Knowledge is the key future resource

Feb 12, 2006 Strategy, Sunday Nation, Technology

Peter Drucker, widely acknowledged as the greatest management thinker of the past century, died 3 months ago. His death went largely unremarked here in Kenya; not surprisingly, as we tend to pay little attention to management – either as a concept, or as a way of doing things.

Drucker was just a few days short of 96 when he died. His influence on management and business cannot be exaggerated. He wrote more than 40 books and literally thousands of articles. And the world paid attention: Drucker’s fame extended from America and Europe to Japan and the developing world. The entire course of big American business took a different turn because of Drucker’s influential ideas on decentralisation, worker empowerment and management by objectives.

Drucker was a management evangelist. His mission was to persuade the world that management matters in all spheres of life. His influence went far beyond the business world – to the Salvation Army, even the modern church movement. According to him, “Management is the organ of institutions…the organ that converts a mob into an organisation, and human efforts into performance.” He was convinced that civilisation was merely a thin skin that lay atop latent anarchy, and that in the science of management lay the best hope for saving humanity from barbarism.

His insights were far-reaching. Around 1960 he coined the phrase “knowledge worker”, and predicted the inexorable rise of a cadre of people who would live by their brains and their acquired knowledge. Brain workers, he confidently asserted, would dominate society, and we would move from an economy of goods to an economy of knowledge. Knowledge, and hence education, thus became the single most important resource for any advanced society.

These ideas may seem self-evident now, but remember that Drucker was coining them 45 years ago, when agriculture and manufacturing still dominated most economies. Today, fewer than a quarter of American workers make their living from manual jobs. Today, as Drucker predicted, knowledge workers not only control the means of production in the world; through their stakes in pension and mutual funds, they are the majority shareholders and owners of many of the largest businesses in the knowledge economy.

So Drucker the seer had a vision that few could match. But his talent did not run out with age; he was confidently predicting where our world would be heading well into his nineties. In 2001, The Economist magazine asked him to write a lengthy treatise titled ‘The Next Society’. Here, Drucker set out his thoughts on how tomorrow’s world would be different from today’s. Given his previous track record, we would do well to pay heed.

Drucker first zoomed in on a key issue: the aging of many advanced country populations. This fact has many more ramifications than we may realise. In every single developed country (and even in China and Brazil), the birth rate is now below the replacement rate. This means that immigration will continue to be a hugely important issue in all rich countries. And as the supply of skilled young people shrinks in these nations, they will increasingly try to hold on to the stock of educated older people.

Drucker also pointed out that we are very close to being in a society whose key resource is knowledge, and whose dominant groups are not the owners of land or capital, but those who use their wits and expertise for a living. But knowledge is a very special type of resource: it is borderless, and can travel even more effortlessly than money; it bestows upward mobility, because it is available to anyone who can access formal education; and it cannot be inherited or bequeathed. Yet knowledge alone is not enough; everyone can acquire it, but not everyone can use it to win. And knowledge quickly becomes obsolete; in the knowledge society, schooling never stops.

This will make life even more competitive than it already is. Given the speed at which information can now travel, every institution in the knowledge society – not just businesses, but also schools, universities, hospitals, NGOs and even government agencies – have to learn to be globally competitive. The institution whose core function is to gather, harness, nurture and refresh knowledge is a very different one from those we have been used to.

What impacts will these various forces have in Kenya? For one thing, we are going to find it very difficult to stem the flow of skilled Kenyans out of our borders, at least in the short term. We will continue to lose doctors, IT professionals, hotel managers, accountants and bankers. The demand from rich destinations is not going to dry up anytime soon. And so our leading corporations will continue to struggle to hold on to their top talent. At some stage, however, we have to have a strategy to bring back the prodigals – to ensure that advanced skills (often developed and extended abroad) come back home.

That is easier said than done. But we are certainly not paying enough attention to the issue. China and India suffered from the brain drain for decades, but are now managing to attract skills and capital back – with a judicious mix of changes in citizenship rules, tax incentives, investment opportunities, new career options and infrastructural initiatives that give professionals the comfort that they would not be leaving advancement behind. In this country, we have not even begun to address the issue of where our next stock of knowledge workers will come from.

Our corporations, too, face upheaval. Drucker predicts that companies will not be held together by ownership, as in the past, but by strategy. They will form confederations where ownership is not the key issue; the ability to add value to a network of interlinked activities will be the defining feature. So we should expect alliances, joint ventures, know-how agreements and contracts to become the building blocks of new types of confederations. For this, we require a breed of business leaders who can see that their future companies will be an array of partnerships, not a physical presence.

In Kenya, we tend to be fixated on the idea of permanent jobs. Casual employment is a derisory term – unstable and undesirable. But Drucker tells us that people in full-time jobs will become a minority. Part-timers, temps, consultants and contractors will become the norm. These people’s primary allegiance will be to their field of knowledge, not to individual governments or companies. They will sell their expertise to an array of buyers. So our armies of graduates would do well to focus on their knowledge sets and on applying them in innovative ways; their future lies in knowledge enhancement, not job seeking.

What is Drucker’s primary message for Kenya? Simply that we must recognise the primacy of knowledge and management. Our future lies not in title deeds, but in our ability to acquire and continuously revitalise knowledge, and apply it to the business of producing value in the global economy. Everything else is a distraction, a side show from an ever-fading past. So if we are going to discuss our future, let us put knowledge squarely at the centre of the debate.