Thomas Stewart said, “the history of business is the history of ways of managing knowledge.” Competitive advantage has always been about being better at using knowledge than the other person. And when you look back into the past, that has been true for at least 5000 years. The ways in which knowledge has been captured, stored, organised and propagated have changed, but the fundamental purpose has remained. For most of our history technology for handling knowledge and business methods have evolved hand-in-hand.
“the history of business is the history of ways of managing knowledge.”
Objects as frozen knowledge
Sometimes knowledge is expressed in physical objects. In the hills near my home in North Wales there is a Neolithic stone axe factory at Graig Lwyd dated about 3000 BCE. I call it a factory, because it was laid out for mass production. Axe blanks were quarried in one location, shaping done at another station, followed by final polishing to the superb finish that the local volcanic rock allowed. These were high value and high-status items, Neolithic bling, and were traded all over the British Isles. Some archaeologists think that a prominent stone circle on the headland overlooking the sea may have served as visible marker of where these high-quality axes could be obtained. A Neolithic equivalent of the MacDonald’s golden arches.
They were successful because the raw materials and the knowledge of how to use them were found in this particular place. They had an ‘edge’.
You see the same effect of knowledge and materials embodied in a specific product in Chinese porcelain. Developed in the 7th C to 8th C. it was exported to Europe in the 16th C. Faced with such a wildly desirable and profitable product, European potters worked hard to produce it locally. But without knowledge of the recipe and techniques, or access to the key materials, they failed. Locally produced imitations such as Delftware satisfied some of the demand, but being produced from earthenware never achieved the quality of porcelain. It took until the 18th C for European potters to learn the secrets, when a French Jesuit priest working in China wrote back to Europe describing the manufacturing process in detail. Finally, working from that knowledge they developed bone china, a product that was even better than Chinese porcelain
These methods of capturing and transferring knowledge by direct experience of the individual reached a high point in the mediaeval guilds in Europe. They trained new entrants through apprenticeships, set business and technical standards, and frequently dealt with disputes. They were an extremely efficient way of maintaining skills and driving innovation in a world where knowledge transfer had to be person to person. Although the guilds have largely vanished, their methods are still used today where craftsmen must work directly with raw-materials, much of the knowledge is tacit rather than explicit, and ‘touch’ and ‘feel’ are essential for success.
No matter how successful they are, these methods limit how far and how fast knowledge can spread.
The emergence of ‘paperwork’
Knowledge is not only expressed in objects. The development of writing gave civilization, trade and knowledge sharing a real boost. For the first time you could touch someone you could not see. In another place or another time.
Although people have been making marks on various materials to remind them of things since at least 7000 BCE, it took some time to evolve a writing system capable of dealing with abstract ideas. Some of the earliest writing is Sumerian dating from around 3000 BCE. And what did they first write about? Business! Taxes and trade. The example shown is about managing beer rations for workers.
Writing enabled ancient civilisations to capture vast amounts of knowledge; about astronomy, mathematics, society, war and countless other subjects. They were able to administer their empires effectively and efficiently. Permanent records allowed long range trade and sophisticated financial structures. Sadly, written language also gave us taxes and governments’ passion for statistics and form-filling!
In Europe a huge technological breakthrough happened in the 1500’s. The invention of the printing press. Developed to reduce the cost of providing accurate copies of key manuscripts without teams of monks getting writer’s cramp, it quickly spread to new and unforeseen uses.
Early popular books were religious texts and pornography, quickly followed by do-it-yourself guides. Human nature never seems to change.
Books were popular because knowledge could be spread so efficiently. By 1600, a staggering 200,000 different books had been printed. When Agricola published De Re Metallica in 1550, for the first time everything you needed to know about metal ores, mining and smelting could be packed into a saddlebag and moved from place to place.
By the 18th C books were the standard for information transfer. In 1751 Denis Diderot started publication of the Encyclopédie, ou dictionnaire raisonné des sciences, des arts et des métiers, an attempt to collect and organise all the knowledge necessary for a successful society. It was the first general encyclopaedia to attempt to cover all the mechanical and manufacturing arts. Traces of that same idea can be found in The Long Now Foundation’s Manual for Civilisation project. Pulling together the knowledge you would need to restart civilisation after a catastrophe, and spreading copies around the world.
Knowledge technologies accelerate
Then came the big one – the Industrial Revolution. And a rush of information and knowledge technologies that compressed time from millennia into decades or even years.
Just the invention of the telegraph profoundly changed the world. It has been called the “Victorian Internet”.
From its initial demonstration in 1844 there was dramatic growth. By the 1870’s there were 600,000 miles of wire, 30,000 of them running under water, and 20,000 towns and villages were connected. A message from London to Bombay and back took just 4 minutes.
The telegraph created the first global commodity markets in corn and cotton, and allowed giant, centrally managed, corporations to exist.
Then came the telephone, radio, television and the internet. Each caused, and are causing, huge business and social change.
All these technologies have in one way or another had a profound effect on society. Each has a ‘grammar’, a way of using it, that we have had to discover. What turn out to be the important applications for a technology may not be obvious when it is invented.
Edison thought that the phonograph would replace paper memos in busy offices. Marconi’s vision for wireless telegraphy was as a way of linking two points when you couldn’t lay a wire.
Where will it go next?
What happens next? How will AI, machine learning, and robotics and autonomous systems affect our business models? How will we deal with business systems which cannot be directly interrogated and understood by the human mind? Over the last 5000 years we have constantly sought ways to increase the span and capacity of our creative minds by progressively outsourcing memory and routine information processing. Is it possible to extend that outsourcing to the point where no one really understands what is going on, or will we find new ways to condense complex economic and social systems to the limits of human thinking?
The pace of knowledge acquisition and capture now vastly outstrips our ability to sort, absorb and use that knowledge. But we can be sure that the future of business lies in future of ways of managing knowledge.
“the future of business lies in future of ways of managing knowledge”