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

How will Education look like in 50 years' time?

Public Education was invented in the nineteenth century to produce the workforce needed by the industrial revolution, as brightly explained by Sir Ken Robinson:  

This model is no longer useful. As the Knowledge Society brings the Knowledge Economy, education must be able to help each person develop his or her particular talents and affinities, since talents produce knowledge, and knowledge is the resource. The education model based in standardized curricula and hierarchical learning methodology does not produce that each person develops its particular talents. I am afraid most people in the world actually do not work in what they like most and are most talented. And that, in terms of knowledge economy, is a monumental waste of resources.

The point is how can we generate an education model that can be personalized and yet scalable. Here’s a proposal.

Schools have two roles: instruction and formation. With instruction children learn things, with formation, they acquire habits and values. Learning is actually what gets the bigger part of the time spent at school. Habits and values are considered to be a consequence of learning. Why do we name “hard skills” those that come from instruction and “soft skills” those that come from values, if it is not that we praise more instruction than values? And, no time is spent at school in acknowledging the talents and affinities of each child.

The Internet is increasingly allowing instruction to be self-done.  Sugata Mitra has exprienced with children who teach each other using Online contents (http://www.ted.com/talks/lang/en/sugata_mitra_the_child_driven_education.html) . Roger Schank has experienced with "learning by doing online" (MBA Online, La Salle at http://www.beslasalle.net/portal/masters/masters-mba-mbaol-online).  Salman Khan (The Khan Academy, www.khanacademy.org/) has introduced an interesting new paradigm called “flipping the classroom”. Children in classrooms are instructed by the teacher and do homework at home. Khan makes it the other way.

The methodology consists in making students get instructed at home through the Web, with lessons uploaded to YouTube. This allows students to “rewind and play” the lesson as many times as they want, until they get it. Or, to comment with other fellow students through social networking until they get it. In the classroom is where “homework”, that is, the repeated application of the concepts learned, happens with a one-to-one computer approach. The teacher monitorizes who is doing well and who is not, and makes the advantageous student help the handicapped one. Plus, there is team work to discuss matters and present conclusions. This makes students learn, think, and apply what they learned. And get used to work as a team.

I think with this approach you don´t need classes to be as long as they are now, liberating time that can be devoted to the “soft skills” part. This is where the teacher becomes a mentor rather than a teacher, helping each student to discover his or her talents and affinities. With the information raised from flipping the classroom, each student can be guided to those subjects more related to his or her affinities and talents. With this, the students in most classes will share talent and affinity, making the class something thrilling and challenging to both students and teacher. Mentoring then can be specialized by affinities, with teachers related to the subjects where affinity is shared by the students, making creativity part of the methodology of teaching.

This will help students when confronting what professional career they want to follow.

In Knowledge Society professional training will become an ongoing activity. But, instead of packaging knowledge under a college or post graduate degree, the student will be able to choose what subjects he or she should follow in order to better develop talents and affinities. Universities will provide accreditation of subjects. A personalized curriculum will be able to be made by each person, structured and poured in job searching engines, making it possible to match jobs, talents and affinities. Therefore, jobs will be given to people most talented and related to the soft and hard skills needed for the job, in a worldwide job market searching for specific knowledge jobs.

With the “flipping the classroom” paradigm, the fragmentation of college and the universal access to the Internet, students will be able to attend classes anywhere in the world (limited only by language, which can also be learned Online), making education more competitive, innovative and cheaper.

I think that in 50 years' time the way people are educated, search for a job and develop their professional career will be totally changed. Less and less people will have a permanent job in an organization. More opportunities – and more uncertainty – will be available as the Knowledge Society and the Knowledge Economy evolves, focusing in intangible assets rather than tangible ones.

It took a lot of guts to our forefathers to produce and make possible the Public Education paid by with taxation to educate a huge amount of people which, up to then, had no access to education. It will also require a lot of guts to change the actual paradigms which are no longer suitable for the present Society and Economy, due to the fear of uncertain results and the lobby that will be raised by incumbent members of the Education sector which might see a threat in the new order of things. But that is just what happened two hundred years ago when Public Education came to place.

The bottom line is that the new paradigm will have to fulfill the needs of Knowledge Society, that is, that each person may work where he or she is most talented and likes best working at. Only then will knowledge create the maximum value it may reach, since knowledge is the product of people interacting with other people, with nature and with things created by people.

Alfredo Barriga

The Age of Aquarius

What would the World look like if everyone in the Planet could work where they are most talented? How bigger the Gross Domestic Product would be? How happier would people be? What would quality of life look like as compared to the actual reality? I have no measurable answer for any of those questions. What I am certain of is that it would be a lot bigger, a lot happier and a lot better than now. It is one of those “truths that are hold to be self-evident”, as Thomas Jefferson quoted.

During thousands of years humanity has been focused on the wealth that arises from the environment – physical resources – or whatever visible goods and means of production it has been able to create. Now we are coming to see that the real value creation is inside people themselves, in what looks not visible: creativity - the ability to think, understand, and come up with something different. 

That knowledge in itself becomes not only a resource, but the resource, as Peter Drucker states in his book “The Post Capitalist Society”, is driving and will continue to drive the focus of humankind from visible resources to invisible resources. If all the potential talent existing at one moment in the World could be unraveled and put to work at its best, in a global, networked, and collaborative basis, creativity, innovation and value creation would boost. We have no idea what that would look like, but undeniably it would be a lot better than what we have now. Networked and global collaboration would also constitute a driver for peaceful relations, since everyone would see clear that all are codependent from one another for the benefit of each. It is Nash’s equilibrium but in a “coompetitive environment” – one where competition and collaboration go hand in hand for a win/win relationship. It is Metcalfe’s Networks Law, but applied to Society instead of telecommunications.

The fact that knowledge is the leading resource must change the focus of all public, corporative or organizational policies, since knowledge comes from people, well trained, well motivated and working where they are most talented - something that Sir Ken Robinson calls “the element”.  Under these circumstances, the greatest waste of resources in the world is the huge amount of talent in stock that is not being used, be it because people do not work where they are best talented, or be it because they are poor and have no opportunities to educate themselves properly. Poverty becomes not only an injustice, but a measure of economic stupidity. All that talent not being put to work are cuatrillions of dollars kept under the pillow.

This new age needs a new education model. What Sir Ken Robinson contents is right: the actual public education model throughout the world is a creation of the enlightment to serve the needs of the industrial revolution. It is inadequate for the Knowledge Society. It will never be able to produce this change of paradigm where everyone is able to develop all the received talents. The technological platform to make that change is available. But there is a big resilience worldwide to make the change. It has worked during more than two hundred years; too many people live of it and by it, and the new paradigms, though clear regarding the “what” are not so clear regarding the “how”. Yet, it must be remembered that it was the same thing when public education came to life.

Knowledge Business, Knowledge economy and Knowledge politics are emerging. There is a worldwide feeling that “something big is going on”.

The Internet economy is thriving: it is growing continuously at two digits every year at a far bigger rate than any emerging economy; it is creating 2.6 new jobs for each one it destroys; it is moving over 8 trillion dollars a year in commerce; it is boosting exports in SMEs. Forty years ago, free trade was an economic theory, but one contested. Half the world relied in central, governmental planning. Today free market is champion. Only, it does not deliver accordingly to what theory says, hence the big financial troubles we are seeing, and the need for more regulations. But inside the Internet economy, it does work: equal opportunities, equal and symmetric information, low barriers of entrance and exit, free concurrence, free trade, and free stuff (doesn´t happen offline) competing with paid for stuff, no monopolies (once you are in: there are, unfortunately, monopolies for access to the Web in many countries)... and no regulations – aside those that deal with cybercrime. That environment has produced the biggest innovation tide ever seen, the fastest market capitalization ever recorded, the most globalized small business expansion ever known of.

The role of the State is being put to test, which is logical, given that the actual role is also a product of the enligthment and the industrial revolution. The global community emerging from the Knowledge Society and the value creation of invisible means of production available throughout the world as if they physically were present in the same place is surpassing the very concept of Nation State that emerged with the upcoming of democracy and industrial revolution.

Knowledge Society is being built by a number of knowledgeable people – especially in Information and Communications Technologies. But most of all, it is being built by the people who use the Web. Unlike other prior revolutions, this one is top-down in its creation but down-top in its development. It is as if the Net had a will of its own, different from the will of each of the people involved in it. Things happen fast and transcend people, nations, races, gender.

I know this is like reinventing or reengineering humanity. Perhaps too big a task, but that is what a new age is about. Knowledge Society and the Internet are making it possible. The ten flatteners and the three convergences that Thomas Friedman speaks of in his book are making it possible. Two billion people are connected now, and all and each one of them has access to practically the same contents, tools and platforms. The power that can be released actually in this environment is paramount. And if the five billion people who are not actually in the Internet had access to it, the consequences would be immeasurable

World leaders must acknowledge and understand the deep meaning of these changes. It is not economics 2.0, or politics 2.0: its humanity 2.0. That is why I believe it is a new age, the age of Aquarius. The faster these ideas are put to work, the sooner its benefits will come to all humankind.

Alfredo Barriga
Past Secretary for Digital Development, Chile