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Thinking about the knowledge economy

September 30, 2006

I have recorded below a list serve conversation about the knowledge economy for those who are interested. In it I have argued against idealistic approaches to forecasting and talking about the future and argued instead for multiple small safe-fail experiments. Its not a complete document, but it has some basic thinking.

THE ORIGINAL QUESTION ====================================
Here is my original post David ,to give it a 2nd chance. I and others had not responded the first time round

To avoid a discussion focusing on how much forecasting we can realistically make (as it happened the first time I posted this) I would like to mention that what will actually really happen to KM in 2050 isn't really the important point here, it is more the idea that some scientific advances to come would lead to (or would correspond with) a full recognition of the value of knowledge in our societies at large, and in particular in the business world.

What if we tried to foresee what will follow the currently unfolding Knowledge Economy? What will be the new buzz word for corporate leaders in 2050? I will not attempt here to answer these questions directly but will use scientific predictions as metaphors to give us a hint.

While reading recently the very interesting scientific book “The Next Fifty Years – Science in The First Half of the Twenty-First Century”, a collection of 25 new essays by leading scientists edited by J. Brockman (A Vintage Original, New-York, 2002) I found three passages from three different authors that are relevant to my two questions above.

First, here is how Alison Gopnik (professor of psychology at the University of California at Berkeley) ends her essay “What Children Will Teach Scientists”:
“[…] At the end of the last century, knowledge began to become the most valuable currency, like land in a feudal economy or capital in an industrial economy. The new science of learning should tell us that knowledge is not just a prize to be won in some desperate test-taking struggle for places in the contemporary mandarinate. Instead it is, literally and not just rhetorically, our universal human birthright.”

The way I read this (based also on the reading of Alison’s whole essay about the science to understand learning) is that our societies will progressively realise that knowledge is what makes us, humans, so special. The value of knowledge would then take the forefront in all aspects of our everyday life. We would continuously seek better ways to acquire it, to retain it, to share it, to nurture it. Of course, this should have a profound impact on management and organizational cultures. By 2050, the fact that knowledge is a vital asset will be a given fact and competitive advantage will be won by those who will leverage it faster and more effectively. This should mean that organizations of this future will have as a constant priority to make all their collaborators as creative and innovative as possible. Everyone in an organization will be empowered and encouraged to create/innovate making some mistakes along the way but learning a great deal more. This seems to be compatible with the next
extract below.

Mihaly Csikszentmihalyi - a Hungarian-born polymath, formerly chairman of the Psychology Department at the University of Chicago and currently Davidson Professor of Management at the Claremont Graduate University in Claremont, California – writes in his essay “The Future of Happiness”: “[…] Among the things we learned is that people who are engaged in challenging activities with clear goals tend to be happiest than those who lead relaxing, pleasurable lives. The less one works just for oneself, thelarger the scope of one’s relationships and commitments, the happier a person is likely to be. […]”

Mihaly sees that by 2050, societies at large but employers in particular will have understood that people are more productive when they are happier, and that people are happier if they have challenging objectives and if these objectives are clearly contributing to the corporate goals. This seem to suppose that individuals will be valued for their specific knowledge and competencies to go beyond what is initially expected of them, in order to create value for the organization.

This nicely leads us to the third extract of this book I believe relevant to the leveraging of Knowledge. I found it at the end of Brian Goodwin’s essay titled “In The Shadow of Culture” where he attempts to explain why he believes a “science of qualities” is developing, where feelings and qualities have at least as much importance as proofs and quantities. Brian (a professor of biology at Schumacher College, Darlington, UK - where he coordinates a master’s program in holistic science- and a member of the Santa Fe Institute) writes:
“[…] In the shadow of current science it is possible to see the components of a science of qualities which would restore qualitative evaluation to the place it occupies in our everyday lives, where judgments depend on quality as well as quantity. This restoration, together with the recognition that feelings belong not only to us but also to the rest of nature, in whatever form, presents us with a dramatically transformed set of possibilities for scientific knowledge, technology, and corporate and political action. A shift in scientific perspective of this magnitude is not going to happen overnight, if it happens at all. It requires new forms of education at a basic level, in which the sciences and the arts are united to keep people whole and in which scientific and technological decision-making require participation by all members of civil society, with knowledge joined again to responsible action.”

This extract is heavy in meanings and could open up many philosophical debates. I will only say this: if science does indeed go though such a drastic shift towards valuing qualitative judgment, it will have an even bigger impact on other parts of society such as the business world.
Accounting would no longer rely on quantitative analysis and the value of a company would give at least as much importance to qualitative aspects such as its intellectual property, including the specific knowledge of all its collaborators.

Peter-Anthony Glick

MY RESPONSE ====================================
Ok I will give it a stab - but have snipped the original as its a long post and the reply is long. I should also warn readers that this is a subject that I get passionate about as its too important to leave to liberal idealism (see later)

My final conclusion at the end of this post is that there is hope, but that thinking of the knowledge economy in terms of assets or in the models of your first two quotes is hope-less and as likely to be effective as waiting for the return in 2012 of the green feathered serpent god green feathered serpent god of the Maya to restore planetary harmony, or consulting the alien master race who planted humans on earth 3000 years ago to mine for monatomic gold monatomic gold for use in their religious rites.

(If anyone things I have gone crazy on this don't - a Washington futurist think tank has given both theories credibility)

TO PETER's POSTING

Each quote provides an interesting position and possible dispute and in general is very much a "first world" perspective that ignores the possibility of ecological change.

The Gopnik quote to the effect that knowledge will be the most valuable currency and that knowledge is a universal human birthright.

Response: I think one of the big mistakes people are making is to see knowledge as the new asset type in succession to land and capital. I think that is wrong for three reasons. (i) knowledge is not tangible in the sense of land and capital, an ASSET model (basis of the intellectual capital movement) is therefore inappropriate. (ii) I see no evidence that the capital model has yet been shattered, although it is changing. Money is still the transaction base of knowledge exchange like it or not (and I don't by the way). (iii) For whole economies LAND is still central and may become so again in the west. Water and living space with population growth and global warming by result in a partial reversion to Feudalism. There is a general trend in all of these and your comments to see the world as necessarily progressive which is a dubious proposition.

Linked to the above you say ":Everyone in an organization will be empowered and encouraged to create/innovate making some mistakes along the way but learning a great deal more

Response: this is the worst form of utopian idealism. Its not going to happen with any asset based economy. You also assume continued growth (see above comments). More harm has been caused to human progress by misplaced idealism, than by repression over the centuries so I think it needs opposing.

Csikszentmihalyi on happiness and the idea that people with challenging and clear goals are happiest than those leading relaxing lives. You extend this to say that employers will have to focus on happy employees.

Response: well yes and no. In some cases its true but we really don't have enough data to know as so few of the world's people are in a state of voluntary leisure. Yes work and rewarding work is good. Even if this statement is true its only go to apply to a very small percentage of the world. Children will still go down mines and people will die young in manual labour to produce food and resources in an increasingly constrained world. Employers will have to keep some employees happy - they do its called share options and its not producing the desired effect.

Goodwin on the science of qualities references the need for a new type of qualitative evaluation and a different type of education

Brian is one of the really good guys and the concept of qualities is important. It was one of the source ideas that we used as we started to develop impact measurement systems based on narrative. However Brian himself says that the change in educational needs is huge and is not going to happen overnight IF IT HAPPENS at all.

HALF EMPTY TO HALF FULL

OK so lets move from optimism to pessimism. I think Brian is closer than the others. He is not looking for or forecasting some huge change. Rather he is focusing on something that could be done - namely create new measurement techniques.

My own work on network government (and thanks for all the contributions which are still coming in - I will email everyone who contributed on that ongoing project hopefully next week) is saying that (in line with complexity theory) we should not focus on trying to forecast or define a desired end state: idealism. Instead we need to start multiple small experiments on a safe fail basis which offer the prospect of different ways of doing things. That is also in line with Brian's philosophy by the way. Two of these are I think obvious and are progressing, but we need more.

Firstly - creating a measurement technique that produces numbers (familiar) but is based on complex behaviour and does not allow gaming would be a major step forward and we hope to announce something on that at the end of the year (current Beta trials are going well) using large volume self indexed narrative as the source. Linking quantitative material to contextual meaning. However this approach will not work if qualitative judgments are made in the process.

The second is to find ways replicating the structural (a key word here) success of the Grameen Bank (referenced here) in which we focus on stimulating network capability rather than using resource allocation methods based on a false notion of fairness and objectivity.

So, to the overall subject. I think the knowledge economy is real. I think if it is to succeed we will need to change from "scarcity" models to those of "abundance" and if that is to take place we must stop using the language of scarcity (Assets) when we talk about it. I think it is about liberation, not libertarianism and the move to everything being a market (including prediction) disturbs me here. Capital, labour and land will still be there like it or not, but you might expect that from an unreconstructed socialist such as myself.

Do I think its likely - well I think its worth trying, but human nature has a perverse attraction to making things scare for "other people" and the natural scarcity of key resources that will arise over the next 20-50 years is going to make that very difficult.

Critically - the worst thing that could happen is to resort to idealism and futurology. If that is the case we might just as well give up and wait for 2012 when as everyone knows the green feathered serpent god of the Maya will return to restore universal peace and harmony. That is about as likely as liberal idealism providing a solution.

A THOUGHTFUL RESPONSE TO THE RESPONSE ===============
Hi there Dave

As someone who has studied both KM and futures studies, I should put in my 2 cents into this conversation.

I wholeheartedly agree with Dave that thinking of knowledge in terms of assets will lead to errors as knowledge is fundamentally different. By using it more, its value grows (abundance process) as compared with resource depletion models which makes the economic world go round. In addition, we are facing a major crisis in relation to global resources over the next 20-30 years (or sooner in the case of oil unless we can come up with some other cheap energy sources) that will cause some major changes to the world's economy and society. It may not be a knowledge economy coming to fruition but a reversion to a material-based economy.

But in relation to the future, futures studies does not equal futurology nor does not equal idealism nor does it equal forecasting, scenarios, or the musings of Mayan serpent god worshippers (but I might be wrong about this one - I'll tell you in 2013). Futures studies has a long history as a discipline with its own theorists and practitioners just like KM. Some are OK, some I find a bit difficult. It's not about prediction but more about exploration with understanding.

For Peter-Anthony's original note, he looks at the role of science in the future - but that is only one perspective. What about a greater humanist perspective - looking at the role of energy healing, meditation and contemplation? What about future social interactions? And also, the scientific approach tends to look at the world with a particular worldview, and as Kuhn stated, things change when new mindsets or paradigms take hold.

An idealist perspective of the future is obviously not a solution, even though that would be the end of many science fiction novels. But seeking out how different ways the future can progress and develop, reaching new levels beyond capitalism that uses knowledge not as mere property but as currency, is really interesting. That would be the subject of a much longer post which I will do later in a couple of weeks.

But I'm currently just up the road of Dave in the middle of Malaysia at a beautiful rainforest B&B near Taman Negara Resort - listening to the frogs and insects outside at 10 pm on a wonderful balmy night. And I'd like to go out and commune with them for a little while ...

Luke

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