The problem with knowledge economy : it does not exist !

Summary : Enterprise 2.0 or social business initiatives aim at crafting organizations that fit what we call the knowledge economy. And that’s quite hard…for one reason. The knowledge economy does not exist. Knowledge work and workers do. Not the economy. What’s missing ? A global environment that would help its blooming, its take-off rather than forcing enterprises to make industrial decisions on matters that are not industrial. Education, law, tax system, accounting has to be rethought from a new angle. In the meantime, anything undertaken by organizations will be bricolage : it will need lots of efforts for marginal or even futile results regarding to the deep transformation challenges that are at stake.

When we talk about new organization or management approach, about the tools that support new ways to communicate or collaborate we often use the knowledge economy as a justification. Moving from an industrial to a knowledge economy means a deep change of context and responses of a new kind from businesses. That’s an obvious fact and none of the current social business or enterprise 2.0 expert has coined anything new : there already was an abundant literacy on these new forms of organization while most of os where still learning writing and counting at school. If we take the technology side apart, any old book from Peter Drucker could be a best seller if published today with the same texts and a socially fashionable title.

So knowledge economy is there and both organizations and people have to deal with it. But what do they do it so slow, with so much reluctance, fears and doubts ? Why can’t we see this draught, this collective march that happened when the world faced its last similar evolution ? The answer is easy : because the knowledge economy does not exist. Not because it’s a dream kept alive buy a few passionate and lunatic people but because it’s not a concrete reality, foundations on which we’ll be able to craft the future.

A field was not enough to craft the agrarian economy. A factory and some steam or electricity did not found the industrial economy. There were organization models designed for the factory. Labor laws evolved to lead the change. Financial mechanisms were set up to make the requires investment possible, what made industrial economy grow. A factory did not made the industrial economy but a set of rules, practices, mechanisms did. They turned a need and an opportunity into reality.

So, what’s about knowledge economy ?

One swallow doesn’t make a summer and a knowledge worker does not make a knowledge economy. Knowledge work exists. Knowledge workers too and they represent each day a bigger part of the working population. They are the resources that may help to build a sustainable growth for the future. But that won’t happen unless some requirements are met.

As a matter of fact, even if the potential exists it’s poorly exploited. First because businesses don’t do everything possible to make the most of it…but that’s an easy pretext. Businesses  also are  looking for sense, for reasons to do things. They don’t find these reasons because they are operating in an environment that did not change that much during the last 50 years. Consequence : they struggle to reinvent their model, to reinvent themselves. Evidence  is those that success, that find the way of a new durable growth, are those who made choices that were both “obvious” regarding to where the world is heading and crazy according to the current environment in which they operate.

What’s missing to craft the appropriate environment ?

– innovation : programs that encourage innovation and sustain creation of innovating businesses.

– an appropriate legal and accounting environment. It will be quite impossible to move further In an economy that relies on people when everything that’s about them is seen as costs and never as investments. Globally speaking, we need to rethink everything that’s about time. The knowledge economy needs time to create knowledge, trust, learn. Time is an investment when wisely used. Short term approaches leads to resource wasting and shifts adaptation costs to others without removing them.

– means to link incomes not with jobs but with participation. Both inside and outside businesses. Many systems relying on people and communities from which businesses draw benefits rely on the voluntary participation of as many people as possible. That’s not a problem as long as it’s a secondary activity that comes in addition to a “real one” from which people get money. When principal activities are becoming scarcer every day, this model that many think is the model of the future, needs to be sustained differently. Even inside organizations this is a major barrier to new approaches to emerging collaboration, where people can’t find what’s in for them and managers find themselves at risk because of the use made of the resources they are accountable for. Let’s remind that cost allocation is a collaboration killer.

– an appropriate legal environment. Don’t forget that, in many countries, the new way of working we’d like to encourage and the use of tools that sustain them are close to the legal border line, because of regulations dating from decades. Yes, law is lagging far behind…so much that some will advise you “not to care about it”. But the risk is actual and huge. The point is not to break all what exists down but to find a new balance that fits today’s context. In the meanwhile, this is one more reason not to go even if it would make sense.

– the future of businesses will depend on the people that will make it. Provided they have the right mindset and toolkit for the upcoming years, not for the past ones. The education system needs a fix too.

– infrastructure that will sustain both local and global growth. A wide scale fiber program is as essential today as railroads were one century ago.

– since it’s all about global challenges that are quite beyond what businesses can do, we need a long term vision at the countries level. And we’re still far from that. For instance, a couple of months ago the French government installed a “Digital National Council”. Quite a praiseworthy decision in a country where “digital” is a strange, poorly known and even scary thing fior elites still stuck between the 60s and the 80s are are more focused on bringing the past back to life that dealing with the future. Praiseworthy initiative I said….until I had a look at who will make it up. Not to criticize those who’re in (they are recognized and legitimate professionals) but to think about those who are not. Except what I call “pipe sellers” and those who sell things through the pipes…nearly nothing. An education system expert ? A tax system expert ? An HR professional ? A labor law professional ? The lack of vision is obvious. “Digital” is only seen as a new channel to deliver contents and goods. Can it be leveraged to transform our organizations, the way work is done to drive future growth and competitiveness ? Is this question worth ? Of course it is. is it a part of the national ambition ? Not at all because this ambition does not exist and none of our leaders gets a thing about “digital”. If they do there would not be a state secretary dedicated to the “digital economy” but the minister of economy would be in charge of all that.

I’d also like to remind that, because they were not good at knowledge work, businesses had to find their profitability elsewhere in the last decades. On financial markets. If you’re looking for some of the causes of the financialization of economy that lead to the extremes we know you have a part if the answer here : their inability to turn themselves into knowledge organizations because of the constraints of an economy that’s still designed for industrial work and only for that.

If we also take into account how much the knowledge economy shares with the service economy, we can understand how big the challenge is.

Knowledge work exist. Knowledge workers too. The potential in terms of growth and jobs is obvious. But knowledge economy is still a dream while, beyond what businesses can do, it’s a new society model to be implemented if we want to build foundations for tomorrow’s growth.

Without such an approach, many will find that enterprise 2.0 or social business initiatives have too little impact, are too soft or not enough something. Don’t try to find the reasons anywhere else. As well as we’ll overlook the real problems, everything we’ll do at the enterprise scale will look very futile.


Head of People and Business Delivery @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler
Head of People and Business Delivery @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler

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