Peter Braun’s Take on the Next Knowledge Economy

Thank you to Peter Braun, Vice President of Human Resources at HKS, Inc. for contributing this post.

braun

In the long run the only sustainable competitive advantage is your organizations ability to learn faster than its competition”
– From the Fifth Discipline by Peter Senge

We are entering into a new definition of wealth. It is not a wealth based primarily on land ownership or, as we are currently used to, on capital, but on knowledge. Just as the land ownership base of wealth gave way to the capital base, we are now entering the age of the knowledge-based economy. It could be argued that Architects are well suited because they are some of the original “knowledge workers” (as Peter Drucker phrased it). Their knowledge and artistic ability was their source of wealth. However, if their mental model of wealth creation remains anchored in the idea of personal knowledge and “expertise” they will miss the fundamental shift taking place. What is emerging today is a knowledge-based economy based on knowledge sharing.

Strategic partnerships that develop a core competency of knowledge sharing are pioneering the wealth of the future. The need to change our mental models of wealth creation will be necessary. There is a fundamental difference between the wealth of both land ownership and capital and that of knowledge. It is a simple difference, but quite profound.

If I own two acres of land and give you one, I lose and you gain. If we both own two acres and give each other one of our acres there is no gain. If I own $ 10,000 and give you $ 5,000, I lose and you gain. If we both own $ 10,000 and give each other $ 5,000 there is no gain. However, if I know something useful and share it with you, you gain, but I don’t lose. If we both know something useful and share it with each other, we BOTH gain. You may argue that there is a value to proprietary information that is lost if given away. However, I would ask if the value of your proprietary information is greater than the added value of each of us sharing such information in such a way as to create greater synergy of thinking and provide competitive advantage.

Research into why Toyota has been so uncommonly successful (despite some recent troubles they still sell more cars than anyone else) found that:

“Toyota’s ability to effectively create and manage network – level (several different firms) knowledge sharing processes at least partially explains the relative productivity advantages enjoyed by Toyota and its suppliers. Most importantly, production knowledge is viewed as the “property of the network”.

– Dyer, Jeffrey H. and Kentaro Nobeoka (2000). “Creating and Managing a High Performance Knowledge-Sharing Network: The Toyota Case.” Strategic Management Journal.

This insight into Toyota’s success is not unique to automobile manufacturing or even manufacturing companies in general because it reflects the changing source of wealth that all firms are a part of. In the emerging knowledge-based economy, the core capability of bridging the collective knowledge of partnerships, and doing so quickly, even at the “expense” of making this knowledge more openly available, will be a significant source of competitive advantage.

– “Intellectual property has the shelf life of a banana.”
Bill Gates

Alvin Toffler has written a couple of great books about this shift in the source of wealth, “PowerShift” published in 1990 and “Revolutionary Wealth” published in 2006. Toffler says knowledge relationships are being transformed with respect to availability. Never before have we been able to instantly access virtually unlimited amounts of any kind of information for virtually zero cost. Unlike the foundations of past wealth revolutions, the knowledge economy defies traditional economics in that knowledge is not scarce; knowledge is infinite and it is the sharing of it (not the “ownership” of it) that will create wealth.

Architecture will need to grapple with and embrace this to move into effective 21st century practice. We have an opportunity to add value based on expertise and to effectively partner and share that knowledge. We have one foot in the scarcity economy and one foot in the knowledge creation economy, but we must move towards the latter. We must move past the economic model that the more we know (our “expertise”) is the basis of our being able to charge money for our services (scarcity model) and we must move into a knowledge sharing (building together) understanding of value creation. We must be able to demonstrate our ability to effectively partner with clients, contractors, consultants, and within our own firms in ways that inspire trust, build effective teams and generate shared knowledge that is the “property of the network”.

Posted: October 6th, 2010 | Filed under: Guests, Most Popular | Comments Off on Peter Braun’s Take on the Next Knowledge Economy

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