The Nonsense of the Knowledge Economy

The phrase ‘knowledge economy’ has always raised my hackles. Maybe because it’s usually spoken by a politician whose knowledge of work doesn’t stretch much beyond campaigns and committees.

My rather flippant response has always been to question the value of a knowledge economy when most facts can be discovered with a few taps on any smartphone.

In preparing a talk for the annual conference of the Knowledge Transfer Partnerships, I have found myself developing the argument somewhat beyond the facetious.

Not another commodity

On one level, my instinctive response was right. The issue is in treating knowledge as facts, and thinking that those facts in themselves have a saleable value.
If the fact in question is a new scientific breakthrough or piece of service or technology design then it does have a value that can be traded.

But in this accelerated world the value of this knowledge differential is smaller than ever.

For a start, some of the most powerful facts in the world are increasingly shared: just look at the technologies that underpin so much of our lives. They are open, shared, and as a result their is no value in knowing them, only in the skills to utilise them.

You can’t sell someone HTML but you can sell them your time to manipulate it.

Even if the fact you have discovered or the design you have created is unique and defensible, its lifetime is now shorter than ever. The rate of progress means that in short order it will be replicated (legally) or superseded totally.

If you are to monetise your knowledge you have to do so quickly.

Platforms and Players

The narrow definition of knowledge as a collection of facts is clearly problematic. But I believe that even a broader definition of a knowledge economy incorporating skills and experience is limiting.

Picture a ‘knowledge economy’ built on this basis and you imagine two primary forms of industry: intellectual property and the human services around them. Neither of these things on their own or when combined describe the transformational businesses reshaping our world today: platforms.

Increasingly it appears the world — both public and private — is being divided into ‘platforms’ and ‘players’.

Platforms are collections of services that span multiple horizontal sectors or service large populations and use this super scale to do so at small marginal cost. Amazon, Facebook and Google are good examples, though they themselves are supported by the global collectively-owned platforms of the Internet and the Web.

Players operate above, below or between these platforms, adding a measure of value — usually on a per-hour basis — to a much smaller audience. but at a higher margin.

To me, today’s definition of a knowledge economy does not provide for the creation of platforms. Only players.

Agile and Diverse

So what’s the alternative to a knowledge economy? The advice will be familiar to anyone who actually pays attention when doctors give sensible advice about healthy eating.

A balanced diet.

If we are to have a competitive economy, one that creates platforms as well as players, then we need to ensure that we develop two characteristics. Agility and Diversity — words that will be familiar to any regular reader of this blog.

Firstly, we need to ensure that what new knowledge we develop is applied fast. That the relationship between education and enterprise is closer, allowing us to leverage advantage in the small window that it provides us with a differential. We need our organisations to have greater foresight and the agility to act on what this foresight shows them.

Secondly, those organisations need to be diverse in nature. The coming wave of automation will likely hit the white collar jobs hardest, first. All of the ‘knowledge industries’ on which we have prided ourselves — finance, law, accounting, and even technology — are ripe for massive disruption. They need to be balanced with manufacturing, energy, farming.

Platforms can only scale if they can support large, diverse customer bases. Without exposure to this diversity in our domestic market we are unlikely to develop platforms that can then grow globally*.

No More Prescriptions

The reality is that any political prescription for the type of economy we need — knowledge or otherwise — is going to be wrong. Reducing this complexity to the size of a soundbite will always leave the proposition sounding one-dimensional.

And a successful economy will always be an ecosystem, not a monoculture.


*I concede this may seem to be in conflict with my earlier post about Unicorns. To some extent this is a question of timescales. While we have the economy we do, we want it to be a success. But that doesn’t mean we shouldn’t be seeking to disrupt its foundations in the longer term.

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Tom Cheesewright