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REVOLUTIONARY WEALTH

Alvin and Heidi Toffler

by

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chief

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Wealth Systems

1. Wealth is anything that fulfills needs or wants

2. A wealth system is the way wealth is created

3. True wealth occurs when man is able to create an economic surplus

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Three Wealth Systems

1. Agriculturea. Ten millennia ago, a woman planted the first seed

in what is now known as Turkeyb. Instead of waiting for nature to provide, man could

make nature do what he wishedc. Agriculture allowed man to settle into communities d. Agriculture created trade, barter, buying and selling e. In some years, there was an excess of foodf. War lords, nobles and kings were able to become

rich by stealing the excess wealth created by agriculture

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2. Industrialisma. This second wave of wealth creation brought mass

production, mass education, mass media and mass culture

3. Knowledgea. This third wave substitutes knowledge for the

traditional factors of industrial production – land, labor and capital

b. This third wave de-massifies production, markets and society

Three Wealth Systems

* The first wave was based on growing things, the second was based on making things and the third is based on serving, thinking, knowing and experiencing

*

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Changes in Deep Fundamentals

1. Worka. Until field labor was replaced by factory work, few

people ever held a jobb. A “job” in today’s sense of formally committed work

in return for pay is a recent innovationc. For centuries, most labor was forced labor

(slavery for example)d. Work has moved from outdoors to indoorse. More people will work in the future but there will be

fewer jobs

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2. Time

a. Never have the pressures been greater for organizations to speed up their operations

Quality

CostTime

Changes in Deep Fundamentals

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2. Timeb. Relative speed of current organizations

100 mph – American business90 mph – Non-governmental organizations (NGOs)60 mph – American family -- Fewer than 25% of

American families have a working father, stay-at-home mom and two children under the age of eighteen

30 mph – Labor unions25 mph – Government bureaucracies10 mph – American school system5 mph – Intergovernmental organizations (IGOs)

such as the United Nations, IMF and WTO3 mph – US Congress and White House 1 mph – The Law

Changes in Deep Fundamentals

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2. Time

a. Never have the pressures been greater for organizations to speed up their operations

Quality

CostTime

Changes in Deep Fundamentals

Ideas?

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3. Placea. Wealth creation in the world continues to

move westb. Detroit & Cleveland, both second wave

cities, are listed as the poorest large cities in the US*

* per US Census Bureau, 2008

Changes in Deep Fundamentals

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Unique Characteristics of Knowledge

1. Knowledge is inherently non-rivala. Millions of people can use the same chunk

of knowledge without diminishing itb. The more knowledge is used, the more

knowledge is created. This is not true of food or “things”

2. Knowledge is intangiblea. We can’t touch, fondle or slap it, but we

can (and do) manipulate it

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Unique Characteristics of Knowledge

3. Knowledge is non-lineara. Tiny insights can yield huge outputsb. Yahoo was started when two college students

simply categorized their three favorite websites

4. Knowledge is relationala. Any individual piece of knowledge attains

meaning only when juxtaposed with other pieces that provide its context

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Unique Characteristics of Knowledge

5. Knowledge mates with other knowledgea. The more there is, the more promiscuous and the

more numerous and varied the possible useful combinations

b. Giving rise to “Meta-solutions”

6. Knowledge is more portable than any other producta. It can be distributed for a very small price

7. Knowledge can be compressed into symbols and abstractionsa. Try compressing a toaster

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Unique Characteristics of Knowledge

8. Knowledge can be stored in smaller and smaller spaces

9. Knowledge can be explicit or implicit, expressed or not expressed, shared or tacit

10. Knowledge is hard to contain -- it wants to be free of boundaries

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The Information/Knowledge System is Unique

1. The information/knowledge wealth system is the first system to be driven by an inexhaustible and unlimited resourcea. All other wealth systems were based on scarce

resources such as food and raw materials

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Services Become Products

c. In the United States, bank customers in 2002 executed nearly 14 billion ATM transactions(1) Assume that, on average, a simple face-to-face

transaction at the bank might have taken two minutes

(2) That means customers performed 28 billion minutes of unpaid work that would otherwise have required banks to hire more than 200,000 additional full-time tellers

(3) Banks frequently charge customers an extra fee for the privilege of doing the extra unpaid work

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Observations• Businesses confined to “tangible” products

are limited by scarcity of people, property and capital

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Observations• Businesses confined to “tangible” products

are limited by scarcity of people, property and capital

• Knowledge-based businesses are built on an inexhaustible and unlimited resource

• Which are likely to grow faster?

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Questions• What are the “knowledge” components of

my business vs. the “tangible” components?• What can I do to move my business to a

“richer mix” of knowledge vs. tangible?• How can I protect and leverage my

company’s knowledge base? • What can I do to reduce cycle times of both

“learning” and “doing” in my company?

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REVOLUTIONARY WEALTH

Alvin and Heidi Toffler

by