iProceed Knowledge economy and its evolution

Knowledge economy becomes global
How globalization of knowledge affects America's competitiveness?

Remember the days when all analysts claimed on CNBC that "Internet changes everything?" And then the stock market bubble was over. Not only were these analysts ridiculed, they were all banished into the dark abysses of corporate America. Well, maybe they were right; they just got their timing wrong. No one can argue that Internet did change everything. Apart from so many other things that it has changed (and I do not plan to talk about those here), it has fundamentally changed one more thing: we no longer need to be in one physical location to tap into the knowledge that lies in people's heads all over the planet. Conversely, people don't need to be physically in the United States to access knowledge that exists in America. So if you are a doctor in sub-Saharan Africa and you want to keep on top of what the smart folks are writing in the New England Journal of Medicine, all you need to do is to visit their website and learn all that you need to know. In the past, a doctor in Africa simply could not subscribe to such an expensive journal or even if she could, there was no assurance the journals would always arrive (with the broken postal delivery systems in many parts of the world).

In this article, I intend to talk about how emergence of new technologies has made American competitiveness based on knowledge irrelevant. Corporations can now tap into knowledge available anywhere on the planet. HP, GE, Microsoft, and many others are already all over the world not just selling their offerings but actually developing it for selling all over the world. This is a serious threat to the foundation of the US economy and if we do not recognize the challenges that we now face, we have some tough competition ahead of us as countries like China and India (with their enormous pool of knowledgeable people) build the infrastructure (mostly with the help of global companies) to compete with us head on.

The American economy has evolved over the years from being primarily an agricultural economy to an "economy of ideas" or more commonly referred to as the "knowledge economy". As a management consultant, I have often used the chart below to convince my clients to transform their business model from low-value offerings to high-value offerings. Suppose that a company makes polyethylene polymers which is a perfect commodity (there is hardly any difference from products made by different suppliers), I would help them to add other high-value or specialty polymers like liquid crystal polymers (LCP). Similarly, if a company is providing testing services, I would help them offer a complete solution that would include complete product development process, from concept to a commercial product. I think it is time for America to stop worrying about services and solutions and focus instead on "wisdom offerings".

Where do we go from here?

I am increasingly getting convinced that parts of our economy need to transition from a "knowledge economy" to the next higher level, which for lack of a better word, I am proposing that we call as the "wisdom economy". I have studied the definitions of "knowledge" and "wisdom" and I believe that wisdom is what will truly guide our destiny from here. Not only do we have friends in other parts of the world that can manufacture basically anything that we need (Yes, I will not be shocked when my next car might very well be made in China) or research/analyze/ design/develop/
test/service all the cool products that we love to use. What we can do and we are pretty good at it is to share our wisdom with the rest of the world.

Take a look below at the distinction between "knowledge" and "wisdom".

Knowledge: Signifies the simple apprehension of facts or relations. Knowledge dwells in heads replete with thoughts of others. Knowledge is a rude, unprofitable mass, the mere materials with which wisdom builds.

Wisdom: The use of the best means for attaining the best ends. Wisdom always supposing action, and action directed by it. Wisdom comes from minds attentive to their own.

Source: Dictionary.com

Implications for American economy

The Japanese gave us a very difficult time not too long ago and we thought the world was over for us. However, we learned that the only reason we were outsmarted was that we were too complacent. It sounds ridiculous now but at that time we were in reality selling terrible products (particularly cars) to American consumers and when someone demonstrated that they could do better than us, instead of going back to the design table to get our products right, we started to trash the Japanese. Fortunately, good sense prevailed and now American cars are much better than they used to be but still nowhere near they can be and should be. Let us not trash China and India this time. Let us practice what we preach. The market forces are at work in all their glory and that is great. As a free-market economy, let us proudly praise these forces and start acting in our own best interest - that is, transform our economy. (Related article: How to transform America into a wisdom economy?)

I believe that the government has a small role to play, mainly in helping Americans transition into the new economic system as painlessly as possible; but other than that it is up to us Americans to rise to the challenge. We have talked about globalization for too long without realizing that now it is no longer just a buzzword. It is real. Welcome to the "global knowledge economy" but let us move to the "wisdom economy".

Bringing economic prosperity to America Innovation and globalization are linked Future of internet and e-business

How to globalize your business?

Questions, comments, feedback, and suggestions