In 2010, China became the world’s 2nd largest economy and it’s expected to surpass the U.S. in the next 4 years. This economic data may appear to be related to differences in population size, but a closer look at the data underscores a shift in the types of economies in each country.
Labor statistics and small business revenue sources indicate that the current U.S. job market has transitioned from a manufacturing economy to primarily a service and knowledge economy while China is starting to evolve into a service economy. Fast forwarding to the next 3 years, it seems apparent that the U.S. is going to change to a “knowledge-based economy” (KBE).
What are the implications of these economic changes and the changing global workforce?
In a knowledge economy, knowledge is a PRODUCT. In a knowledge-based economy, knowledge is a TOOL. The transition to this new U.S. economy requires that, the employability mindset that determined success in the past, needs to evolve into specialized expertise that’s delivered to customers beyond a local job market.
Today, becoming a freelance knowledge-based business consultant can be set up with relatively low capital and anywhere you can get Internet access. With 2 billion people using smart phones globally, knowledge or specialized products can now come from anywhere. Consider the iPhone 4. It has $171 worth of parts which are assembled in China. Only $6 worth of parts are sourced in China. The rest are imported from Japan, Germany and $10 worth of parts come from the U.S.
Think about this. Knowledge is no longer merely an enabler; it has become a business’s competitive edge. Products and services with a higher knowledge quotient command higher prices in the marketplace and can be distributed digitally for almost zero cost! In a knowledge-based economy, the primary competition between companies is not competition based on price, but competition to innovate first. Innovation that came from the iPod made traditional music stores obsolete and Netflix streaming video killed the Blockbuster store business.
McDonald’s is a great example of a seemingly non-technical food service business that has evolved to include a knowledge-based revenue source. Its proprietary knowledge is its marketing expertise and its ability to manage franchising operations so that every McDonald’s globally offers identical standards of cleanliness and food preparation. McDonald’s and other global chains essentially wiped out other privately owned hamburger places because they made themselves attractive to consumers who wanted a quick, predicable and commonly recognizable meal at a low price. In the same way, professors with unique knowledge no longer confine their teaching to localized classrooms. They commonly earn a higher return on their knowledge by reaching out to global audiences with teleconferencing, Internet-courses, and international book distribution on Amazon.
The era of the Knowledge-Based Economy is here. Your employment security is destined to be directly correlated to how you can market yourself as talent beyond a commutable distance from your home. Perhaps the ecology slogan Think Globally Act Locally needs to be your new employability mindset.