Facebook and the new paradigm on profits in the Knowledge Society

The remark made in Mark Zuckenberg's letter to future shareholders, stating Facebook does not make good products to earn money, but earns money to make good products - something Steve Jobs would have completely agree - changes one of the main paradigms in business as we have looked at, up to now: "making money" is no longer the driver. Transcending, making cool stuff, doing it better that the competitors is. The business theory is shifting from “I´m in for the money, which makes me transcend”, to “I´m to transcend, and it brings money”. Money is the consequence, not the goal.

Profits still are a performing index that indicates you are doing right things right. But they are not a goal, they are a consequence. When Twitter founder Jack Dorsey first met potential shareholders he did not know yet which would be the income driver. Venture capitalists didn´t care. They saw the potential of the networking idea and funded the startup. Of course, they were in for the money, but also for participating in “the next big thing”.

During my whole professional life since I took my MBA degree, the central idea in business had been “how do I make money”, and all efforts and focus were in finding where and how. It could not be otherwise. That was incompatible for me with deeper needs such as making this a better world just because I want to live in a better world. “Business is business” would be the remark to remember you that one thing is what you do to earn money and a totally different thing is what you do to change the world or have fun at what you work. The business theory was that you are here to make money, and if by the way you have fun, much the better. I was miserable, running the “hamster wheel” over and over. Only when I changed that perception into making things I like, whatever the consequences, did things become to go Okay.

This change in the reason why you do business brings another paradigm change. We were trained at MBA schools to make a good allocation of “resources”, meaning capital, labor and work. We had to be efficient in that. Yet, nothing was said of allocating talents. Talents were not in the management formulas, nor in the Balance Sheet. But in order to make cool stuff and transcend they are key. Finding, retaining and empowering talent is a must in the new economy. Knowledge is the main resource, not capital. And knowledge is produced by talented, motivated people.

I am pretty sure all employees with stock options at Facebook are thrilled at their new financial situation, but as it has been written in many places, many of them will want to take the money to start another cool thing, just for the sake of doing it. Profits? Sure, they will “show I was right”. But that´s it. I’m in for the next cool thing.

I learned at my MBA School that there are three reasons someone would want to work. First, extrinsic motivation, that is, the rewards that the work will have on me (money, fame, recognition…).  Second, intrinsic motivation: the rewards that I get in just doing the work that I do (the typical “I love what I do”). And third, transcendent motivation: the rewards I get by seeing the rewards of what I do upon others. Profit-centered business has to do mainly with extrinsic motivation. Knowledge-based business has to do more with intrinsic and transcendent motivations. Intrinsic and transcendent motivations have an economic effect: they boost intellectual productivity and lower intellectual costs. And, being knowledge economy the incarnation of post-capitalist society, these new management best practice rules are much welcome.

Alfredo Barriga

Education: the big gap or the big opportunity?

Knowledge has become "the" economic and social resource. That idea was said as far as 1993 by Peter Drucker. Few paid attention to the implications of such an idea. It means that the economy and wealth lie in the "neuron development" rather than in capital, land or labor. The new trio is people, ICTs and Information. The output is knowledge.

What would the world's GDP be if everyone on Earth could work where most talented? And how would each one's lot be if that opportunity became true? Wouldn´t it be a wealthier world? Wouldn´t all people be happier? Wouldn´t the productivity and output of each one boost?

Though this looks an Uthopian idea, it can be reached. This is what I call the Age of Aquarius (http://onknowledgesociety.blogspot.com/2011/09/age-of-aquarius.html). What excites me most is that developing humankind talents becomes under this paradigm an economic issue: development and allocation of talent are key for the development of the economy as well as business. Issue that neither capitalism nor communism nor socialism nor any “isms” have been able to perform. Allowing “the flowers to flourish”, in Ken Robinson's words, by changing education paradigms and focusing on human talent development becomes then the logical way to produce not only the people who will be able to work in a Knowledge Economy, not only the people which this new world is needing, but above all, it will help each person reach its full talent potential. Education under this concept will cover a human being as a whole, since only a fully developed person can create the full value that his or her talents can produce. It is a huge change of mentality, which comprises all the dimensions of human beings.

Under this idea, education will look absolutely different from what it is today. The main role of schools and teachers will be to discover, unravel and develop the hidden talents of their students and put them to work. This is where ICTs will play a great help. Internet will be the backbone for instruction. It will take the entire job required in education that has to do with instruction, while school will take care of human development: learning how to learn, how to connect and work with other people, how to know yourself, how to project oneself, how to contribute to the community. Codependence of all human beings on other human beings will become more apparent than ever, and we will teach our children how to grow in that environment full of opportunities.

To make that happen we need children to learn three basic things and have access to a fourth. They need to understand, that is, comprehend what they read, see and listen to. They need to think, that is, select the information they need, process it and come out with something more valuable. And they need to explain, that is, express their output in such a way others may understand. The fourth element is the platform: the ecosystem where all have access to the same contents, tools and communication facilities. That is the Web and the Broad Band.

Different measuring of the three basic components in different countries show there is a big gap between developed and under developed countries as well as within the same countries between those who had access to good private schools and those who didn´t. Therefore, education as it is right now is socially discriminating and economically unable to optimize the talents present in the nation. Students should be thriving under the Knowledge Society paradigms with a knowledge-based education. That will become a necessity: an economic as well as a social one. Countries that develop and allocate their national talents will be the ones which will lead in the new society, and that should serve as a huge driver of change. Unfortunately, incumbent literal "leaders" of the world do not see this and are resilient to change their priorities.  It will then be the work of new leaders to make the changes, and it is the role of those who do see this to push the message forward, no matter how scarce the attention received. It has always been the same with truly disruptive ideas.

Alfredo Barriga