The Knowledge Economy

Posted by Jim Van on December 15, 2010 under entrepreneur, small business | Read the First Comment

There’s been a lot of buzz about the Knowledge Economy, and how it’s going to save Providence (and the rest of the country) from this economic cycle that seems to keep us on the bottom forever.  So, I asked about a half-dozen people that I know and respect to define the Knowledge Economy, and received a half-dozen different answers, which is not surprising, given that it’s such a new concept.  Or is it?

In 1955, Peter Drucker, a god to those of us who have suffered through Business School, coined the term ‘knowledge workers’.  Unlike their counterparts, who were, for the most part, skilled workers, knowledge workers were compensated for what they knew, rather than for what they did.  Drucker correctly predicted that knowledge workers would make up 40% of the American workforce by the turn of the century, and that skilled worker jobs, particularly in manufacturing, would migrate overseas.   If only we could have kept Peter Drucker’s brain after his death in 1995….

Although even some of the knowledge worker jobs have also been offshored in recent years (the computer on which I’m typing this was manufactured by HP in Malaysia, and the software I’m using to write this entry was written by programmers in India, for example), politicians were talking about bringing manufacturing back to America in their most recent campaigns.  The reality is, unless one really wants to pay, say, $2,100 for a laptop similar to this one vs. $425 (which is what I seem to recall having paid), those jobs aren’t coming back.  What we do have is a knowledge economy, and here’s one example of how it’s working well:  The Apple iPad.

The iPad, the parts of which are largely manufactured to Apple’s exacting specs in Chinese factories, is assembled by Apple.  The software, design, and some of the apps are all designed here in the good old US of A by Apple employees.  Apple retains complete control over the entire process, from drawing board to sales, and has just opened the gates enough to have cultivated a thriving community of app developers, and various support people, many of whom are US-based knoweldge workers.  A solid example of how a knowledge economy works.

Here in Providence, our former Jewelry District is now being referred to as the Knowledge District, and the city is being referred to as The Creative Capital.  Business leaders, politicians, and some entrepreneurs are all on-board with this new potential home for scores of entrepreneurs in bio-tech, medecine, high technology and related fields.  Providence has a rich assortment of colleges and universities, and a fairly sophisticated quality of life.  With the right people at the helm, and more than a little luck, Providence just might be a great home for those who work in the Knowledge Economy,