REVOLUTIONARY WEALTH

by

Alvin and Heidi Toffler

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chief

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Wealth Systems

1. 2. 3.

Wealth is anything that fulfills needs or wants A wealth system is the way wealth is created True wealth occurs when man is able to create an economic surplus

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Three Wealth Systems

1. Agriculture a. Ten millennia ago, a woman planted the first seed in what is now known as Turkey b. Instead of waiting for nature to provide, man could make nature do what he wished c. Agriculture allowed man to settle into communities d. Agriculture created trade, barter, buying and selling e. In some years, there was an excess of food f. War lords, nobles and kings were able to become rich by stealing the excess wealth created by agriculture

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Three Wealth Systems *

2. Industrialism a. This second wave of wealth creation brought mass production, mass education, mass media and mass culture Knowledge a. 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

3.

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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

Changes in Deep Fundamentals

1. Work a. Until field labor was replaced by factory work, few people ever held a job b. A job in todays sense of formally committed work in return for pay is a recent innovation c. For centuries, most labor was forced labor (slavery for example) d. Work has moved from outdoors to indoors e. More people will work in the future but there will be fewer jobs

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Changes in Deep Fundamentals

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

Quality

m Ti
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Cost

Changes in Deep Fundamentals

2. Time b. Relative speed of current organizations 100 mph American business 90 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 unions 25 mph Government bureaucracies 10 mph American school system 5 mph Intergovernmental organizations (IGOs) such as the United Nations, IMF and WTO 3 mph US Congress and White House 1 mph The Law

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Changes in Deep Fundamentals

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

Quality

m Ti
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Cost

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Changes in Deep Fundamentals

3. Place a. Wealth creation in the world continues to move west b. Detroit & Cleveland, both second wave cities, are listed as the poorest large cities in the US* * per US Census Bureau, 2008

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Unique Characteristics of Knowledge

1. Knowledge is inherently non-rival a. Millions of people can use the same chunk of knowledge without diminishing it b. The more knowledge is used, the more knowledge is created. This is not true of food or things 2. Knowledge is intangible a. We cant touch, fondle or slap it, but we can (and do) manipulate it
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Unique Characteristics of Knowledge

3. Knowledge is non-linear a. Tiny insights can yield huge outputs b. Yahoo was started when two college students simply categorized their three favorite websites 4. Knowledge is relational a. 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 knowledge a. The more there is, the more promiscuous and the more numerous and varied the possible useful combinations b. Giving rise to Meta-solutions Knowledge is more portable than any other product a. It can be distributed for a very small price Knowledge can be compressed into symbols and abstractions a. Try compressing a toaster

6.

7.

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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 resource a. 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 companys knowledge base? What can I do to reduce cycle times of both learning and doing in my company?
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REVOLUTIONARY WEALTH
by

Alvin and Heidi Toffler

We Share Ideas