Amid a crowded landscape of photo-sharing apps, Color Labs exploded onto the startup scene last year with a disproportionate degree of fanfare. After launching a less-than-remarkable app for taking and sharing photos – plagued by bugs, no less – the company all but invited critics to decry its $40 million in funding. But Color Labs is not just an app company; in fact, it is not an app company at all. Their apps provide services to consumers as Color Labs harvests copious data points about their actions, orders of magnitude beyond Google's tracking. Washed through proprietary algorithms, this information will become profound knowledge about consumer behavior, enormously valuable to phone networks, retailers, and countless others. Color Labs is a quintessentially knowledge-based company, one of a tidal-wave of data-driven startups, and one of the reasons a new book from Springer, Knowledge-Driven Entrepreneurship (KDE), seems so timely and promising.
Thomas Andersson, Martin Curley, and Piero Formica labor mightily to capture in a single volume the ongoing transformation of the global economy from industrial to knowledge based. Their text is part of a broader series put out by Springer, Innovation, Technology, and Knowledge Management. The dozen titles in the series range from Managing Science to Knowledge and the Family Business.
The series editors cast a wide net of prospective readers: an “interested global readership”; decision makers of all kinds; public, private, and governmental actors; entrepreneurs of various stripes; and entire academic communities. The authors of this volume are – if possible – even more ambitious in their desired audience. “Our hope is that the book and its diverse perspectives will serve as a source of inspiration for people from different backgrounds in different parts of the world but who share a common concern that we need to move toward models that are more conducive to development and the use of knowledge (p. ix).”
This approach, aspirational language notwithstanding, limits the potential of its knowledgeable authors by spreading a short book hopelessly thin. By text's end, KDE is neither a guidebook for governing nor an academic tour de force, but something less than the sum of its parts.
In Part I, Andersson et al. explore what constitutes knowledge and how it drives economic development. The first three chapters provide the theoretical framework. After “Scenario Setting,” they craft their own series of “Foundational Laws of Knowledge Dynamics,” which help explain how knowledge moves up and down the “Knowledge Value Chain” of Chapter 3. The knowledge economy is swiftly replacing the “atom-based” firms of the industrial economy. Rivalrous goods are out; knowledge-fueled companies are in.
Chapters 4-8 grapple with more tangible topics: clusters (of various kinds), business ecosystems, knowledge in corporations, and economic policy. The authors gratifyingly reject the “seductive but problematic” cluster model of economic development. Rather they explain how clusters have become brands more than anything else, a term used to justify all sorts of ill-advised development schemes. Clusters vary in kind and function, and a knowledge cluster is an entirely different species than the classic industry cluster. Citing Nobel Laureate Vernon Smith's research, the authors see increasing divergence between cluster rhetoric and policy recommendations, and research focused on cluster qualities that foster growth.
This discussion organically expands into the role ecosystems are playing in knowledge-heavy industries. This is an intriguing area of entrepreneurial activity, as developer communities explode around some of the largest companies in the world. Apple, Facebook, Twitter, Google: in the past five years these companies have created vast ecosystems of content and capability. Startups, too, race to create walled gardens or open ecosystems soon after launch, allowing others to reuse and repackage the knowledge they create.
Similarly, Andersson et al. describe how corporations use and create knowledge internally. The text clearly emphasizes the differences between truly free markets and corporatist managed economies, noting the implications for how corporations cultivate innovation. Finally, the authors compare regions of the world across a broad swathe of relevant economic indicators, noting potential pitfalls for knowledge-based development or locations primed to explode in growth in coming years.
The latter half of the book fills in the second half of the title: entrepreneurship. Chapters cover entrepreneurship-fostering institutions, how companies encourage entrepreneurial behavior, and analyzing entrepreneurial activity in the lab. However, the plurality of time goes to classifying those who start businesses. The authors draw lines between small business owners and high-expectation founders, tech entrepreneurs and entrepreneurial scholars. The largest distinction, however, seems to be between traditional (native) and international entrepreneurs, the latter riding the knowledge-based economic wave to startup glory. From defining knowledge itself to the entire economic universe, Andersson et al. attempt a grand overview of a profound shift toward knowledge in the global economy.
The agnostic account above suggests the impressive scope of the academics’ project. Indeed, there is no shortage of recently published works that tackle portions of this subject. For instance, the Kauffman Foundation's Rules for Growth analyzes everything from copyright to immigration to come up with legal reforms that will promote innovation and growth. The Next Digital Decade, from the nascent nonprofit TechFreedom, includes essays asking whether the Internet has fundamentally changed economics and if the digital revolution could actually hinder innovation. John Kasarda and Greg Lindsay's Aerotropolis, demonstrates the essential role of aviation as the enabling infrastructure of a globalized economy. Even Grant McCracken's proposed Chief Culture Officer is a model for managing knowledge and creativity within corporations, closely analogous to KDE's Chief Knowledge Officer. Each of these works shares subject matter with KDE, but are narrower in two critical ways: subject and audience. KDE, in attempting more, conveys less.
Take Chapter 8, “Global Advance of the Knowledge Economy,” and Chapter 13, “Native and International Entrepreneurship.” Combined, they examine the reach of knowledge-based economies and the entrepreneurs who are willing to cross borders to profit. This interesting and important question is smothered under the weight of the authors’ method. Succumbing to an argot only an academic could love (or speak), they generalize in acronyms and jargon. In one sentence alone, we learn that understanding the KBE (knowledge-based economy) requires consulting the KAM, which draws upon UNDP's work, ICT data from ITU, UNESCO's research and education studies, World Development Indicators, and the Global Competitiveness Report.
Even so, the wealth of data could inform prudent policy choices or areas of potential intriguing research. For example, Andersson et al. could point out areas with limited computing resources that still manage to be highly innovative. However, they do not do so. The authors list positive and negative aspects of each area, without becoming specific enough to illuminate things for the reader. Even more problematic is that this reserved approach does not ensure their generalizations will remain true. Describing the Middle East and North Africa region and the “stability it offers,” the authors claim “the rule of law” and “effectiveness of public institutions” are comparatively better than in Latin America. Perhaps that will be true again soon, but it was the apparent ineffectiveness of public institutions that led to the end of the rule of law in the recent regional revolutions.
A similarly distant perspective plagues Chapter 13. There, we learn international entrepreneurs are “embedded in a borderless context where innovations are spawned by science-based revolutions and turned into networks of new products and services that are simultaneously launched all over the world.” The authors find two key advantages accrue to these entrepreneurs without borders; “the market […] does not appear too small initially,” and business mistakes are cheaper. An internationally oriented startup is particularly fortunate if its founders hail from different nations. Public policy, therefore, should reflect the value of these international entrepreneurial cauldrons and governments should create “knowledge zones” that are “open to diversity,” “build bridges between different cultural practices,” “foster connections, dialogue and meaningful conversations,” and so forth.
These suggestions are well-meaning, but meaningless. Compare this work with another recent account of borderless economic visionaries, John Kasarda and Greg Lindsay's Aerotropolis. Karsarda and Lindsay look at the internationalization of entrepreneurship through the cockpit of the plane enabling it. Andersson et al. talk about the importance of real and virtual mobility in the growth of international entrepreneurs. Karsarda and Lindsay actually explain real mobility: how it arose, how it survives, and what happens when it fails (see the devastating impact of Iceland's volcanic ash on Kenyan flower growers). Nor should the real play second fiddle to the virtual; as they wryly note, “the Web can’t move your box from Amazon (p. 9).”
More importantly, the contrast between these two approaches reveals the fundamental problem of KDE: who profits by reading it? What audience would prefer a sidebar on fostering dialogue to John Kasarda's firsthand tour of the Aerotropolises of the world? Does a city planner benefit from a recommendation to build (metaphorical) bridges or real runways? Will a startup founder turn to KDE when trying to understand international markets rather than Kasarda, whose consulting group advises governments and corporations worldwide?
The work suffers from other faults: a passion for definitions, acronyms and academic idioms leave the text less engaging than the subject matter, for instance. Problems of style and focus, ultimately come back to the failure to think about the audience. This handicap obscures their various intriguing insights. For instance, the cluster discussion helps explain why governmental efforts to create the “next Silicon Valley” misunderstand knowledge communities. And the idea of a Chief Knowledge Officer is an interesting proposal for retaining and sustaining institutional knowledge and creativity (echoing McCracken's Chief Culture Officer).
No book can be all things to all readers, and KDE demonstrates the dangers of trying. For all its faults, KDE is an ambitious effort to describe a grand and momentous transformation of the global economy. Alas, in a true knowledge-based economy – the market of ideas – economy of knowledge is no recipe for success.
