Management Magazine
Special Report

Shifting focus to a knowledge economy

More and more people are starting to realise that a lifelong cycle of learning and continuous up skilling is now required


Through the millennia mankind has seen some shifts, which dramatically changed the status quo. For thousands of years, economics was mostly agricultural based. The advent of the industrial revolution in the 1700’s saw a rapid transition to new manufacturing processes as factories, machines and new tools replaced previous hand-made production.

Rapid innovation occurred during this period, which included the invention of steam engines, improved iron and even textile production – all of which lead to a total change in societal lives. Some historians even argue that this period experienced the biggest change in human existence since the domestication of animals and plants. And for the first time in history, the average income and even populations started to grow. The global population is estimated to have been around 650 million people in 1650 – compared to 7.6 billion currently.

Knowledge economy

Up until the 1960s the global economy was still mostly based on the manufacturing and construction of various goods – motor vehicles, food, clothes and much more. But a shift started occurring in the second half of the twentieth century. As technology started to advance and innovation became more rapid, it created what legendary management consultant Peter Drucker popularised as the “knowledge economy”.  In his book The Effective Executive Drucker differentiates between manual workers and knowledge workers. Manual workers produced goods and services with manual labour while a knowledge worker created ideas and information.

With the creation of the internet, and social media, it became much easier to create and share information. Massive data sets are also being created and this only set to increase exponentially as the Internet of Things (IoT) and other aspects of the Fourth Industrial Revolution come to fruition. The Fourth Industrial Revolution is defined by new technologies fusing many aspects of the physical and digital worlds like the Internet of Things (IoT), self-driving cars, 3D printing, nanotechnologies and others.

A knowledge economy is far more reliant on intellectual capabilities and knowledge rather than manual labour and natural resources. Rabelani Dagada, a Policy Fellow at the Institute of Race Relations (IRR) describes a fascinating case study on how a focus on a knowledge-based economy can impact a country’s growth trajectory.

Industry and services

Malaysia and Ghana both became independent nations on the same date, 6 March 1957. Both countries were characterised by dire poverty at the time. All depended on the economic path and policies which the countries would embark on.  More than 50 years later, the contrast between the two countries is clear. By 2016, Ghana’s GDP was at USD37 billion and economic activity was mostly focused on agriculture and exports such as gold, cocoa and wood. Malaysia’s GDP at the same time was USD309 billion – with much of economic activity focusing on industry and services.

Malaysia identified and pursued technology and ICT friendly policies and focused their education system heavily on these fields. This focus on the creation of a knowledge economy clearly paid off – just as it had in powerhouses such as South Korea.

Kenya has made great progress in recent years with agriculture now only responsible of 24 per cent of GDP while services account for up to 62 per cent of GDP. Technology and innovation is starting to play a great role and Nairobi’s Silicone Savannah, a USD1 billion technology hub, already hosts more than 200 technology start-ups and big firms such as Microsoft and IBM.

Tech hubs have also started appearing in other towns like Mombasa, Machakos and Nyeri. The rapid proliferation of these hubs, supported by some of the fastest mobile internet speeds in the world, are creating massive opportunities for innovation and entrepreneurship. Early innovations such as M-Pesa are already over ten years old and many developed countries have tried to emulate this – many times unsuccessfully.

Social entrepreneurship

Higher education institutions are critical to any country’s knowledge base. Recent research by Kenyatta University’s Jackline Nyerere looked at entrepreneurial training at some of Kenya’s top universities and even government institutions. It was encouraging to see that all of the surveyed entities had courses focused on entrepreneurship. She noted that most of these were focused on business activities and she highly recommended a bigger focus on social entrepreneurship.

While universities will remain a critical factor in education, the learning landscape is also changing dramatically. Masterstart, the online business education partner of South Africa’s University of Stellenbosch Business School, recently released research that showed only 24 per cent of South Africans believed that their current skills will keep them employed in the next decade. More and more people are starting to realise that a lifelong cycle of learning and continuous upskilling is required.

Continous learning

With technology changing at rapid rates, shorter courses are becoming critical. Luckily, Kenya with its good internet connectivity is perfectly placed to utilise online education.

It is now critical that not just countries, but individuals focus on a culture of continuous learning, gaining and creating knowledge and insights. Natural resources are finite and diminishes with use. Knowledge only increases with use. With massive business such as Uber (a transport service with no vehicles) and AirBnB (accommodation services with no properties) creating such disruption in traditional industries, one can only wonder what the next great Kenyan innovation will be.

Francois van Dyk, @sbalie, heads Operations at Ornico, the Brand Intelligence research company. He worked in public relations before entering the world of media research.

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