next wave, companies are embracing the potential of networked computing to let workers share their knowledge more efficiently as they nurture new ideas, new products and new ways to digitally automate all sorts of tasks.
Companies are drawing on collaborative models that first blossomed in nonbusiness settings, from online games to open-source software projects to the so-called wiki encyclopedias and blogs to speed up innovation. This networked collaboration is creating new opportunities and disrupting industries. New styles of work and, in business schools, new theories of innovation are rising.
"The big payoff for the future will be in helping knowledge workers to be more inventive and creative, and to get those innovations into the marketplace," said Erik Brynjolfsson, a professor of managerial economics at the Sloan School of Management at the Massachusetts Institute of Technology. "That's where a wealthy nation like the United States is ultimately going to have to seek its competitive advantage."
Open-source software is a pioneering example of the kind of collaborative work made possible by the Internet. Networks of far-flung programmers share code and ideas to constantly improve and debug their software. So the open-source Linux operating system is challenging Microsoft's Windows, a product backed by one of the world's richest corporations.
The open-source formula is being applied in one field after another. Projects range from Wikipedia, an open-source encyclopedia, to Biological Innovation for Open Society, or BIOS, an open-source initiative in biotechnology. Corporations are rapidly adopting software tools intended to nurture collaborative work, including wikis, blogs, instant messaging, Web-based conferencing and peer-to-peer programs.
So far, economists say that only a fraction of the cost-cutting opportunity from networked computing has been captured. Looking ahead, they say, the United States must master how to use networked collaboration to accelerate innovation.
Pursuing that competitive edge will rely partly on the spread and steady advances in high-speed networks and software, but mostly on smart people figuring out how to exploit this protean technology. That is certainly the lesson of history. The electric motor, for example, was introduced in the 19th century, but the big economic benefits came decades later with innovations like assembly lines and mass production.
"Whether the current information technology-enabled productivity surge will continue into the future is and should be controversial, for it depends on the inventive capacity of businesses using the technology," said Timothy F. Bresnahan, an economist at Stanford University.
Personally, Mr. Bresnahan said he would bet on it. And businesses everywhere have been betting on the potential payoff from networked computing projects of all sizes. In Williamsville, N.Y., the Buffalo Brew Pub, which offers food and 34 draft beers, took the usual touch-screen ordering system further. It installed six I.B.M. touch-screen terminals linked to a Web-based network. Waiters punch in the orders, which are electronically shuttled to the kitchen and the bar, instead of walking them over.
Now, said Keith Morgan, the general manager, there are no mistakes from messy handwriting or bad math. From his laptop at the restaurant or home, Mr. Morgan can tap into a Web site and get hourly reports on inventory and sales by drink or food items. Slow-moving items are quickly eliminated from the menu. The payroll is automated, saving him hours a week.
