Our global economy has evolved dramatically over the last two generations. A quick google search of things that were around in the 80’s that are extinct now, produces a whole slew of technological advances (and no, I’m not just talking about neon pants, boom boxes and mullets). Things like recording machines, cassette tapes, records, iPods, VHS among many others are relics of a bygone era.
Consumer Products aren’t the only things that have changed. In the 1980’s, the mining industry lost 25% while construction grew by 7%. In the 1990’s , Manufacturing employment dropped by 30%. In the 00’s, from 2000 – 2007, tourism employment increased by 75%, and now retail is back higher than pre-recession levels while healthcare continues to rise steadily by 80%.
As technology has advanced at a rapid pace, our society has changed the way we value goods and services. Things that once would have been luxury items have now become free (just look at all of the capabilities of a smartphone). When things become free, we don’t value them. We expect them. Over time in an advanced economy, commodity products are elaborated in more ways and even labor is commodotized in the service industries.
While goods and services are becoming demonetized, knowledge as a service is becoming increasingly valuable. This is an example of the clothes line paradox – over time there are things that disappear from our accounting statements. Tim O’Reilly, explains this concept well – things that hung on a “clothes line” do not use up energy and thus are not measured or counted. Since they are hard to measure, they “disappear” from the economy. Typically, losses come from goods-producing categories as consumer demand shifts to open-source platforms or expectations of what is included in a product rise (e.g. live streaming on YouTube).
Perhaps the best example of the rising value of certain forms of knowledge is the self-driving car industry. Sebastian Thrun, founder of Google X and Google’s self-driving car team, gives the example of Uber paying $700 million for Otto, a six-month-old company with 70 employees, and of GM spending $1 billion on their acquisition of Cruise. He concludes that in this industry, “The going rate for talent these days is $10 million.” You could make the same case for Snapchat’s $1 billion valuation and Facebook’s offer early on.
That’s $10 million per skilled worker, and while that’s the most stunning example, it’s not just true for incredibly rare and lucrative technical skills. People who identify skills needed for future jobs — e.g., data analyst, product designer, physical therapist — and quickly learn them are poised to win.
We have an economy that optimizes for the output, i.e. shareholder value. Shareholder value can be wildly variable on consumer sentiment, market demand and current events. Just look at the stock market. It goes to show the importance of striking when the iron is hot. Knowledge used as a tool for persuasion is crucial in career development.
Those that optimize for a global economy use tools that help us see where outputs are maximized. Knowledge isn’t a zero sum game. It cannot be lost if gained by another person. With that being said, there will always be jobs to replace jobs for ambitious people. This advice is despite skeptics such as a McKinsey Institute study that claims that 5 percent of today’s occupations could be fully automated and 1/3 of the tasks involved in over a half of today’s occupations could be replaced by AI. There’s recent hype that an overwhelming number of jobs will disappear in the next 20-50 years. Forecasting it just that; a best guess. Past technological advances created more jobs than were lost shifting careers from manufacturing to information technology.
So what’s the point?
Knowledge is your competitive advantage. Leverage it where opportunity exists.
For example, one person who communicates his or her knowledge is able to command a higher salary than another who simply lists it as a bullet on a resume. Knowing how to and executing on the articulation of knowledge is more important than the knowledge itself. Perception becomes reality.
Here are three ways to leverage knowledge:
In Transactions – Knowledge is leveraged in several ways in the way that services or goods are bought or sold; both in the raw materials and finished goods in addition to the tactics involved in negotiating the value of knowledge. This is primarily impacted by research and preparation. As the old saying goes, “poor preparation results in piss poor performance.” Don’t underestimate the value of it.
Context Specific – This is unarticulated knowledge, experience-based, context specific or even muscle memory. The application or context specific knowledge is tacit because it is hard to share with others. Call it a gut feeling you get when you know something will or will not work. It is able to be recalled when triggered by specific memories either from first- or third-hand experience.
Fostering Innovation – By sharing explicit knowledge in an increasingly fragmented world or doing something that fosters innovation in your free time. The greatest example of this is a side project. How a person spends their free time says a lot about them. It can show the level of intensity, grit and creativity used to take an idea from hobby to real achievement and also the thought process of how we prioritize our time. As a creative thinker, it means improving my writing product while learning new marketing strategies.