Knowledge Is A Commodity

by Mary Adams on 04/13/2013

Today’s organizations and economies run on knowledge fueled by social technologies. Knowledge in many ways is like oil, it is a commodity, widely used and widely available. It is hard to imagine the tangible economy without oil. It fuels our cars and trucks. It generates electricity to power our factories and homes. It is serves as a raw material for products we use every day, from plastics to fabrics, fertilizers, and high tech materials. These many uses for oil have made this commodity a source of great wealth.

Knowledge is like oil. It behaves like a natural resource. This resource is widely available in any library, on the Internet and given away regularly on television and in public schools. There is no more graphic demonstration of this than all the recent opening of content in the education sector with Massive Open On-line Courses, sites likeMITOpenCourseWare and YouTubeEDU which aggregates lectures published by universities. It has never been easier to access knowledge in its raw form at little or no charge.

Yet individuals and businesses regularly profit from knowledge. Over half of the value of the economy in the U.S. is in social and knowledge-based intangibles. This means that commoditized knowledge is regularly and profitably turned into products that can be sold. The fact that MIT has published its courseware on the Internet does not mean that it stopped charging $35,000+ in tuition to its students. And, although there will surely be change in the future in the way that a university creates and gets paid for value, it is hard to imagine a future where there will not be students willing to pay a large amount of money to attend MIT and beyond getting access to the course ware, also be able to interact with professors and students and at the end of their stay, receive a diploma with the MIT brand on it.

The trick to getting paid for your knowledge is to package it in a form that connects with a market need. A lot of this book is about how to do that. And it is very necessary because the shifts in our economy is causing huge disruption. The economics and opportunities of social technology and knowledge are fueling change in almost every business. We take it for granted but computers have radically changed almost every business.

We had a recent reminder when we took one of our cars to have a dent repaired. Walking through the auto body repair shop and into the owner’s office, we were not surprised to see a computer on his desk. But then he started showing off his estimating software. It had information loaded about every make and model of car in the market. He explained that he could produce an estimate in a few minutes that would have taken hours in the “old days” when he would have had to search reference books and make phone calls to find the pricing of specific parts on a car. This has made his small business much more productive than in the past and created new value for the owner and for his customers. It has also changed the skill set needed to be successful in his business. All his competitors have the same software. So in order to compete, he has to be good at using the systems as well as making the actual auto body repairs. Even this small business has a knowledge factory.

The shift to a social knowledge economy, however, is doing more than creating efficiencies. Technology and the Internet are also fueling huge disruptions in many businesses. The disruptions are just starting in the education sector and are sure to mirror those that have already led to huge challenges for newspapers, magazines, music companies and even movie studios, all of which are struggling to maintain profitable businesses in the face of on-line competition. At the same time, technology businesses like IBM have shifted from being hardware suppliers to selling consulting and solutions. The lines between types of businesses are blurring more every day.

Knowledge is necessary for every business. How you use it and leverage it with social technology will determine whether you can avoid being a commodity player or instead become an innovative, high-performance company staking out the cutting edge.

 

{ 3 comments }

auto repair chandler September 2, 2013 at 2:57 pm

Do not pick your auto mechanic based only on price.
A cheap mechanic with a poor track record of service is not
a good value at all. If the work is shoddy, you wind up wasting your time
going back to the mechanic to get the same problem fixed.
A good quality mechanic that charges a bit more is worth the extra money.

Mary Adams April 17, 2013 at 1:34 pm

Thanks David – I like your bottom line focus on managing decision making and problem solving. That’s clearly where we turn a commodity into gold!

David Griffiths April 17, 2013 at 8:23 am

Good read!

The thing to remember is that this fundamental shift in thinking is driving organisations to have to deal with disruption in a much more coherent manner. Disruptions bring about flux (e.g. increased diversity). Flux brings problems. Problems need problem solvers (to bring about: effciency, effectiveness, innovation). Problem solvers rely on individual and collective knowledge, skills and experience. Manage your problem solving and decision making capability well and you are on the path to resilience http://knowcademy.com/2013/03/17/resilience-the-saviour-of-knowledge-management-2/

For me, knowledge is not ‘a’ commodity, it is ‘the’ commodity.

Thanks for a good read… David

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