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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".
Recommended
links: Impact of offshoring on American economy
How
to pursue products with short life cycles?
Bringing
economic prosperity to America Innovation
and globalization are linked Future
of internet and e-business
How
to globalize your business?
How to deal with marketplace change
Questions,
comments, feedback, and suggestions
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