Kevin Kelly's New Rules for the New Economy

Kevin's put together a nice list of principles for networked economy. The summative idea is one I've argued that commons create but never been able to articulate so concisely: "Opportunities over efficiencies." It draws a nice distinction between an the main strategy for growth in an open/commons economy (the generation of opportunities) and a production economy (the enhancement of efficiencies). Here are some of my favorite points Kevin makes in his list:


Principle #3: Where humans are most actively engaged with their imaginations, we don't see productivity gains--and why would we? 

"Is a Hollywood movie company that produces longer movies per dollar more productive than one that produces shorter movies? Yet an increasingly greater percentage of work takes place in the information, entertainment, and communication industries where the 'volume' of output is somewhat meaningless.

"The problem with trying to measure productivity is that it measures only how well people can do the wrong jobs. Any job that can be measured for productivity probably should be eliminated from the list of jobs that people do.

"The task for each worker in the industrial age was to discover how to do his job better: that's productivity. Frederick Taylor revolutionized industry by using his scientific method to optimize mechanical work. But in the network economy, where machines do most of the inhumane work of manufacturing, the question for each worker is not 'How do I do this job right?' but 'What is the right job to do?'

"Answering this question is, of course, extremely hard to do. It's called an executive function. In the past, only the top 10% of the workforce was expected to make such decisions. Now, everyone, not just executives, must decide what is the right next thing to do."


Principle #4: Productivity, however, is exactly the wrong thing to care about in the new economy.

"To measure efficiency you need a uniform output. But uniform output is becoming rarer in an economy that emphasizes smaller production runs, total customization, personalized 'feelgoods' and creative innovation. Less and less is uniform.

"And machines have taken over the uniform. They love tedious and measurable work. Constant upgrades enable them to churn out more per hour. So the only ones who should worry about their own productivity are those made of ball bearings and rubber hoses. And, in fact, the one area of the current economy that does show a rise in productivity has been the U.S. and Japanese manufacturing sectors, which have seen an approximately 3% to 5% annual increase throughout the 1980s and into the 1990s. This is exactly where you want to find productivity. Each worker, by supervising machinery and tools, produces more rivets, more batteries, more shoes, and more items per person-hour. Efficiencies are for robots.

"Opportunities, on the other hand, are for humans. Opportunities demand flexibility, exploration, guesswork, curiosity, and many other qualities humans excel at. By its recursive nature, a network breeds opportunities, and incidentally, jobs for humans."


Principle #6: Don't solve problems; pursue opportunities.

"Seeking opportunities is no longer wisdom relevant only to the long cycles of economic progress. As the economy speeds up, so that an "internet year" seems to pass in one month, the principles of long-term growth begin to govern the day-to-day economy. The dynamics of growth become the dynamics of short-term competitive advantage.

"In both the short and long term, our ability to solve social and economic problems will be limited primarily to our lack of imagination in seizing opportunities, rather than trying to optimize solutions."


Principle #7: As the transmission of knowledge accelerates, as more possibilities are manufactured, the unabated push of incremental growth also speeds up. In the long run, creating and seizing opportunities is what drives the economy. A better benchmark than productivity would be to measure the number of possibilities generated by a company or innovation and use the total to evaluate progress.

"In the short run, though, problems must be solved. Businesses are taught that they are in the business of solving problems. Put your finger on a customer's dissatisfaction, the MBAs say, and then deliver a solution. This bit of hoary advice inspires business to seek out problems. Problems, however, are entities that don't work. They are usually situations where the goal is clear but the execution falls short. As in, 'We have a reliability problem,' or 'Customers complain about our late delivery.' In the words of Peter Drucker, 'Don't solve problems.' George Gilder distills the essence further: 'When you are solving problems, you are feeding your failures, starving your successes, and achieving costly mediocrity. In a competitive global arena, costly mediocrity goes out of business.'"


Princple #10: We can rearrange more than just bits.

"Think of the mineral iron oxide, suggests Romer. It's rust. More than 10,000 years ago our ancestors used iron oxide as a pigment to make art on cave walls. Now, by rearranging those same atoms into a precisely thin iron oxide film on plastic we get a floppy disk, which can hold a reproduction of the same cave paintings, and all the possible permutations of it wrought by Photoshop. We have amplified the possibilities a millionfold.

"The power of combinatorial explosions--which is what you get with ideas and opportunities--means, says Romer, 'There's essentially no scarcity to deal with.' Because the more you use opportunities, the less scarce they get.

"Everything we know about the structure of the network economy suggests that it will bolster this efflorescence of opportunities, for the following reasons:

"Every opportunity inhabits a connection. As we connect up more and more of the world into nodes on a network, we make available billions more components in the great combinatorial game. The number of possibilities explodes. Networks speed the transmission of opportunities seized and innovations created, which are disseminated to all parts of the network and the planet, inviting more opportunities to build upon them. Technology is no panacea. It will never solve the ills or injustices of society. Technology can do only one thing for us--but it is an astonishing thing: Technology brings us an increase in opportunities."