The Knowledge Economy and the Knowledge Society K 612 Next-Generation Knowledge Management Prof. Katsuhiro Umemoto JAIST - Japan Advanced Institute of Science and Technology Graduate School of Knowledge Science Ver 1.13 – 2006-10-15

Have you ever thought about it? What is the knowledge economy? What is the knowledge society? Why should we care about them?

What is the knowledge economy?

What is the knowledge society?

Why should we care about them?

Knowledge economy Proposed definition Economic properties of knowledge New economic dynamics

Proposed definition

Economic properties of knowledge

New economic dynamics

Economy is about… … production , distribution and consumption of goods and services … markets and firms (in the case of capitalism) … efficient allocation of resources Land (raw materials, natural resources) Labor (workers’ time and effort, expertise) Capital (equipments, plants, wealth, etc.)

… production , distribution and consumption of goods and services

… markets and firms (in the case of capitalism)

… efficient allocation of resources

Land (raw materials, natural resources)

Labor (workers’ time and effort, expertise)

Capital (equipments, plants, wealth, etc.)

What is the knowledge economy? Knowledge has become the main resource The pace of innovation is accelerating (not only in products and services, but also in processes, markets, sourcing, business models, etc.)

Knowledge has become the main resource

The pace of innovation is accelerating (not only in products and services, but also in processes, markets, sourcing, business models, etc.)

Growth of K in the economy Knowledge industries Knowledge itself is the product/service (e.g., software, media, entertainment, consulting) Knowledge-intensive industries High level of K embedded in products/services (e.g., electronics, computer, pharmaceutical) Traditional industries Capital and labor still largely relevant (e.g., oil & gas, construction, transportation, retail) Pace of change

Knowledge industries

Knowledge itself is the product/service (e.g., software, media, entertainment, consulting)

Knowledge-intensive industries

High level of K embedded in products/services (e.g., electronics, computer, pharmaceutical)

Traditional industries

Capital and labor still largely relevant (e.g., oil & gas, construction, transportation, retail)

Knowledge has different properties Low rivalry (usually said non-rivalry ) Use by one person does not diminish it Low excludability (usually said partial excludability ) It is difficult to prevent others from using it Knowledge is both input and output Today’s innovations feed tomorrow’s In other words… Knowledge is an infinite resource Knowledge tends to spread

Low rivalry (usually said non-rivalry )

Use by one person does not diminish it

Low excludability (usually said partial excludability )

It is difficult to prevent others from using it

Knowledge is both input and output

Today’s innovations feed tomorrow’s

In other words…

Knowledge is an infinite resource

Knowledge tends to spread

The dynamics of K industries Knowledge has positive externalities: Spillovers (one person’s investment benefits others) Investment in research/education benefits many Increasing returns (positive feedback) In costs : high upfront costs, low marginal costs In supply : the more you know, the easier to acquire In utilization : the more you use, the easier to use In demand : the more you sell, the easier to sell Network externalities (adopters   value  )

Knowledge has positive externalities:

Spillovers (one person’s investment benefits others)

Investment in research/education benefits many

Increasing returns (positive feedback)

In costs : high upfront costs, low marginal costs

In supply : the more you know, the easier to acquire

In utilization : the more you use, the easier to use

In demand : the more you sell, the easier to sell

Network externalities (adopters   value  )

Summary Economic value comes mainly from knowledge The pace of innovation accelerates The economy evolves at different paces, with different levels of knowledge intensity Knowledge has different properties Low rivalry and excludability: tends to a public good Multiplicative effect: “shoulders of giants” effect A new competitive dynamics, with new rules Increasing returns

Economic value comes mainly from knowledge

The pace of innovation accelerates

The economy evolves at different paces, with different levels of knowledge intensity

Knowledge has different properties

Low rivalry and excludability: tends to a public good

Multiplicative effect: “shoulders of giants” effect

A new competitive dynamics, with new rules

Increasing returns

Knowledge society Alternative views Network-based knowledge society New social dynamics Ethical challenges

Alternative views

Network-based knowledge society

New social dynamics

Ethical challenges

Society is about… … social relations (social interactions regulated by social norms , involving social positions and social roles ) … culture (patterns of social practice , norms of behavior, value systems, traditions , beliefs , etc.) … institutions (social structures and mechanisms of social order and cooperation ) E.g., family, government, media, money, property, labor, etc. Analysis of the K society is more complex!

… social relations (social interactions regulated by social norms , involving social positions and social roles )

… culture (patterns of social practice , norms of behavior, value systems, traditions , beliefs , etc.)

… institutions (social structures and mechanisms of social order and cooperation )

E.g., family, government, media, money, property, labor, etc.

Analysis of the K society is more complex!

Alternative views on the K society Primacy of scientific knowledge (Bell 1973; Stehr 1994) K as source of authority and basis of social stratification Scientific research as the ultimate source of knowledge Rise of knowledge work (Drucker 1969; Reich 1991) Fastest growing section of the workforce Knowledge workers own their knowledge Networked society (Castells 2000; Benkler 2006) Networked economy, work and social relations Enabled by information and communication technology

Primacy of scientific knowledge (Bell 1973; Stehr 1994)

K as source of authority and basis of social stratification

Scientific research as the ultimate source of knowledge

Rise of knowledge work (Drucker 1969; Reich 1991)

Fastest growing section of the workforce

Knowledge workers own their knowledge

Networked society (Castells 2000; Benkler 2006)

Networked economy, work and social relations

Enabled by information and communication technology

A network-view of the K society Two basic conditions Society’s material needs are fulfilled, so there is greater space for non-market behavior Tools for knowledge creation, utilization and sharing become widely available Knowledge production, distribution and consumption becomes decentralized Exponential growth in knowledge availability Growth and expansion of social networks

Two basic conditions

Society’s material needs are fulfilled, so there is greater space for non-market behavior

Tools for knowledge creation, utilization and sharing become widely available

Knowledge production, distribution and consumption becomes decentralized

Exponential growth in knowledge availability

Growth and expansion of social networks

Networked dynamics Open culture Content is made publicly available (e.g., the whole Web, creative commons, WiFi) The Blogosphere and social networking Persistent, distributed, open conversation Leads to unmediated communication, collective thinking and social mobilization Peer production Radically decentralized cooperative production (e.g., GNU/Linux, Wikipedia, Slashdot, Everquest)

Open culture

Content is made publicly available (e.g., the whole Web, creative commons, WiFi)

The Blogosphere and social networking

Persistent, distributed, open conversation

Leads to unmediated communication, collective thinking and social mobilization

Peer production

Radically decentralized cooperative production (e.g., GNU/Linux, Wikipedia, Slashdot, Everquest)

The ugly side… The network can be used for both good and bad Questionable content Worthless (e.g., spam, ads, porn) Strongly biased (e.g., propaganda, prejudice) About unethical procedures (e.g., hacking, terror) Questionable actions Identity cheating, spyware, etc. Bullying, defaming, etc. Crime (e.g., phishing, hacking, theft, etc.)

The network can be used for both good and bad

Questionable content

Worthless (e.g., spam, ads, porn)

Strongly biased (e.g., propaganda, prejudice)

About unethical procedures (e.g., hacking, terror)

Questionable actions

Identity cheating, spyware, etc.

Bullying, defaming, etc.

Crime (e.g., phishing, hacking, theft, etc.)

Summary Three perspectives on the knowledge society Primacy of scientific knowledge Rise of knowledge work Networked society Networked-view of the knowledge society Decentralization of knowledge production, distribution and consumption More open, democratic social relations Non-market behavior becomes salient Conflict along the transition is expected

Three perspectives on the knowledge society

Primacy of scientific knowledge

Rise of knowledge work

Networked society

Networked-view of the knowledge society

Decentralization of knowledge production, distribution and consumption

More open, democratic social relations

Non-market behavior becomes salient

Conflict along the transition is expected

Implications Levels of analysis: Societal Organizational Individual

Levels of analysis:

Societal

Organizational

Individual

Societal level Development of public policies on: Scientific and technological research Industrial development (K-intensive industries) ICT infrastructure (access rights, digital inclusion) Intellectual property (patents, copyright, commons) Education (knowledge work and citizenship)

Development of public policies on:

Scientific and technological research

Industrial development (K-intensive industries)

ICT infrastructure (access rights, digital inclusion)

Intellectual property (patents, copyright, commons)

Education (knowledge work and citizenship)

Organizational level External issues Scan the environment (e.g., public policies, S&T development, competitors’ behavior, etc. Improve knowledge creation and transfer through collaborative arrangements and acquisitions Open channels with customers and society Internal issues Develop absorptive and innovative capacity Manage knowledge work and workers Explore contracting and outsourcing alternatives

External issues

Scan the environment (e.g., public policies, S&T development, competitors’ behavior, etc.

Improve knowledge creation and transfer through collaborative arrangements and acquisitions

Open channels with customers and society

Internal issues

Develop absorptive and innovative capacity

Manage knowledge work and workers

Explore contracting and outsourcing alternatives

Individual level Learn continuously (knowledge  value) Formal and informal education Challenging assignments Manage own career (value  reputation) Market oneself and manage opportunities Cultivate professional and personal networks Engage in knowledge networks Develop ethical sense

Learn continuously (knowledge  value)

Formal and informal education

Challenging assignments

Manage own career (value  reputation)

Market oneself and manage opportunities

Cultivate professional and personal networks

Engage in knowledge networks

Develop ethical sense

Summary Knowledge economy and knowledge society follow distinct paths of analysis Both have been extensively discussed, but there is much ground for work Both bring about important practical implications at societal, organizational and individual levels

Knowledge economy and knowledge society follow distinct paths of analysis

Both have been extensively discussed, but there is much ground for work

Both bring about important practical implications at societal, organizational and individual levels

Types of knowledge work Complexity of work Level of interdependence Judgment Routine Groups Individuals Source : Adapted from Davenport (2005), Thinking for a Living Integration Systematic work Methodologies and standards Integration across functional boundaries Transaction Routine work Rules and procedures Low-discretion workforce or information Expert Judgment-oriented work Individual expertise and experience Star performance Collaboration Improvisational work Deep expertise across functions Fluid deployment of flexible teams

Integration

Systematic work

Methodologies and standards

Integration across functional boundaries

Transaction

Routine work

Rules and procedures

Low-discretion workforce or information

Expert

Judgment-oriented work

Individual expertise and experience

Star performance

Collaboration

Improvisational work

Deep expertise across functions

Fluid deployment of flexible teams

An emerging relationship through blogs Andrea accesses past entries from Lilia’s blog Lilia posts answers to Andrea in her own blog A new surge in reciprocal posts and comments after some time Direct exchanges through email and skype Source : Adapted from Efimova, Lilia (October 03, 2006), Artefacts of a weblog-mediated relationship: a visualisation , retrieved 2006-10-11 <http://blog.mathemagenic.com/ 2006/10/03.html#a1839>

Protecting the commons Three layers in the commons infrastructure Informational (content) Logical (software) Physical (network) Creative commons Open software Network neutrality Forms of control Potential responses Source : Inspired by Benkler (2006), Wealth of Networks

Three layers in the commons infrastructure