Friedman. 2003. Leadership in the Knowledge Economy.

Intelligent Management in the Know ledge Economy

Edited by

Sven Junghagen Department of Management, Politics and Philosophy Copenhagen Business School, Denmark

Henrik C. J. Linderoth Department of Management, Politics and Philosophy Copenhagen Business School, Denmark

Edward Elgar Cheltenham, UK • Northhampton, MA, USA

1. Leaders for the Knowledge Economy

Ken Friedman

1.1 THE AGE OF INFORMATION

At the dawn of a new century - a new millennium, no less - one kind of economy is ending and another is struggling to develop. We fmd ourselves in an era that spans the end of the industrial economy and the beginning of the lmowledge economy.

Industry will remain a central factor in the new economy. Much as agriculture remained a central factor in the industrial economy, so the production of goods will remain vital to the knowledge economy. Human beings continue to eat, and they continue to need tools and other goods. It is the development of the latest generation of these tools - computers, software, informated machines and information machines - that gave birth to the new economy. The activities and services these tools make possible defme the knowledge economy.

It is nearly 10 000 years since the agricultural revolution gave rise to a new kind of society. The development of agriculture and evolution over the intervening millennia shaped and defmed subsequent economies. As they grew, they grew around the physical and cultural core of the earlier agricultural economy. Agriculture defmed a level of necessary products and services, and these remained important. What changed through subsequent development was the way that human beings managed agriculture.

At the dawn of civilization, most human beings were engaged in the work of feeding themselves and the groups around them. A huge farming and peasant class worked to feed and support the other groups in society. There was generally a small group of rulers and perhaps nobility or an aristocracy. There was a slightly larger group of educated administrators and managers. This group often included priests and it was sometimes identical with a priestly clerical or administrative class. There was a significantly larger group of warriors or soldiers. Many of were peasants. In many societies, military service was an accepted route to social advancement out of one class into another. There was a class of artisans, merchants, and other members of

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a civil society whose work included generating the different kinds of . products and services enjoyed- or required - by the other classes.

Over the centuries, agriculture remained an important factor in all civilizations. Agriculture did not become less important as civilizations advanced from an agricultural economy. It became more important. Evolving economies and societies meant larger markets. Better transport and improved preservation gave more agricultural products greater ··range in time and space. Ever-increasing interaction among cultural groups and societies meant new opportunities for agricultural products as existing products found their way into new cultures and new kinds of products developed through the new cultures of interaction. The same process took place as cooking and cuisines expanded, extended and ramified across cultures. An expanding universe of economies, societies and cultures meant an expanding universe of agricultural products and new uses for them. The importance of agriculture did not shrink. It grew. What shrank was the proportion of the overall human population required to produce agricultural products.

While the agricultural sector required fewer individuals for production, however, new economic sectors developed that used agricultural products in new and different ways. The cities that grew around markets became centers of consumption. These centers developed new kinds of food services -restaurants, taverns, bakeries - and these services developed new kinds of products. The development of other economic sectors also found important uses for agricultural products. Early smithing, metalworking and glassblowing industries required charcoal. Modem alternative fuels industries manufacture agriculturally based gasohol. Tomorrow's biotechnologies will generate still more products on the agricultural base. While the primary agricultural sector shrank, new sectors grew out of the agricultural base. Some of these sectors continue to grow even today.

The restaurant sector, for example, remains a vital center of all modem economies. It continues to grow as part of the immense hospitality industry, an industry allied to one of the world's largest economic sectors in travel and tourism, and an industry equally rooted in daily commerce and service to all the many people who eat food supplied by restaurants of one kind or another. A few moments' thought will reveal dozens of other growing sectors linked to kinds of restaurant services made possible by modem economic developments.

Agriculture was invented 8,000 years before Christ when the first farmers began to grow wheat and barley in what is now N orthem Iraq (Ochoa and Corey, 1995: 3). This invention was an important step toward civilization. It meant that wandering tribes of hunter-gatherers and herdsmen could settle in one place, and it meant that they could generate more surplus than had previously been possible. In a different era, even this small surplus was hard

Leaders for the knowledge economy 21

won, and a huge number of workers were required to maintain themselves and the other members of their societies. Ten thousand years later, two or three people per 100 supply entire societies with their agriculturaJ needs.

The changes over the past two centuries have been astonishing. In the United States, nearly 72 percent of all workers were employed on the farm in 1820. By 1994, that percentage had shrunk to 2.5 percent (World Almanac, 1998: 136). All of the OECD nations show similar patterns. It can even be said that this change is one of the criteria that differentiates a developing nation from a developed nation.

Similar shifts and developments have attended most economic developments. Increases in effectiveness, efficiency and productivity reduce input consumption while increasing outputs. Fewer people do more work, and the work they do is better.

The example of agriculture demonstrates the development of the first central economy. This example suggests a core of patterns and resources that continue to grow even through successive waves of economic evolution. However, while some earlier economic structures grow in absolute size, during the evolution of successive economies, they shrink in importance relative to other sectors of the economy. This seems to me to be the pattern of most industries in the knowledge economy.

Industrial organizations will continue to be an important factor in the world economy, but knowledge is a key distinction between the industrial organizations of the past century and the industrial organizations of the next (Drucker, 1990). The difference is information and information transformed into knowledge.

Agricultural commodities defmed the agricultural economy. All of these commodities were essentially alike. They were all comprised of physical material. Any one unit of any commodity was essentially interchangeable with any other unit of the same commodity.

Physical artifacts defmed the industrial era. These were primarily heavy goods or worked goods in which the value added by knowledge was used at the point of manufacture. Knowledge and information were important even in the industrial economy. They made the difference between good manufacture and poor. They created distinctions between successful manufacturing and unsuccessful manufacturing. Nevertheless, the manufacturing process represented the information value of the product. The information value of most products was hardly more visible in the manufactured product than the information value in agricultural commodities of past times. The greatest proportion of value in the product was physical. Only in the high-value-added precursors of high-technology goods such as fine clocks or highly technical equipment did information represent a significant proportion of the value of a product.


Today, the proportional value represented by information in industrial products is far greater than the value represented by material. This includes the information stored within the product as well as value added by manufacturing, distribution and service.

High-technology products contain vast amounts of information. But today's high-tech products often look like yesterday's relatively simple heavy goods, and many perform the same functions. High-tech products now include automobiles, airplanes or washing machines, not to mention telephones, television sets and toasters.

The information technology incorporated into an automobile could not have been imagined in an automobile two decades ago. I was recently informed that the onboard computing power of the latest high-quality automobiles far surpasses the onboard computing power of the first mission to the moon.

Information also comprises a significant proportion of service products such as banking or travel. In fields such as computers or software, information comprises most of the product. Telecommunication service products are nearly 100 percent information.

Most organizations are now service organizations and all service organizations are knowledge organizations. An increasing percentage of organizations have become pure information organizations enabling other organizations to produce or deliver goods and services.

In the past, information leadership involved relatively few organizations such as libraries and information companies. Today, information leadership is an issue in most organizations. Many organizations now designate managers for information policy. Titles such as 'chief knowledge officer' and terms such as CKO and CIO - chief knowledge officer and chief information officer - have become common in the business world.

In 1940, the Australian economist Colin Clark created an important classification scheme for different kinds of economies. He identified three ' classes: primary, secondary and tertiary. Primary economies extract wealth from nature, secondary economies transform extracted material through manufacturing, and tertiary economies engage in service. Clark's (1940) scheme was the basis of Daniel Bell's (1999) deeper analysis. In BelPs scheme, there are three kinds of society, pre-industrial, industrial and postindustrial. Pre-industrial society is based on a primary economy, industrial on· a secondary economy, while the classes of economy within a post-industrial society involve tertiary, quaternary and quinary sub-divisions of the service sector.

The analytical discourse of the post-industrial economy considers the relations between human beings and artifacts, and particularly the new kinds of economy that are brought about by the relationship between technologies


and societies. A rich body of literature over the past quarter century focuses on these issues (Bell, 1976, 1999; Block, 1990; Dudley, 1994; Hage and Powers, 1992; Stanback, et al., 1981; Stull and Madden, 1990).

Scholars in information science contrast the growing focus on human factors in information with the previous emphasis on technology and processing. This involves ideas emerging from the human sciences (Wilson, 1995: 277), learning theory (Olaisen, 1995: 13-17; Senge, 1990) and many allied areas of research (Ingwersen, 199 5: 7 5-8 8). Information specialists are increasingly responsible for people rather than equipment. Their focus is the interface between information technology and the individual information user (Friedman, 1995a). They will be increasingly responsible for the flow of information throughout the organization (Stewart, 1995: 97; Zuboff, 1988: 103-4).

During the past few years, mformation leadership has begun to shift its frame of reference. Soon, it will no longer be a branch of information technology or information science. It is becoming an interface profession located at the border of information science and organizational leadership and an interdisciplinary academic field touching information science, the human sciences and cognitive science.

1.2 WHAT IS LEADERSHIP?

In Leadership for the Twenty-first Century, Joseph Rost defmes 'Leadership [as] an influence relationship among leaders and followers who intend real changes that reflect their mutual purposes' (1991: 102). The old, industrial paradigm of leadership identified leadership with good management. This may have been adequate for a different era with a different workforce. It is no longer useful in an era in which the flow of knowledge determines the success or failure of every organization, public or private.

The flow of knowledge involves more than the organizational need for information. It involves the development of today's well-educated, increasingly skilled workforce required by contemporary organizations. This workforce requires effective leadership enabling individual workers to activate their talents for the entire organization. To foster the mutual purpose that Rest describes, organizations must nurture relationships based on trust, shared values and ethics. Information is a key resource in this process.

What do leaders do?

Leaders do three things:


1. they lead others; 2. they manage organizations; 3. they achieve direct personal results in one or more professional areas.

Only leading others is a leadership function. The other functions often attend leadership positions but they are not leading. Leading means achieving results by working through other people.

Leading others can be summarized in an inventory of eight tasks (Friedman, 1995b):

1. determining appropriate goals and establishing a strategy to achieve them;

2. putting the right people in place to accomplish the goals; 3. promulgating the strategy and goals to those who must realize them; 4. ensuring that each person has the necessary resources to do his or her

job; 5. getting out of the way to let each person do his or her job in his or her

own way; 6. monitoring activity and results; 7. intervening only to remove obstacles to achievement; 8. giving feedback, praise and appropriate coaching.

W. Edwards Deming established a series of 14 points for realizing these tasks in operational terms. Deming's principles have now been successfully tested in industrial organizations around the world (see below).

1.3 DEMING MANAGEMENT AND THE LEADERSHIP TOOLS OF THE INFORMATION ERA

Deming became famous by helping Japanese industry in its post-war transformation. During those years, Japanese manufacturing moved from low quality to high qua1ity. One of the factors attending the transformation was a shift from ineffective management to effective management. As Japan moved from low-technology manufacturing of hand-made souvenir goods to advanced technology manufacturing of premium products, management came to involve leadership, culture change within organizations, and fmally organizational learning.

In Japan, Deming's theories and practices are seen as the highest expression of effective leadership for the industrial age. This view is also known elsewhere.


Deming himself looked on his ideas as a combination of science, art and philosophy. He considered his 14 points to be 'principles for the transformation of Western management' (Deming, 1986: 18) and the 'transformation of. .. industry' (Deming, 1986: 23).

Popular articles often describe Deming as a quality guru. This may have had something to do with Deming's work in Japan. It may also reflect the fact that many people became aware of Deming at the time that Japanese industrial production became associated with high quality. This was an era when Western industrial leaders were shocked to discover that Japanese manufacturing had begun to set global quality standards while remaining competitive on price. This shock and the search for answers brought Deming into wide public view for the first time. The circumstances of his emergence gave him a reputation in quality issues. Deming deserves this reputation, but he was never a quality guru in any specific sense. Rather, he was a systemic thinker on management and leadership.

Deming did not advocate high quality in a narrow sense. He proposed principles for effective managerial leadership and good working practice. His central point was that applying these principles would make business and industry work as · they should. Quality would emerge as one natural consequence among many.

Quality is a natural outcome of a system that Deming terms 'profound knowledge' (Deming, 1993: 94--118). Deming's method is based on the development of social, intellectual and psychological values operating in comprehensive organization-wide systems that capture and reinforce the val1:1es and knowledge of an entire organization. Deming saw organizations as organic entireties linked by the flow of knowledge. He understood and outlined the leadership criteria, human criteria and ethical criteria that make it possible for knowledge to flow effectively through organizations. Deming's system of profound knowledge was also the first articulate leadership system of the information age.

'A system of profound knowledge', Deming writes, 'appears ... in four parts, all reJated to each other: appreciation for a system; knowledge about variation; theory of knowledge; psychology'.

'One need not be eminent in any part of profound knowledge in order to understand it and apply it. The 14 points for management in industry, in education, and government follow naturally as application of the system of profound knowledge, for transformation for the present style of Western management to one of optimisation' (Deming, 1993: 96).

Deming's view is that the outcome of any process is shaped by a system. Leaders must understand and shape the systems that give body to their organizations - human systems, information systems, mechanical systems. Through years of practice and experimentation, he developed the 14 points


that make organizational systems effective (Deming, 1986: 23--4; also see: Aguayo, 1990: 121-2; Scherkenbach, 1991; Walton, 1989: 33-6):

1. Create constancy of purpose for improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must Jearn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the ftrst place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to

improve quality and productivity, and thus constantly decrease cost. 6. Institute training on the job. 7. Institute leadership. The aim of supervision should be to help people and

machines and gadgets do a better job. Supervision of management is in need of overhaul as well as supervision of production workers.

8. Drive out fear, so that everyone may work productively for the company. 9. Break down barriers between departments. People in research, design,

sales and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations and targets for the workforce asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low performance belong to the system and thus lie beyond the power of the workforce.

11. Eliminate work standards and quotas on the factory floor. Substitute leadership. Eliminate management by objective. Eliminate management by numbers and numerical goals. Substitute leadership.

12. Remove barriers that rob the hourly worker of his or her right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, among other things, abolishment of the annual or merit rating and of management by objective.

13. Institute a vigorous program of education and self-improvement for everyone.


14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

Deming views the organization as a system. He is not reductionist nor does he advocate instrumentalism. He sees the human beings who work in and comprise organizations in human terms. His system rests on solid ethical and psychological foundations.

Deming portrays human psychology in its fullest dimensions. His understanding of needs can be compared with Maslow's Hierarchy of Needs {Maslow, 1998: xx; see also Maslow, 1954, 1987~ See also Hersey and Blanchard, 1969: 22-40)~

This also involves the issues of trust and shared values seen in the leadership literature among scholars who view work as a profoundly human experience, based on earned trust and shared values. These human issues are central to the key leadership theories of recent years (see Bennis, 1989; Bennis and Nannus, 1985; Hersey and Blanchard, 1969; Kouzes and Pozner, 1991; Nannus, 1989).

1.4 EMPLOYEES IN THE KNOWLEDGE SOCIETY

Workers in nearly every kind of organization require comprehensive information and effective knowledge to work effectively in this era.

Prosperity in the knowledge economy requires that all workers create, share and distribute information freely. This applies to management workers and line workers alike. It is no longer effective for management to withhold information or to make decisions based on restricted or putatively superior knowledge. Today's workforce is well educated. Tomorrow's workforce will be even better educated. The social distance and knowledge differential between line worker and leader is shrinking, and with it, much of the supposed reason for a major salary differential between line workers and top leadership. In this era, shifting skills and shifting expectations transform many of the organizational principles that govern the flow of information and power.

While organizational ethics are not the focus of this article, certain issues should be considered in the context of changing organizational patterns. Specifically, I refer to the frequently noted tendency of managers to reward themselves when times are good while cutting back on workplaces or worker salaries when times are bad. Individuals tend to attribute success to individual, personal qualities when times are good. In contrast they attribute problems or failures to external circumstance in hard times. Deming, trained as a mathematician, physicist and statistical analyst, demonstrated that


organizational success and failure are the more result of the systems we create rather than the action of any one individual in an organization (Deming, 1986; Deming, 1993).

Changing times and transnational linkages in today's complex world economy mean that distant and seemingly unrelated factors affect the performance of many organizations. Scientists see the well-known 'butter:l:ly effect' in complex systems such as weather, stock markets, or political economics (Gleick, 1987: 11-31). Distant or chaotic events also affect longterm business cycles and the short-term play of forces that lead to the profits and losses of individual fmns. This requires a new view of the factors that determine an organization's results.

Consider one case that represents many similar situations. A drought in Africa leads to a hydroelectric contract for a construction company in Idaho. This contract generates a sub-contract for an electrical turbine manufacturer in Michigan. The same drought destroys a year's harvest of a certain plant. The crop failure causes an Argentine food-processing plant to default on its supply contract and lose the year's profits. This loss requires the Argentine firm to cancel a contract with an equipment manufacturer in Arizona. Do the leaders of the Michigan plant deserve a bonus? Should the workers in Arizona be frred?

Consider the real case of a company president whose salary was increased dramatically at a time when company losses required him to reduce staffmg and cut costs. One justification he offered for the increase was that the stress of cutting salaries and staff positions meant he deserved more pay. There are several prominent recent examples of this situation. This is difficult in a knowledge-based company where well-educated workers understand the causes of prosperity and failure and well-informed workers understand the tlow of operations through the firm.

In the knowledge economy, will it continue to be possible for managers to defend salaries and privileges in excess of the other employees'? Successful organizations are increasingly horizontal, successful companies increasingly multi-skilled and skills increasingly spread through the organization. While managers do not want -to give up their privileges, organizational success suggests they must.

According to the Economist (1995: 75): 'it does not take a degree in epistemology to realize that organizations thrive on open communication and creative electricity. But, given that many managers owe their power to the monopoly of knowledge, and that many organizations are so complex that people from different departments never meet, flrms need all the skills they can get to put these insights into practice'.

These are turbulent times, and, as Peter Drucker notes, 'a time of turbulence is also one of great opportunity for those who can understand,

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accept and exploit the new realities. It is above all a time of opportunity for leadership' (Drucker, 1993a: 5).

1.5 INFORMATION LEADERSHIP FOR THE INFORMATION AGE

Industrial organizations, from the nineteenth-century French coal industry to the Detroit automobile industry, were based on span of control imposed through administrative hierarchy (see Fayol, 1987; Ford, 1991; Halberstam, 1987; Sloan, 1986). These organizations involved wide social and salary distance between leadership and workforce. Those distances were based on and required the imperfection of information between leaders and workers. Management workers were knowledge workers while line workers were generally uneducated or lacked the wisdom and skill to transform information into knowledge.

The imperfection of information served another role in terms of the flow of power. Simply stated, many managers owe their power to the monopoly of knowledge. Without regard to the negative effect of imperfect knowledge within the company, individual managers derive personal benefit from imperfect information. Managers often use imperfect information to shield and defend privilege. This has a price. One price is strife among managers as individuals build feudalities and fiefdoms within the corporate structure. The other is the kind of labour conflict that helped to gut American industry in the 1970s, turning much of the industrial Midwest into a rust belt (see Halberstam, 1987).

Perfect information within an organization shapes attention and focus for all participants. In the late 1970s, banker and investment advisor Michael Phillips advocated business information - including all fmancial records - available to all stakeholders for this reason. He described this as 'a superior strategy for business that emphasizes openness, community and extensive access to information' (Phillips and Raspberry, 1981: ix, 83-90).

Ricardo Semler, internationally noted as one of Brazil's best-known business leaders, also advocates open books and his firms even offer classes for workers to learn to analyse corporate data (Semler, 1993: 132-7).

Semler notes that 'in the modern organization power rests with information' (Semler, 1993: 132). Granting access to information - even insisting on it - is an important step in the evolution of any organization that intends to practice empowerment. While many believe that ethical values and the free flow of information are essential to the modern organization, others argue that it is difficult to make an empirical demonstration of benefits. What can be studied empirically is worker behaviour, organizational effectiveness,


or profitability in companies with an open books policy. In Semler's fmns, for example, workers understand 'Why the profit ratio is what it is (Semler, 1993: 132-7~ 193-9). They play a significant role in corporate stewardship by effective participation in the fmn' s investment plans, by initiating costcutting and profit-building measures, by sharing leadership constructively.

In the information age, leadership will increasingly come from many points in the organization. Just as management workers and line workers are both workers, so leadership can flow from management leaders and line leaders. The successful private and public organizations of the future will be increasingly flat and increasingly small (Sakai, 1993). Large organizations will be increasingly structured to behave as if they are flat and small.

Peter Drucker notes that ' ... Because of its flatter structure, the large information-based organization will more closely resemble the organization of 150 years ago than today's big companies or big government agencies' (Drucker, 1990: 202-3). In effect, Drucker and others predict an era of specialists, several or hundreds or even thousands in every organization. They will also be generalists, and organizations will derive strength and flexibility from the cross-fertilization of specializations across all workforces. 'Information is data endowed with relevance and purpose', writes Drucker, 'converting data into information thus requires knowledge. Moreover, knowledge, by definition, is specialized ... The information-based organization requires far more specialists overall than the command-andcontrol structure we are accustomed to' (Drucker, 1990: 202).

1.6 A REGIONAL APPROACH TO INFORMATION LEADERSHIP

The innovative management practices of the knowledge economy are often identified with specific regions and issues. One example of this view describes 'a new generation of companies ... born, largely in North California but also in Sweden, Denmark, Brazil, England and in other countries as well. For their founders, a company must pursue a multiple bottom line: fmancial, environmental, human and social. All individuals are seen as different from one another, and that diversity is glorified and seen as a strength for the organization. It is possible to be in business to make a better world' (Ecole Nationale des Ponts et Chausees, 1995: 32).

Scandinavian social policy has always seen infonnation in tenns of public welfare. This has been true since the Nordic nations began to develop the first information policy for public libraries (Audunson, 1995: 147-52).

Scandinavian businesses and governments increasingly realize the importance of information in the new international economy. Denmark has


been the most advanced. Finland is also making plans for an information policy that will affect every area of national development as Y Jjo Sotamaa said in a speech at a recent conference dealing with issues of urban planning in the information age (Sotamaa, 1995). Sotamaa, a member of the Finnish national commission of information technology policy, noted that the most important effects of this policy would be felt in organizations - industrial and public. Sweden has been promoting a 'knowledge lift' and expanding its university network. Norway debated the idea of a public information policy in the middle of the 1990s (Jagland, 1995; Solheim, 1995), but this debate has been quiet in the past few years.

Denmark has made the most progress in information policy. In 1995, Denmark's Ministry of Research and Information Technology issued a report on the role of information in education, public service, business, research and government affairs covering a broad range of topics that affect organizations. These topics included 'The electronic service network of the public sector ... A better health service providing faster treatments ... The 'global village' of research... New ways in the educational system... Cultural network Denmark.. . The mass media through new channels. . . Information technology - a means to improve traffic management... Network of companies ... The world's best and cheapest telecom services ... Open network of society' (Ministry of Research and Information Technology [MRIT], Denmark, 1995).

According to the report ' ... With the fusion of the telecommunications and computer technologies ... geographic distance tends to lose its importance altogether. Many production processes are made dramatical1y more efficient. Entirely new requirements for the qualification of employees are often the consequence of these trends. The basic conditions of cultural development and education are radically changed.'

'In the global perspective', the report states, 'the Info-Society is certainly becoming a reality that we cannot dismiss. The only question is how we will respond to it' (MRIT, Denmark, 1995).

The free flow of information based on ethics and social engagement mirrors the great historical trends of Scandinavian culture. One can compare this to the market-oriented social democracy of Scandinavian industry. One can call it green capitalism. One can even consider the perspective of liberal, Nordic Lutheranism. The golden rule stated in Matthew 7:12 is one of egalitarian reciprocity, asking us to behave toward others as we want them to behave toward us. Restated in contemporary language, this is the profound humanism of Ricardo Semler's vts10nary capitalism. Successful organizations require management workers and line workers to treat each other as they wish to be treated. This process builds strong organizations based on mutual purpose and shared values.


The impetus for democracy and a vision of the good society for the twenty-ftrst century is reflected in the Danish position. Jytte Hilden (1998: 182), former Minister of Research and Technology, described the importance of information technology in Danish society as 'the fall of authority'. Hilden was not lamenting this fall. She and her government were advocating the rise of the citizen. The Danish government was working to replace government bureaucracy with direct citizen action to the greatest degree possible, facilitated when possible through information technology. On the one hand, this represented a greater move toward democracy. On the other, it meant cost savings and the opportunity to shift workers and public service resources to the areas of greatest need.

The doctrines of equality and the free flow of information have been core issues in Scandinavia since the Lutheran Reformation. Martin Luther specifically linked them. In his Appeal to the Ruling Class of 1520, he cited I Corinthians 12:12 where the apostle Paul writes, 'We are all one body, yet each member has his own work for serving others'.

Luther noted that all members of the community have equal standing in many dimensions and that 'there is no difference among them except in so far as they do different work' (Luther, 1961: 407). In the same document, Luther (1961: 470) urged universal education.

By translating the Bible into German and making it accessible to all, Luther established the doctrine of free information to all members of society. This, in turn, became a principle of the Enlightenment.

Luther's vision was that the information needed for the conduct of public life belongs in the hands of the people. Heiko Oberman notes that the impact of Luther's Bible was that it 'did not remain a linguistic work of art; it became a book of the people' (Oberman, 1993: 306). Education for all, knowledge to all, was a central issue of the Lutheran polity. Luther's views on many issues were the views of his era, less liberal than our own. Over time, however, his view on education and information have had a profound effect in shaping the consensus on the role of information in democracy that is now estabJished in Scandinavia.

1.7 NATIONS IN THE KNOWLEDGE ECONOMY

If these trends have been early and swift in Scandinavia, they are reflected in a wider global shift. Developing information leadership will be important to economic and political stability in all societies during the challenging years to come (Friedman, 1998).

Many challenges are already visible. There will be a significant shift of economic power to Asia as human capital, vast growing markets and a wealth

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of natural resources come into play. As the Asian nations grow in education ]eve], in manufacturing quality and in prosperity, the Pacific region will increasingly shape the world economy.

Writing in Foreign Affairs, Kishore Mahbubani noted the 'faster spread of technology, ideas, techniques, and capital across borders' made possible by information technology and the transformation of information into knowledge (1995: 103). ' ... the Pacific has emerged as the most dynamic region of the world', he notes, 'because it has drawn on the best practices and values from many rich civilizations, Asian and Western. If this fusion continues to work, there could be explosive creativity on a scale never before seen' (1995: 107).

The flow of information is at the heart of this development. The growing nations of Asia are now shaping information policy as Singapore has done and placing even greater emphasis on education as in Korea and China.

Despite the struggles of uneven development, growing Pacific economies will inevitably come to balance the power of European and American interests. This will exacerbate the difficulties of European nations through restructured industries, structural deficit, and structural unemployment. While vast, impersonal forces are shaping the era, many European govenunents are responding in local, political terms.

There is no guaranteed safe course in an era of turbulence. The most likely path requires more education, better information systems, more knowledge, and a better educated workforce. The same political leaders who understand the need for this transition worry about the effects this will have. They feel that more education will produce more highly educated but unemployed scholars, that improved information systems will reduce jobs in selected industries, that a better-educated workforce will be more demanding. All of these worries are real. These realities will be problematic no matter what governments do.

The difference between effective .policy and ineffective policy is a nation rich in human capitaL The population of individuals equipped to succeed in the knowledge economy represents this. These individuals and the opportunities they create will enable nations to survive.

All nations with literate workforces will face the problems shaped by an increase in knowledge workers. Nations with an advanced, knowledge-based workforce will have the skills to solve many of the problems and economic strength will afford the resources needed for solutions. While I do not address industrial policy or agricultural policy, I believe that both will increase in importance in the international knowledge economy. Once again, shifting ratios will come into play.

People must eat. People and the societies within which they live will continue to require manufactured products. Industry and agriculture will


therefore remain central forces in a balanced economy. The difference between the knowledge economy and earlier economies based on agriculture or industry is that advanced informated nations will be able to pursue both agriculture and industry more effectively.

1.8 THE NEED FOR KNOWLEDGE LEADERS

Informed and informated nations require an adequate corps of knowledge leaders. These leaders will not be librarians, information technologists, sociologists, historians, or managers. They will be professionals with experience, education, and background in several of these areas. Scholars in these fields will have multiple points of entry and a variety of application points for research and practice in such disciplines as informatics, information science, information leadership and knowledge management, as well as through more traditional fields ranging from business administration to library science or engineering.

Knowledge leaders will play a key role in the new economy in the public and the private sectors. The mix is vital. If knowledge leadership depends on state institutions and national policy, it will be difficult to bring about the broad diffusion of knowledge needed for economic success.

In the information economy, the flow of knowledge and the flow of market forces parallel each other. Information policy established as a pure public function tends to ignore the useful feedback of the market while diverting resources toward purely egalitarian functions. This course cannot work in the end.

On the other hand, it is dangerous to permit market forces to establish all the premises of the knowledge economy. A broad vision and public goals are necessary for the development of the educational and informational infrastructure required by the knowledge economy. Public and private sectors need each other. Both function most effectively in a healthy linked system. There are always short-term opportunities in the limited frames of a single business venture or a specific public project. Even so, neither the public nor the private sectors can meet the challenges of the knowledge economy by itself: in the long run.

It is interesting that an increasingly democratic and service-oriented information economy has grown in the great capitalist economies and the highly industrialized nations. This moment in history spells both opportunity and threat.

To embrace the future, all participants in a society must have access to the same information, the same opportunities, the same advantages. What use each makes of these is up to the individual person, the individual


organization, the specific communities of practice and polity within which they are located. This choice is the difference between equality of opportunity in a mixed economy and the failed egalitarianism of the Marxist economies. However, central control in failed economies seems often to fmd a parallel in central control over large organizations by their own leaders. This is particularly dangerous in a time when some individual companies have a larger annual gross domestic product than many nations. If leaders attempt to maintain sole proprietary control of information - in companies, in nations, in transnational economies - our economies will choke and fail.

Knowledge leaders serve large public and private goals. Information officers, knowledge officers, even 'gatekeepers' will shape and transact the information that becomes knowledge for public policy, public affairs and private enterprise. Mahbubani writes, 'History teaches us that trade and investment bring not just money and goods, but also ideas' (Mahbubani, 1995: 108). The knowledge leaders of the future will play increasingly larger roles as agents of the knowledge economy.

Acknowledgments

Thanks for comments and criticism to: Trond Blindheim, former Assistant Professor of Marketing Communication at the Norwegian School of Management NMH; Sven Junghagen, Associate Professor Management, Politics and Philosophy at Copenhagen Business School; and Johan Olaisen, Professor of Information Leadership at the Norwegian School of Management Bl.

Date post:	12-Jan-2023
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Friedman. 2003. Leadership in the Knowledge Economy.

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