Digitalization and the future of the knowledge economy
From the early 2000s, the knowledge economy was the focus of many European countries. The general idea was that ‘production is replaceable whereas knowledge is not’. Google (a true knowledge enterprise) has a nice analytics tool (Google Trends) that provides insight into whether keywords are hot or not. Frequency in use of terms gives a first insight in where to the economy evolves. I see that knowledge economy is no longer a focus, in fact, it's nearly disappeared from the map.
Digitalization in the Advisory Domain
The knowledge economy that has been established in recent decades is increasingly showing cracks under the pressure of digitalization. Where the knowledge economy is supposed to be focused on innovation, the execution is often found in process-based working. Now that’s precisely the area in which digitalization is disruptive because processes can be nearly fully replaced with digital initiatives. As a result, the coming years, work for lawyers, accountants and notaries will reduce significantly. The advice founded on the knowledge of legislation, accounting rules, and jurisprudence will simply be automated using various forms of artificial intelligence. Currently, it is predicted that over 10 years (in 2025!) no notaries and lawyers are needed, except for a limited number of bright minds. Also for specific roles in the knowledge economy, such as sourcing advisors, digitalization has a massive impact. The advice is often still focused on facilitating a procurement process, an intermediate layer between providers and the end user. The speed of changes and further commoditization of IT is resulting in shorter 'agile' contracts and a thinner purchasing process. New initiatives such as matching platforms for outsourcers and clients provide further automation (and erosion) of the advice layer.
Benchmarking, another domain of advisors, also greatly diminished in importance. Markets and technologies change too rapidly to give advice based on the past; recent benchmark data (e.g. a study of 6 months old, on a contract negotiated 2 years ago) offer no ambition or future target; the changes in two years are just too big. A customer recently said ‘by benchmarking you used to show that you wanted to follow the market… nowadays it shows that you totally out of touch with the market’. True, but of course one still requires an accurate understanding of prices and services as an input for business cases in the strategic decisions making. In terms of applicability and value of data however, benchmarking has been surpassed by Big Data.
In-depth knowledge of IT capabilities and -services will be the added value that advisors have to offer, but precisely that content knowledge is lacking at the advisors. The critical mass to facilitate, for example, a simple purchasing process, is available, just as that one specialist to set up a specific process is. However, the critical mass to deliver real substantive knowledge, in the IT and business domain in which the advisor is operating, is missing. This lack of knowledge at the sourcing advisor provides space for IT vendors to position themselves as domain experts, decreasing the role of the sourcing advisory layer even further.
Knowledge economy, it still can work
The development of this knowledge economy, however, will not lie in mastering a process or a trick but in unlocking creativity. Creativity to abandon the known paths and think out of the box. Adding value by jointly exploring IOT for example. Together with colleagues, competitors and companies outside the sector. Innovation through cooperation is key. I therefore like to participate in hackathons, a phenomenon in which creative paths are explored by collaboration, resulting in new possibilities. Actually, such a hackathon might be something for accountants, advisors, lawyers and notaries; discover new possibilities through digital transformation, push the limits of yourself and your business model. Dare to abandon your current traditional business model and cash cow. Continue to innovate and challenge yourself! Onwards to a true knowledge economy.
More information: www.ditragroup.com