Laws of Wealth Creation in 21st Century
In his best seller book – ‘The Third Wave’, Alvin Toffler takes a macroscopic view of the past, present and future of the human civilization. He explains the evolution in most simplified analogy of waves. The ‘First Wave’ symbolizes the evolution of mankind from nomadic tribes to ‘Agricultural socio-economy’. The ‘Second Wave’ symbolizes the major shift to ‘Industrial socio-economy’ and the ‘Third Wave’ – what’s happening today – is the symbol of a massive shift to ‘Knowledge based socio-economy’. All these waves collide with each other and same is the cause of various struggles we see across the globe.
The stakeholders and change-makers in each wave are different social groups. In the first wave (agro-economy) power was with the kings, who owned army and muscle power. The talent and the traders were under the kings’ supreme power. In the second wave (Industrial-economy) the kings vanished and the power was with the money. The traders and corporations - who have money - have the control over muscle power and talent. Now it’s changing again – in the third wave (knowledge-economy), the power shifts to the talent – one who has the knowledge, controls the muscle power and money. With the existence of all the three waves at the same time, there is a super-struggle between these stake holders which is very interesting to see.
One may choose to be a part of any wave. But one must understand that every time, the next wave dominated. Agriculture almost finished the existence of nomadic tribes. Industry is taking over agricultural civilization in all possible forms – like organized education, healthcare systems, mechanical governance and all. The industrial economy is now loosing its steam and what takes over is the ‘knowledge based socio-economy’. If we stick to the earlier waves we are going to perish in the struggle. So let’s understand the basic principles of the ‘Third Wave’. How the wealth and power is generated in the new world.
1. Super Symbolic Economy – No Knowledge exchanged, No Wealth created
Any currency is a symbol of value. Now with credit cards the value is becoming super-symbolic. The physical stocks / shares are dematerialized. The economy - as a whole - is becoming super symbolic. The day is not far when we can transact through our cell phones.
The basis of this super-symbolic economy is knowledge. No Knowledge exchanged, No Wealth created. If you are just a dealer of a high tech gadget then beware! Your margins are going down. But if you provide some knowledge to your customer with the gadget you provide, then you have a better chance of success.
2. Demassified Production – Customization
The days of standardization are over. Its time to serve according to an individual’s taste! May be its entertainment or production industry, the one who provides customized products, is going to survive!
3. Land, labor, raw material, capital Replaced by Knowledge
We learned in our schools that a business constitutes of land, labor, raw material and capital. The days are changing. People who invented ‘Hotmail’, ‘Google’ or ‘I-Pod’ never stopped because they were lacking any of these constituents. What’s needed is ‘Knowledge’! The capital has become fluid - like never before. In few seconds you can get finance from any corner of the world.
4. Revision of standards – control of
standards
The days of older standards are gone. The ‘Mercedes engine’ or ‘British Law’ has lost its significance. The new standards like ‘Microsoft’, JAVA or ‘Wi-Fi’ are the one which affect our day to day life. The one who knows about these standards will survive in the new world. The corporations who create or control such standards are the one which will succeed in future.
5. Free flow information system – no bureaucracy
The days of secrecy are over. There won’t be any George Orwell’s ‘1984’ for sure. The information is free. Whatever you want is available on internet. Use of video-conferencing, telemedicine, tele-education are the keys to the social and business development. And most important there is no ‘red tapism’ to access this information.
6. New forms of organization / Less interchangeable Workers
The standard triangular form for organizations is fast changing to flexible, de-centralized organizations. There is no need of supervisors. Workers can decide about their targets and their salary too. With these new forms productivity and work satisfaction both will improve. With super-specialization in their work and also being a stake-holder in the organization, the tomorrow’s workers are going to be less interchangeable.
7. Innovation – combination of imaginative knowledge with action
This is the foremost important principle of the new world. Those who don’t innovate will perish. The dream of having an international space station is almost complete. The innovative ‘Google Earth’ brings out so many possibilities. The organizations must look out for creative engineers, accountants and workers.
8. Circular process – recycling of waste
Growth does not mean ‘maximization’. The mad race for maximization has left us with limited fossil fuels and lot of pollution. The new world will find its new energy base – may be solar or hydrogen or anything new. The industrial systems of the new world are going to be ‘eco-friendly’. With proper recycling, every waste created in one process will be used as raw material for another process.
9. Rise of Prosumer
Unlike in the agro-economy, the industrial economy put a wedge between the producers and consumers – called ‘Market’. In the new economy again the producer will work for his own consumption but with high tech devices. Now we can shoot our own films with digital camera or we can compose our own tunes on our cell phones – not to sell in market but for own consumption.
10. Production at lower level (user) and higher level (cross-national)
Some 10 years back we have to go outside to print what ever we write. Now with printer at home the production of printing has come down to lower level i.e. home.
The cars were manufactured in huge industrial infrastructure though some of the processes were costly. Now the doors are manufactured in one country and engine in the other. All parts are assembles in the third country. So the productions have gone to a higher level.
These are the laws of wealth creations for tomorrow’s world. Let’s understand it and try to implement the ideas so that we don’t perish in the struggle of waves but ride on these waves.
Don’t forget about the electronic keys of the future:
o Interactivity
o Mobility
o Connectivity
o Convertibility
o Ubiquity (Access to masses)
o Globalization
The stakeholders and change-makers in each wave are different social groups. In the first wave (agro-economy) power was with the kings, who owned army and muscle power. The talent and the traders were under the kings’ supreme power. In the second wave (Industrial-economy) the kings vanished and the power was with the money. The traders and corporations - who have money - have the control over muscle power and talent. Now it’s changing again – in the third wave (knowledge-economy), the power shifts to the talent – one who has the knowledge, controls the muscle power and money. With the existence of all the three waves at the same time, there is a super-struggle between these stake holders which is very interesting to see.
One may choose to be a part of any wave. But one must understand that every time, the next wave dominated. Agriculture almost finished the existence of nomadic tribes. Industry is taking over agricultural civilization in all possible forms – like organized education, healthcare systems, mechanical governance and all. The industrial economy is now loosing its steam and what takes over is the ‘knowledge based socio-economy’. If we stick to the earlier waves we are going to perish in the struggle. So let’s understand the basic principles of the ‘Third Wave’. How the wealth and power is generated in the new world.
1. Super Symbolic Economy – No Knowledge exchanged, No Wealth created
Any currency is a symbol of value. Now with credit cards the value is becoming super-symbolic. The physical stocks / shares are dematerialized. The economy - as a whole - is becoming super symbolic. The day is not far when we can transact through our cell phones.
The basis of this super-symbolic economy is knowledge. No Knowledge exchanged, No Wealth created. If you are just a dealer of a high tech gadget then beware! Your margins are going down. But if you provide some knowledge to your customer with the gadget you provide, then you have a better chance of success.
2. Demassified Production – Customization
The days of standardization are over. Its time to serve according to an individual’s taste! May be its entertainment or production industry, the one who provides customized products, is going to survive!
3. Land, labor, raw material, capital Replaced by Knowledge
We learned in our schools that a business constitutes of land, labor, raw material and capital. The days are changing. People who invented ‘Hotmail’, ‘Google’ or ‘I-Pod’ never stopped because they were lacking any of these constituents. What’s needed is ‘Knowledge’! The capital has become fluid - like never before. In few seconds you can get finance from any corner of the world.
4. Revision of standards – control of
standardsThe days of older standards are gone. The ‘Mercedes engine’ or ‘British Law’ has lost its significance. The new standards like ‘Microsoft’, JAVA or ‘Wi-Fi’ are the one which affect our day to day life. The one who knows about these standards will survive in the new world. The corporations who create or control such standards are the one which will succeed in future.
5. Free flow information system – no bureaucracy
The days of secrecy are over. There won’t be any George Orwell’s ‘1984’ for sure. The information is free. Whatever you want is available on internet. Use of video-conferencing, telemedicine, tele-education are the keys to the social and business development. And most important there is no ‘red tapism’ to access this information.
6. New forms of organization / Less interchangeable Workers
The standard triangular form for organizations is fast changing to flexible, de-centralized organizations. There is no need of supervisors. Workers can decide about their targets and their salary too. With these new forms productivity and work satisfaction both will improve. With super-specialization in their work and also being a stake-holder in the organization, the tomorrow’s workers are going to be less interchangeable.
7. Innovation – combination of imaginative knowledge with action
This is the foremost important principle of the new world. Those who don’t innovate will perish. The dream of having an international space station is almost complete. The innovative ‘Google Earth’ brings out so many possibilities. The organizations must look out for creative engineers, accountants and workers.
8. Circular process – recycling of waste
Growth does not mean ‘maximization’. The mad race for maximization has left us with limited fossil fuels and lot of pollution. The new world will find its new energy base – may be solar or hydrogen or anything new. The industrial systems of the new world are going to be ‘eco-friendly’. With proper recycling, every waste created in one process will be used as raw material for another process.
9. Rise of Prosumer
Unlike in the agro-economy, the industrial economy put a wedge between the producers and consumers – called ‘Market’. In the new economy again the producer will work for his own consumption but with high tech devices. Now we can shoot our own films with digital camera or we can compose our own tunes on our cell phones – not to sell in market but for own consumption.
10. Production at lower level (user) and higher level (cross-national)
Some 10 years back we have to go outside to print what ever we write. Now with printer at home the production of printing has come down to lower level i.e. home.
The cars were manufactured in huge industrial infrastructure though some of the processes were costly. Now the doors are manufactured in one country and engine in the other. All parts are assembles in the third country. So the productions have gone to a higher level.
These are the laws of wealth creations for tomorrow’s world. Let’s understand it and try to implement the ideas so that we don’t perish in the struggle of waves but ride on these waves.
Don’t forget about the electronic keys of the future:
o Interactivity
o Mobility
o Connectivity
o Convertibility
o Ubiquity (Access to masses)
o Globalization
Vinay Chutake
B.E. Mechanical
Manager
Deenanath Mangeshkar Hospital, Pune
Managing Partner
Shreyas Creations, Pune
Contact No. +91-9158885181
E-mail: mailto:cvinay2000@gmail.com
Website: http://www.cvinay.blogspot.com/
posted by VINAY CHUTAKE at
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