| The world is being redesigned. Information and | | | | Without being a knowledge economy, Angola cannot |
| communication technologies are changing the | | | | focus on developing oil drilling technologies despite the |
| structure and composition of global commerce and | | | | need for it. Whereas Japan could develop the |
| industry. This is a new economy anchored on the | | | | technologies and sell to them, though, it has minimal |
| powers of microprocessors. | | | | local needs for those technologies. As Japan |
| Today, the classical economics theories of factors of | | | | modernizes its technologies, it understands that its |
| production and comparative advantages of nations | | | | competition is not coming from Angola, but say |
| are still relevant. However, a new concept has | | | | Germany. |
| evolved to diminish their impacts in international | | | | So, it is important to understand that some of the |
| market. | | | | theories developed in the agrarian and industrial age |
| As we globalize and Internet penetrates across the | | | | are not relevant today. The textbooks must be |
| world, factors of production can be fused with ease | | | | modernized and students must be brought up to |
| using technology in what I will call 'knowledge cluster'. | | | | date accordingly. |
| That has been the business philosophy of | | | | Competition today has assumed more amorphous |
| outsourcing. You can buy any knowledge irrespective | | | | forms owing to the drastic impacts of technology in |
| of distance and integrate it locally in your process. | | | | shaping the tastes of consumers. And one thing that |
| Likewise, the sources of fund have become global | | | | is central to this taste is information. |
| and local capital is not that very important. So, local | | | | This information changes everything. Unlike the |
| unavailability of capital may not be a limitation to a | | | | saying: 'you cannot eat your cake and have it'; I |
| bright business idea. | | | | know that information is non-rival. In other words, |
| If you are looking for labor, you can easily access a | | | | the consumption of information does not exclude |
| pool anywhere on earth through the internet. Land | | | | another person from consuming it. That you read a |
| has since diminished to be a major factor in location | | | | story online does not prevent another person from |
| and localization of firms since many firms are | | | | reading it. |
| knowledge firms and do not need land to exist. | | | | This concept is a key fundamental change to the old |
| Salesforce displaced GM in the Dow Jones Industrial | | | | marketing and sales strategies. When you sell your |
| Average. Google has since disrupted old established | | | | cocoa to one customer, it prevents you from selling |
| industries, primarily by competing with Algorithms, | | | | the same cocoa to another customer. But in this |
| Knowledge, and Information (AKI). It matters not | | | | area, that whole concept has since been diminished. |
| they may not have large land mass. With AKI, they | | | | A newspaper can make its online content free and |
| can win any battle because that is what matters. | | | | anyone can read it. While not selling it directly, |
| Algorithm provides the intellectual base to compete. | | | | someone reading that article brings revenue through |
| Information helps firms to stay focused on what | | | | a third party arrangement based on how many |
| customers want, especially in web based firms. The | | | | people visit that site. The focus is to get more |
| algorithms provide the means to process the | | | | people to consume more information on the site |
| information. When the information is available, | | | | because it creates value for them. |
| knowledge is built to develop strategies in the market | | | | But there is another caveat to this: why information |
| place. | | | | is non-rival, it has time content. That is why |
| Today, we have grid computing and cloud businesses | | | | information is physical since it costs something to |
| and progressively transitioning to physical asset-less | | | | produce it. In other words, information is not free |
| enterprises. Certainly, we will still have businesses that | | | | and it has an element of time. Think about it: does it |
| support the computer powers that power firms, but | | | | matter today if a newspaper has a heading that |
| it is possible that major firms can exist virtually in this | | | | says: Obama wins the Presidency. |
| age. | | | | Sure, that information is not useful because it is not |
| This observation advances the notion made in old | | | | timely. This becomes more interesting when you |
| classical economics theories. For the fact that the | | | | trade on stocks. A piece of information can make |
| world is more accessible, the notion of comparative | | | | someone rich (say, insider trading) and that is why |
| advantage while important is not potent as it used to | | | | SEC will pursue people that partake in insider trading |
| be. In the old days when some of the theories were | | | | because the value of that information becomes so |
| formulated, manufacturing dominated with minimal | | | | useful than when it is in public domain. The difference |
| service industry. | | | | between the same information is time. When |
| Instead of obsession on comparative advantage, | | | | everyone has the information, it becomes less |
| firms must focus on core competence. The latter is | | | | valuable. This clearly shows the physical nature of |
| internal while the former in most cases is external. | | | | information as it can lose value with time. |
| You do not have to focus on making chocolate | | | | As technologies transform the global economy, |
| because your country produces cocoa, but you must | | | | knowledge will become so important. After all, this is |
| develop a better production system that makes your | | | | a knowledge century. The transformative value of |
| chocolate production lean and nimble to be | | | | commercial assets which for some firms is |
| competitive, irrespective of your location. | | | | information will continue to change marketing and |
| In all these dynamics, what is changing the concepts | | | | competitive strategies. Understanding these changes |
| is knowledge as a factor of production. Knowledge | | | | will make a firm adapt, evolve and survive this |
| redesigns the mix and opens up new issues in | | | | innovation economy. |
| business strategy and marketing. | | | | |