Depending on the traffic, I have at least a thirty-five minute one-way commute to and from work, just enough time to fit in one 30-minute lecture from a course-on-tape/CD. At last count I had about 65 of these courses completed and stacked in my library, with my latest venture being “Foundations of Economic Prosperity”, taught by Dr. Daniel W. Drezner, Professor of International Politics at The Fletcher School of Law and Diplomacy at Tufts University.
Photo: Rosalind Franklin and her famous x-ray diffraction photograph of the DNA molecule
One of the interesting claims he presents is that the need for capital is qualitatively different between the developed and the developing world. That is, both types of economies need capital, but they need it for distinctively different purposes. On the one hand, ask any developing nation what they need most and, aside from the cessation of war and strife, what you’ll get is a list almost certainly containing: schools, hospitals, water and sewage treatment plants, robust power grid, seaports and airports, roads and rails, plant, property and equipment – what we would of course recognize as “capital” from Econ 101. Denzer goes on to point out, however, that in the developed world, while there is still the need for capital, it’s usage/emphasis is quite different – the developed world needs capital for research and development (commercial, governmental and academic), for education, for intellectual property development, for innovation and for working capital.
Don’t get him or me wrong here – he’s not saying that there are not large unmet material needs in the developed world, nor is he discounting the role of a basic education, especially among women, in the developing world, but relatively speaking, the developed world’s capital needs are not what we traditionally think of when we hear the word “capital”. The developed economies in the 21st Century invest significantly more in drug and medical device research than in blast furnaces and assembly lines compared to fifty years ago, or compared to the developing world today. And it is in the more developed economies that an advanced education can best be put to productive use because of the information-rich infrastructure that surrounds him/her.
I want to dovetail that with some comments recently made to an audience of SAS employees by Dr. Randy Woodson, Chancellor of North Carolina State University, where all three of my children are currently enrolled in the School of Engineering. He stated that, due especially to the rapid growth in the student population at NCSU over just the past few years, he was able to fund some new faculty positions, with most of these new positions being interdisciplinary in nature – the intersection of math with physics, statistics with biology and health care, the sciences with engineering, economics with computer science, and so on. Knowledge, insight and innovation come as much from the intersection and synthesis of the disciplines as it does from the pure science itself.
The importance of an interdisciplinary approach is generally well understood and accepted in principle but often less so in practice. Perhaps the most famous example of interdisciplinary success was Watson and Crick’s discovery of the structure of DNA. It was Crick’s early pre-War training in physics and X-ray crystallography that allowed him to properly interpret as a double helix Rosalind Franklin’s famous X-ray diffraction photograph (above). Today, many of the most important discoveries and inventions come from large commercial or academic teams comprised of half a dozen or more disciplines.
What this is all getting at is the critical importance in the modern, developed economy of information, information management, collaboration and information sharing, and the analytics that derive value and insight from all of that data. What many had dreamed of 20, 30 years ago – information as a utility – is coming to pass. Just as with electricity, we literally plug into the internet, or more recently, simply raise our WIFI antenna and soak up information from the airwaves like it was a Top 40 AM radio hit and think nothing of it. That you can pay your mortgage via your mobile phone, and all that entails (security, on-line transaction processing, communications, etc …) should astound you, yet in such a short time it has become commonplace.
I was born in the Atomic Age, grew up in the Space Age, was first employed during the Computer Age, but what will likely outlast them all in relevancy is what we tend to call in these post-modern times the Information Age. What I learned in business and economics courses in college during that Computer Age was that there were four factors of production: Capital, labor, management and raw materials/land. What I think we will learn in this next age is that we were missing one – information. Up until now we’ve treated information as an asset, a subset of the other four perhaps - a little bit of capital, raw material, management and labor combined together. What we are learning is that information itself may be a bedrock principle of modern economics and society. There is even now the holographic theory of the universe – that the universe is just one big quantum computer and that it’s ALL about the information flows.
Treating information as an asset has gotten us this far, but not taking seriously the prospect that information could be the fundamental foundation for our future would be a big mistake. Several weeks ago I wrote about how “The Value is in the Network”, largely because the information is in the network. The information you need to compete and succeed is vastly larger than just the data you generate internally and store in-house as an asset. I again point you to Brian Arthur’s “The Second Economy”, where the digital economy is taking on a life of its own, independent of its predecessor - the physical economy. In the physical economy information is a by-product of the process; in the digital economy the information comes first and defines the process, while the physical components are more or less just along for the the ride. And as the interdisciplinary approach shows, the collaboration and sharing is as important as the information itself. It’s a non-linear, non-additive effect - not just “information + information”, but “knowledge squared”, or insight.
It has been noted that ‘individuals may be able to set aside money for the future (i.e. “save”), but not a society or an economy as a whole; a society as a whole guarantees its future only by real physical and social investments. Savings are valuable only because they represent a claim on real resources produced and available in the present’ (URL link HERE). In the developing world those real investments do tend to be physical / infrastructure. But for the developed economies, those investments are increasingly becoming social; a collective wisdom so-to-speak, of education, innovation, information and knowledge, and the interdisciplinary insight and value that analytics can create with them.
by Leo Sadovy, EPM Contributor, from: http://blogs.sas.com/content/valuealley/2013/03/19/knowledge-squared/
Leo Sadovy handles marketing for Performance Management at SAS, which includes the areas of budgeting, planning and forecasting, activity-based management, strategy management, and workforce analytics, and advocates for SAS’ best-in-class analytics capability into the office of finance across all industry sectors. Before joining SAS, he spent seven years as Vice-President of Finance for Business Operations for a North American division of Fujitsu, managing a team focused on commercial operations, customer and alliance partnerships, strategic planning, process management, and continuous improvement. During his 13-year tenure at Fujitsu, Leo developed and implemented the ROI model and processes used in all internal investment decisions—and also held senior management positions in finance and marketing.Prior to Fujitsu, Sadovy was with Digital Equipment Corporation for eight years in sales and financial management. He started his management career in laser optics fabrication for Spectra-Physics and later moved into a finance position at the General Dynamics F-16 fighter plant in Fort Worth, Texas.He has an MBA in Finance and a Bachelor’s degree in Marketing. He and his wife Ellen live in North Carolina with their three college-age children, and among his unique life experiences he can count a run for U.S. Congress and two singing performances at Carnegie Hall.