Creativity, Knowledge Economics, and Business: The Shifting Paradigm

Kun-hee Lee, Chairman of Samsung Electronics, in 1995 said, “The 21st century will be a knowledge-based society where intelligent creativity rules. In this society, quality and contents of education will matter so much. Since it would be the era of education and culture, decent education and unique culture will be the crucial weapon for one to become the true winner of the world. In the 21st century, one genius would be able to feed tens of thousands of people.”

In my blog posts, you’ll notice I use the term “Age of Information” often. This is in stark contrast to the “Manufacturing Age” that came with the Industrial Revolution. In the Manufacturing Age, employees needed to gather in a single location because that was where the equipment was housed to do a job. In order to build a car, employees went to a factory. The work couldn’t be done individually or remotely. It was too big of a task to be completed alone.

Things changed in the 80s as technology advanced and companies began to adopt it into everyday operations. However, this alone did not change the paradigm. It was actually the ideas of a Knowledge Economy, globalization, the advent of the internet, and the digitization of goods and services that furthered the change to an Age of Information. Information can be transferred easily through the internet. E-mails are instantaneous versus waiting for courier mail or, going back even further, pigeons (or owls for Hogwarts). With the internet, common facts are just a Google search away. Even the expertise of a doctor can generally be found on the internet through sites like webmd.com. I am not in any way suggesting you replace your primary physician with a website, but it is now easier than ever to get quick information and best practices. When I was growing up, I had to use a set of encyclopedia my mom received from her dad to look up facts about World War II. Today all I have to do is do a Google search or head to Wikipedia. My information is no longer constrained by the people I can talk with (friends, family, neighbors, teachers) or the books I own. With the internet, the world is my teacher and source of information. In terms of the digitization of products and service, look no further than iTunes, Netflix, and Amazon for music, movies, and e-books or TurboTax for what people once needed a professional tax preparer to do.

The Age of Information changed the way businesses operated. Workers became more efficient through the use of technology such as the word processor (now with a computer). Although productivity post-technology adoption was not as high as experts expected, it has since taken off. The explanation for this is the amount of time it takes for workers to learn technology and for companies to fully adopt technologies that line up with their operations. Technology in itself has made some jobs obsolete through efficiency changes. One worker can perform the work of ten with the help of technology. In some cases, technology completely replaced a worker although companies will now hire IT Managers to service and maintain equipment instead. However, this service can be outsourced, which is the next topic.

As mentioned above, the second change that the Age of Information brought was outsourcing. Small businesses can now outsource their Human Resources needs to another company easily or hire counsel for International expansion instead of hiring internally. For the larger businesses, they utilize outsourcing to reduce costs by setting up shop in countries with lower labor costs or favorable tax policies. The New York Times recently talked about how Apple sidestepped billions in taxes by using low tax countries to filter their digital profits through. Outsourcing is made possible by the instantaneous nature of information in the Age of Information. It is easier and cheaper now to call internationally or use internet video services. It is simple to send an e-mail. Transferring documents is as simple as using a fax or attaching it to an e-mail. Establishing trust through banks internationally and performing transactions has never been easier.

The trend of technology and outsourcing has brought up the idea that creativity and innovation will be the drivers of the future. If a program or machine can’t do it for cheaper, then certainly someone in India can (or wherever the next low cost, high skill country is). Samsung’s chairman certainly believed so (recommended reading: Daniel Pink’s A Whole New Mind). How a business can adapt to the Age of Information is one foci of this blog. Certainly, in order to survive, businesses will have to develop creative products that their competitors cannot easily imitate.

One way to ensure the products and services your business creates are innovative is to have creative employees. Hiring creative employees will only get you so far though. Creative employees will need the right environment – the right culture – for their creativity and innovation to flourish. Much like flowers, creativity needs to be nurtured or it will wither away or, in the case of humans, walk away.

It’ll be important for people to have time to be creative. 3M, Google, and many other companies give employees company time to work on their own projects (also called bootlegging). These pet projects often turn into revenue streams for an employer like with the post-it note for 3M and many of Google’s services including Gmail and Google News. In terms of the physical environment, many companies opt for open floor plans and large areas to gather to foster creativity. An open environment where employees can meet and talk with other creatives to bounce ideas around is equally important. After all, it is often through these interactions that new ideas are created. Ideas can come from anywhere and from anyone. Managers, contrary to what some may think, don’t always know best. It’s often the people doing the work everyday who are thinking about creative ways to change the process, reduce time, and increase efficiency. Having the right culture falls on senior management to establish and communicate with middle managers to help reinforce. This unique culture cannot be easily copied by competitors and can provide a competitive advantage and help with attracting and maintaining talent.

Generation Y will be the first generation to be fully indoctrinated by the Age of Information, having grown up with the digital age. How businesses can attract and retain Generation Y’ers will be a topic for a future blog. Just adapting a business and its culture to the Age of Information is hard enough without looking at what Generation Y expects out of work. Information can move instantaneously but businesses often require years to change. Is your business ready for the shift?

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