The importance of the old school tie in the internet age.

There was an excellent "Schumpter" article in the 18th October edition of the Economist on how many of the predictions of the impact of the internet have been wrong. Not just slightly wrong, but completely out of phase with reality. Schumpter looked at these three predictions:

• 1. "On the internet nobody knows you're a dog". Actually they do. They probably know your age, gender, tastes, where you shop and go on holiday, who you friends are, your sexual preferences and where you are now. Most of us leave a ready trail, happily post details of our life to public websites, and are content to swap data about ourselves for free in return for internet services.
• 2. Death of Distance. It seems that sales of online products spread by physical and then cultural proximity. Distance is still very important in the real world and the real shops seem very full of real people this time of year. Whilst some real shops now offer a "click and collect" service, some virtual ones, such as Screwfix, have opened real stores. With the ability to tell where potential customers are, even when mobile, distance is now, if anything, rather more important.
• 3. Disintermediation. Whilst some industries may have suffered disruption to their intermediaries it is easy to see many others where intermediaries have developed and flourished. So, while many insurance brokers may have been replaced by comparison websites, estate agents and recruitment businesses have not.

It would be possible to write books on the failure of each of these three predictions, but it is the lack of disintermediation that I find particularly interesting. Having talked to various recruitment agencies recently in my search for contract IT work I can say that they seem to perform two functions. One is a simple pattern-matching exercise to match candidate expertise to job specification. They have lots of CVs to process, so this seems to be a strict exercise with no room for thought outside the box. It could be done by a machine. The second stage is to call and validate what the filtered set of candidates have said they can do. I have done some technical interviews. Typically they don't last long, with the candidate soon apologising for putting some acronym on their CV when actually they have only had the most fleeting exposure to it.

It seems then that intermediaries continue to thrive, and new forms of intermediation will grow, for two reasons. Firstly, the virtual world is just too big. Many people would not know where to start searching, and even if they did they may not have the time and knowledge to sift through all the data that would be returned. Secondly, that world is full of companies and people who might not be all that they first seem. Who can you trust? Most people would know that online reviews are open to abuse, and would treat them as only a rough guide. They may not have realised until recently that those price comparison sites will act as a broker, taking commission and quite possibly not showing them the best deal if more commission is available on other deals. Who guards the guards?

So how do people cope? They cope by relying on brands. They cope by relying on personal networks: the old school tie, colleagues and local contacts (we're back to the importance of proximity again). There has been disruption, but not the huge disruption that was forecast. Instead, the internet has increased barriers to entry and reinforced old behaviours. I forecasted the importance of brands 15 years ago, but didn't realise the importance of contacts, otherwise I might have gone to more old school and college dinners and joined linkedIn earlier.

John Davis
13 Nov 14.

Cranfield Software Ltd, a company registered in England and Wales, Registered Number: 02542169. Registered office: 67 Bushmead Avenue, Bedford, MK40 3QW.