Implications of the Knowledge Economy

The Knowledge Economy Sparks a Shift in the Technological Economic Paradigm
By “paradigm” we mean simply the set of core assumptions one holds with regard to the key operating principles that guide our actions on specific matters.

The arrival of the global knowledge-based economy has precipitated a major paradigm shift in the elements related to building prosperity and quality of life. This shift involves:

• the products we make and consume
• the processes (operating principles) we employ to make the products and deliver the services
• the organizations we use to coordinate our economic activity (including how we structure and lead these organizations)
• the variety of institutions that provide the innovative infrastructure (innovation system) to support the economic activity
• the variety of institutions, strategies and programs to distribute and apply the wealth created by the economic activity.

Changing Nature of Knowledge and the Need to Improve Performance of Knowledge Workers
Knowledge can no longer be viewed as a large single entity. Our map suggests that there are at least six types of knowledge to consider and that knowledge can now be both an input and an output of a project.

We lead by nurturing the development of knowledge workers.

“The most important and indeed the truly unique contribution of management in the 20th Century was the 50-fold increase in the productivity of the Manual Worker in manufacturing. The most important contribution management needs to make in the 21st century is similarly to increase the productivity of Knowledge Work and the Knowledge Worker. The most valuable assets of a 20th Century company were its production equipment. The most valuable assets of a 21st Century institution (business or non-business) will be its knowledge workers and their productivity.”

Changing Nature of Market and of Customer Expectations
See the Cluetrain Manifesto with its premise that markets are fundamentally about conversations with people speaking to each other in authentic human voices and that this reality is outpacing increasingly the ability of public relations agencies, marketing and advertising companies to relate to them in this type of authentic voice.
Also, clients and customers are making paradoxical demands for just-in-time, customized, high quality, low cost products and services.
Customers also want to be more involved in shaping the production of many of their own new products.

Changing Nature of Competition
The value chain to maintain competitive advantage is shifting. Most organizations are moving to more knowledge-intensive activities that allow them to gain competitive advantage through closer linkages and information sharing with suppliers and customers. Also organizations are separating the media aspects and the physical aspects of the value chain (ex. Many companies now focus on design, branding, promoting, etc., but farm out the actual production of physical products and the shipping of these products to others.)

Changing Nature of  Organizations
The earlier Industrial Age perceived a business organization from a mechanical perspective and used the metaphor of a machine or a clock with parts that were interchangeable.
In the knowledge-based economy, the organization is viewed more from a natural perspective using the ecological metaphor of an organism, which has to be nurtured and needs to keep learning in order to grow.

Increasingly organizations that aspire to greatness are recognizing that the brainpower, ideas and knowledge of their employees are their only sustainable competitive advantage.
There is also a trend that suggests that businesses more and more will function as educators and will see their employees, their customers and suppliers as learners.