IT#03 Discovery Economy

 #Economy, #KnowledgeAge, #KnowledgeEconomy, #DiscoveryEconomy, #SocialSystems

This article introduces the idea of Discovery Economy which seems to take a root in the world economy.

Parable preface

In a far far away land, there was a very lonely king. So, he wanted to marry a princess. He had heard of one locked in the highest room of the tallest tower of a castle guarded by a fire breathing dragon. The king did not have time for such technicalities as killing a dragon or finding the princess and the castle in the first place, so he called the Hero and asked him to rescue the princess and bring her to him.

- Sure thing, Your Majesty, - said the Hero, - but I’ll need some time and road expenses.

- Talk to my Treasurer, he will provide you for the road, - casually dropped the king and turned to more important things to do.

- It does not work this way, - said the Treasurer self-importantly, - Write the Design. Where will you go, which cities you will visit, how much room and food cost there, where do you plan to buy the weapon to slaughter the dragon, and how much will it cost, and of course, how long will it take. This is needed to approve your per diem expenses!

- Well, - started the Hero, - I heard of an old wise evil witch in a village close to the next town. I planned to ask her.

- Will she know where the princess is? - asked the Treasurer.

- I don’t know, - said the Hero, - But she may know who does.

- And who will that be? Please, mention it in your Design, - said the Treasurer.

- If I knew, I would not have to ask her, - tried to explain the Hero. But to no avail.

The Hero did not get any money and left the next morning. No one had ever seen him in that Kingdom.

The rumors though say that he still found the princess, married her, and became a king of his own. The rumors also say that anyone in his kingdom who capitalizes the word "design” is beheaded.

History

The slavery can be conditionally considered stared from Sumer, that is around 5500 BC and Ancient Egypt, around the same time. Of course, there are plenty of nations claiming a million year history, but let’s stick to those confirmed by archeology and paleontology.

We may conditionally date the end of slavery by the fall of Rome on 24 August 410 AD (even though it lost the capital status in 286 AD) or we can stick to the date of September 4, 476 AD when the last Roman Emperor Romulus Augustulus was deposed by Odoacer who declared himself a ruler of Italy. Of course, for Mesoamerica the dates would be different.

We may conditionally date the end of feudalism by the French revolution in 1792.

Dating the end of capitalism would be likely most debatable things but the Russian revolution of 1917 and the Great Depression in USA of 1930s certainly indicated the birth of the next social system – socialism.

If you don’t think that the Great Depression was a start of socialism in America look at what it brought:

• Central banking system.
• Retirment & pensions (SSA)
• Organized trade unions and workers' rights (Labor Law).
• Prohibition of owning gold[1].

There are a lot of similarities to what was done in the yet forming Soviet Union at the same time.

As to beginning of the knowledge society, we have the data when the term “knowledge worker” was proposed – 1959 in Peter F. Drucker book “The Landmarks of Tomorrow”.

The bottom line:

• Slavery 6000 years from 5500BC to around 500AD.
• Feudalism ~1300 years from 500AD to 1792.
• Capitalism 225 years from 1792 to 1917.
• Socialism 42 years from 1917 to 1959, or, if you want to count to the fall of Soviet Union in 1991, whole 74 years.

If we count the Knowledge Society from 1959 and now in 2023, we already have 64 years. Ok, let’s be generous and count by the foundation of the Knowledge Age flagman companies, Microsoft and Apple. 1975 and 1976. Even then we have 48 years. The previous formation lasted 74 years.

By the way, did you notice that the time to move from one social system to another accelerates? It actually makes sense, because in theory social system change happens because of technological advances. And if in the Ancient Egypt only selected priests paid attention to science, now we have an army of scientists and engineers pushing forward our knowledge and technology. Of course, things will accelerate.

So, it looks like we are overdue for something new. And that “new” is already with us.

And yes, we are. And it is.

The end of Knowledge Age

Disclaimer: I’m not saying that Knowledge Age relationships will disappear. Change of a social system does not remove older ones, it just becomes a dominant one that creeps into economy taking more and more space. But we will still have older systems around, even hunter-gatherers won’t disappear. They still exist in the most Northern and some equatorial places.

But let's get to what’s next. Do you remember how and why the Knowledge Age happened? Check the “Knowledge Economy” article on this site. The Knowledge Age started because the knowledge to create a product, component or service stopped fitting into a single human head. So, we need teams of people whose knowledge and experience fit each other to create the whole thing. But remember? The total knowledge accumulated by human civilization continues to grow at an accelerating rate.

What will happen when you need too many individual areas of expertise? Let’s consider simplified example of a “Tom Sawyer Inc.” (you can find an article about it on the Eldar University site). A boy from a small MidWestern town has grown up and created a corporation doing fence painting.

In 1876, when the book was published, it was simple. Here is the bucket, here is the brush, here is the whitewash, and finally here is the fence. That’s all. Simple enough for an eleven-year-old boy to do it, especially if he is resourceful enough to make other boys do it instead. Not today. We have tons of different paints with different weather and UV resistance, different shades of white, different sticking ability to different materials... Speaking of materials, fences are very different. Stone fences, metal fences, wire fences, plastic fences, various wooden fences, weathered fences... And we have different brushes, different rollers, different airbrushes. Let’s not even start about different buckets.

Suddenly you need four experts in addition to the guy who will actually paint the fence. If you think I am overcomplicating things, don’t forget, I am not really talking about painting the fences, but rather designing a new Boeing or constructing a spaceship. Painting a fence is just a simplified example. If I’ll speak a real Knowledge Age project you will be swarmed with details and confused, just like it happens in the real life. This is not what I want, I want you to understand the point.

And the point is: in the Knowledge Age you need teams to do the job. And the more knowledge humanity accumulates in a specific domain, the more people you will need. And the more people you need in the team, the more complicated the project becomes and the more time it will require. 

How much more? This is easy to evaluate. If you need the teamwork, you need people to work with each other. So, the number of connections between people is the estimate. In a team of 3 people, you only have (3*3 – 3) /2 = 3. We don’t count connections of a team member to self, and connections like Bob-Alice and Alice-Bob are one connection. For 5 people it’s already (5*5 – 5) / 2 = 10. For 10 people it’s (10*10-10)/2 = 45. Overall, for N people, it’s N(N-1)/2 or (N^2-N)/2, that is quadratic.

Well, every mathematician knows how parabola looks like but look at it for visualization. What do you see? What does it mean? For 100 people it’s almost 5000. Such a team won’t be functional. The internal communications will slow down any progress to a nearly full stop.

That was a mantra of the early Knowledge Age. Hire an expert. You need C++ code to be written? Hire C++ expert. You need it to run on AS/400 series computers? Hire an expert on AS/400. You need it to exchange data with IBM DB2? Get an expert with DB2. This does not work anymore.

Now we have DB2, dbase 3, SQL Server, Oracle, Postgres, mySQL and MySQL, MongoDB, SQLite... And if you add internal ones, you’ll get BigTable, Megastore, Spanner (searchable on both Bing and Google in seconds). In fact, there are even public articles saying that the number of internal names at FAANG companies is overwhelming[2]. Hiring in advance an expert for every technology you need does not work anymore.

There is also another problem. “Expert” becomes a highly subjective metric. Remember? No matter how you measure smart people, they will find how to use this metric to their advantage. And your disadvantage. Go to any job search site, and everyone is an “expert”. There are even expert advice services how to rewrite a resume to look like an expert.

And there is an even bigger problem. At the beginning of a project, you don’t even know which experts you will need. 

Discovery

Is there a solution? There is always a solution. A long time ago a proud freshman (it was me) heard from the dean of the Mathematics & Mechanics Department: “We don’t teach mathematics, we teach to think. Everything else you will learn yourself.” You don’t hire an expert, you hire a well-educated person who can learn new things really fast.

Doing a project becomes a series of discoveries. You discover which technologies you could use. You discover their cons and pros to decide which ones to use. You discover how they work. And how they work together. You discover their hidden issues. And on the way you discover what your customer, let it be an external customer or your VP, forgot to tell. We don’t have the luxury of assembling a team of experts. Forget about “Great knowledge of Python” in the job description. Your main requirement must be “Can think. Can learn. Can do things. Can complete projects.” Leave handling a new programming language, a new database, a new tool to your people. Of course, if you are in in a knowledge intensive business.  Hunting squirrels, gathering berries and sewing slippers can be still done in the old way.

Humanity does not move as a single entity. It’s not like someone snapped fingers in heaven and we are all immediately in a new social formation. But those on the front edge of complexity, we created ourselves with our science and technology, are entering the new social formation – the Discovery Economy.

Discovery Economy is the state when at the beginning of the project neither the manager nor the team members know what will be required to achieve the goal. We know what we want, but not how to achieve it. That knowledge has to be discovered and used to complete the project.

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[1] Executive Order 6102 by President Franklin D. Roosevelt, 1933, repealed in 1974 by an Act of Congress signed by President Gerald Ford.

[2] Google Has so Much Jargon and Code Names That It Built an Online Glossary (businessinsider.com)