By: Kenan Jarboe
Exploring the I-Cube Economy: Information, Innovation, and Intangibles
A conference to broaden the debate about inclusion of all Americans in the digital economy and society.
February 1, 2000 Washington, D.C.
America is engaged in a national conversation on information technology (IT) and the future of the global information economy. Part of that discussion must concern the impact of these changes on people at the bottom end of the economy.
To a large extent, public policy discussion on this so-called ‘digital divide’ has focused on issues of access to new information technologies. While access is an important topic, it is only part of the problem. The deeper issues-such as the financial and psychological barriers to access to information technology, the changing nature of work and skills, the existing inequality of incomes and skills, the use of information technology and the relevance of content, the questions of control (who sets the standards and who are left out of this process) and the interconnect among the various issues-are rarely discussed outside of narrow groups of experts.
The decisions being made on these topics (or made by default) will determine whether communities-left-behind and communities-at-risk will be able to use the changing nature of economic reality to rejoin the economic mainstream-or whether they will slip further behind. As the conversation on the ‘digital divide’ goes forward, it is critical that it address a broad set of issues and involve a wide range of stake holders and experts. Otherwise, we run the risk of partial, incomplete solutions that do not meet the needs of communities-left-behind. We may also find ourselves with a parallel digital divide-one of differing understandings of the problems and the solutions, mirroring C.P. Snow’s famous Two Cultures.
To help broaden the debate, Athena Alliance sponsored a one-day conference and workshop on the inclusion of all Americans in the digital economy and society at the National Academy of Sciences building in Washington, DC on February 1, 2000.
The conference, “New IT-New Equity-New Economy,” brought together approximately 60 experts, advocates, and interested parties to share information, insights, perceptions, and solutions. Participants examined the broad issues concerning the inclusion of all persons in the information age, identify barriers to inclusion, and define a set of issues that need to be addressed.
The conference began with a moderated roundtable discussion, intended to air the various issues and perspectives. Discussions continue in two parallel workshops covering:
A report based on the discussion and insights coming out of the conference is in process. While the report is in process, a number of points can be highlighted. First of all, access must be defined on many levels and in many different ways. Access means not just access to the technology, but access to the benefits of information technology: jobs, targeted information, or education. The goal is the creation of an infrastructure that enables capacity building for individuals and communities. This means that the question of “access to what” can only be answered by the individual and the community.
Governance is an important part of the issue of access. It is a fundamental principle that as many people as possible are involved in the process. Both the government and the for-profit sector need to hear multiple voices and understand the specific challenges facing low income communities. Technology can be a means for participation and voice, but only if the process is truly open to all.
Reaping the benefits of information technology is the goal of economic development. Yet, the relationship between advanced information technology and economic development is unclear. A few of the issues raised at the conference include: the quality and skill level of the workforce; the changing quality of work – are their working conditions better, or are they worse; how information technologies can be used by local businesses to compete effectively; the role of the conventional physical infrastructure (airports, highways, warehouses) as well as the new telecommunications infrastructure.
The changing roles of government and the marketplace is another concern. How should decisions be made? Should government define a minimal set of access requirements? Should we encourage content by communities being served? Or will the marketplace naturally address this issue?
These are but a few of the issues and questions raised during the discussions.
Among the conclusions of the conference, three stand out:
Based on these conclusions, Athena Alliance will undertake future activities in a number of directions. These include:
(organization affiliations are given for identification purposes only)
Kenan Patrick Jarboe and Richard Cohon
(Ideas in Development: Growing Assets, Expanding Opportunities, Corporation for Enterprise Development, Washington, DC, 1999)
The global information age is upon us – and the practice of economic development must adapt to this new environment. At issue is the changing nature of production, which is no longer merely a process of combining capital, energy, materials and labor. The key inputs today are both formal knowledge/information and informal tacit knowledge that is imbedded in skills and worker experience. This shift changes the skills and community assets required for economic activity. It also changes geographically where production and work take place. Both changes seriously affect the practice of economic development.
The shift to an information economy raises fundamental questions for communities left behind. Will they continue to lose ground, or is this an opportunity to reinvent and reinvigorate themselves? It also raises concerns for lower-skilled production workers and low- to middle- management who are currently “middle-class.” Will those who are just getting by, fall behind, creating a new set of at-risk communities?
For governments and other institutions involved in economic development, old forms and roles are likely to be ineffective or irrelevant in the changed economy. We need to re-develop the basic repertoire of economic development practices, keeping what works and discarding what does not. We must learn how to identify and manage intellectual capital and to understand best practices within the economic development community. This will require an ongoing dialog among those who are trying to understand the global information age, those who are trying to shape it and those who are trying to cope with its effects – in both the public and private sectors.
The new global information economy has emerged with the rise of electronic commerce and greater use of computer and telecommunications technology. In the world of digitized economic activity, information can be delivered instantaneously anywhere in the world. Rather than relying on the knowledge of some small, specialized information elite to direct the organization, many companies are creating a new decentralized social organization of work where success depends on the ability to capture and use the skills and knowledge of the entire workforce. Even in what may be considered lower-level activities, information and knowledge play an increasingly important role as frontline workers assume ever-greater responsibility for their tasks.
Use of information and knowledge is what really counts – not just its production or manipulation. For this reason we believe that the future belongs to the knowledge user as well as to the computer programmer and the knowledge creator. This use of knowledge includes the ability to use both formal knowledge (explicit and codified in books, manuals and databases) and tacit knowledge (experiential, intuitive). Both formal and tacit knowledge are necessary. Either is crippled without the other. It is extremely difficult to use the tacit knowledge of a person who is functionally illiterate. On the other hand, tacit knowledge allows an individual to recognize and use elements of formal knowledge in ways appropriate to a particular situation.The increased importance of both kinds of knowledge is dramatically altering the relationship between production and place, which is at the very core of economic development. While physical capital is easily transferable from one location to another, knowledge and human capital are not. A worker’s skills (including formal and tacit knowledge) are as mobile or immobile as the worker.
Here we stumble upon a paradox for the information age: Individuals and information appear to be more mobile than ever. This leads some to argue that new information technologies will cause services to follow manufacturing toward footloose production. We disagree. Given the importance of both tacit and formal knowledge, face-to-face human interaction remains the most information-intensive means of communication–a critical factor in an information-rich economy. Silicon Valley is just one obvious example of this tendency to cluster information-intensive activities.
Likewise, localized knowledge is needed for customization and for the ability to adapt to rapidly changing situations. For example, a local insurance agent can tap into the company’s knowledge base (formal and informal) to custom design coverage to meet the client’s specialized needs. In this case, tacit localized knowledge is combined with global resources. The result is a production system that is strongly rooted in its local market and knowledge base, and that also draws upon and contributes to the global networks.
So, we may not face a world of completely footloose production where economic activity can be transferred to wherever labor is cheapest or economic development incentives are highest. Instead, the competitive economic success hinges on geographically centered clusters of human capital, skills, knowledge, and local relationships. Importantly for economic development, tacit knowledge is only partially based in the individual; it also resides in the special circumstances and situation of the community.This creates special dangers and opportunities for those communities already left out of the economic mainstream. The danger is that they will not be able to surmount their formal educational deficit and master the skills needed to survive. The opportunities stem from the fact that locally developed information assets are increasingly the keys to economic success. Seizing these opportunities and meeting these challenges requires creativity to discover and develop a community’s information assets, including its hidden pool of tacit knowledge.
The first part of this volume explores asset-based approaches to economic and community development. We suggest expanding that view by taking a lesson from leading companies who are seeking ways to identify and develop their own information assets under the rubric of “intellectual capital.” As Thomas Steward wrote in Intellectual Capital (1997), these companies are developing techniques for locating and then managing their “resources, tacit and explicit perspectives and capabilities, data, information, knowledge and maybe wisdom.” Companies find these assets in the skills and knowledge of their people, in their organizational structures and in their relationships with the outside world, especially their customers.
The corporate experience with identifying and managing intellectual capital is still in the early stages of development. There are no hard and fast techniques, nor are all of the concepts used in a corporate setting applicable to economic development. However, learning from the corporate experience could show the often-fragmented development community how to identify the formal and tacit knowledge both internally in their organizations and externally in the communities that they serve. Then the development community can begin to build a base of common knowledge and understanding about (1) internally what knowledge needs to be shared, what is duplicated, and what may be lacking, and (2) externally what are the local information assets, what assets need to be developed, and who are potential partners.
Armed with this common understanding, development practitioners can begin to develop specific local information assets. This will require re-examining old strategies and re-evaluating the institutions that we rely on to develop and transfer knowledge, as well as those that support the development process. A dialog among all parties – public and private – can begin to determine what works and what is needed. Creating such a dialog is a fitting task for CFED as it embarks upon its next 20 years.
Kenan Patrick Jarboe is President of Jarboe & Associates, a Washington, DC-based political economy consulting firm, and a Senior Fellow at the Progressive Policy Institute.
Richard Cohon is President of the C.N. Burman Company, a manufacturer and
importer of home furnishings located in Paterson, NJ. He is actively involved in
both community economic development and organizational development in the