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Knowledge workers are taking over.

A third of American employees are already knowledge workers. The number is lower in Australia and New Zealand, we’re catching up.

In developed, developing and even in some undeveloped countries knowledge workers are the fastest-growing employment group.

Knowledge workforce outnumbers industrial

In the developing world knowledge workers already outnumber industrial and agricultural workers. In more advanced countries they outnumber these two groups added together.

America has roughly as many knowledge workers as service industry workers. In most rich countries knowledge work is the most important economic sector in terms of economic and political clout.

Knowledge worker is a new idea

The idea that people can earn a living dealing purely with knowledge has only been around for 50 years.

Writer and management expert Peter Drucker is often credited with inventing the term. He first used the term ‘Knowledge Worker’ in his 1959 book “Landmarks of Tomorrow”.

Drucker modestly claims to be only the second person to use the phrase. He says the honour belongs to Fritz Machlup a Princeton economist.

Nevertheless, Drucker popularised the term and has spent many of the last 40 years expanding on the original idea and explaining its implications.

Misunderstood

Although the term is widely used and people generally understand what it implies, there is still much misunderstanding about its exact meaning — even among knowledge workers.

One common misconception is the term applies exclusively to people working in the information technology industry or elsewhere using products created by IT workers.

While almost all IT workers qualify, they are only a subset.

Anyone who makes a living out of creating, manipulating or spreading knowledge is a knowledge worker.

Broad church

That’s a wide definition. It includes teachers, trainers, university professors and other academics. You can categorise writers, journalists, authors, editors and public relations or communications people as knowledge workers. We’ll put aside for one moment arguments about whether the knowledge created by these people is accurate. Lawyers, scientists and management consultants are all included.

One key difference with other white-collar workers is the level of education and training. There may be knowledge workers who don’t have a formal tertiary education or high-level training. They are a minority.

You need a degree, mostly

As a rule, knowledge workers have a minimum of a university undergraduate degree. That’s not always the case. Older knowledge workers tend to have less formal qualifications than younger ones. That’s partly because higher education wasn’t ubiquitous when they started out — university isn’t the only path to knowledge.

Another reason is that practical experience counts for a lot. The key here is knowledge workers each individually posses their own reservoir of accumulated knowledge they apply in their work.

Compared with other groups of workers, they are well paid. Some are extremely well paid. Knowledge workers can be union members. But are often not organised in that sense.

This can lead to forms of genteel exploitation. Few knowledge workers are paid overtime. Yet employers expect most to voluntarily work for considerably more than the basic 40 hours a week.

Mobile

On the other hand, knowledge workers are more mobile than industrial workers and can often take their skills elsewhere at the drop of a hat. They often do.

Any employer who abuses knowledge workers’ professionalism is likely to see their most important assets walk out of the door. This applies as much today as it did when there were more jobs around.

Few governments have come to terms with the implications of having a highly mobile, highly educated, knowledge workforce.

Just as knowledge workers can quickly find a new employer if necessary, most can move freely between countries. Any nation that doesn’t look after its knowledge workforce can expect to lose it.

New Zealand

This is particularly applicable in New Zealand, which operates a so-called progressive income tax system that, at times, appears deliberately designed to alienate knowledge workers.

To understand this, compare the marginal and absolute rates of income tax paid by most New Zealand knowledge workers and you’ll notice they are substantially higher than in many competing nations.

Australia looks particularly attractive.

If anything the flow of knowledge workers migrating to more benign economies is accelerating.

Drucker distinguishes between classes of knowledge worker. High-knowledge workers include professional groups such as doctors and teachers deal mainly in the realm of the mind while the knowledge technologists work with their hands and brains in the IT industry, medicine and other areas. Although both categories of knowledge worker are growing, the bulk of growth comes from this second group.

Commenting on Starbucks’ radical decision to close 61 Australian stores (note the terminology: stores not cafes) the Australian Newsagency Blog’s Mark Fletcher says while he doesn’t enjoy the company’s coffee he admires its business model and goes on to ask “If Starbucks can reach this decision with key factors – range, margin and buying power – working for them, what is the situation newsagents face?”

Starbucks’ coffee is distinctly average by Australian and New Zealand standards. Its cafes are so-so and its prices are sky-high. So with hundreds of small, local cafes providing better coffee, service and all-round experiences at lower prices why would anyone patronise Starbucks?

Well the chain grew fast in America because by US standards it was high quality, albeit at a premium price in a market where fragmented competition performed poorly.

Australia and New Zealand already had a coffee culture, so Starbucks simply doesn’t offer the same value proposition in this part of the world. Some time ago an US business magazine ran a story about small, boutique neighbourhood coffee shops going head-to-head with Starbucks in America and winning. In effect, that’s exactly what happened in Australia.

My local Starbucks in Australia was the branch inside the Borders Bookstore at Hornsby. Sitting down with a bucket of overpriced, weak milky coffee somehow seems more acceptable when you’ve a pile of books to check out and you’re deciding which ones to buy.

There’s an obvious link here with newsagencies — Borders competes for at least some of the business. It may make sense for large magazine specialist newsagents in prime retailing positions to offer a Borders plus Starbucks-like coffee and magazine experience.

But that’s not the answer to Mark’s question. Are newsagents in a similar situation to Starbucks?

Probably not.

First, Starbucks is large. It can standardise, it has buying power and marketing clout that small firms like newsagencies can never achieve on their own (if they acted together things might be different). But what it simply can’t do is deliver a quality customer experience at the local level. Nor can it respond to individual needs or rapidly changing tastes. Newsagencies can do both.

Despite the company’s best efforts, its coffee tends to be dished up by bored teenagers who, beyond uttering ‘have a nice day’ mantras, don’t care about customer service. That’s never going to be as good as coffee served up by cafe owners, their families and the people work with them. Newsagents have the power to ensure the customer experience is first rate.

Second, Starbucks is a corporation. It has to pay all its costs and salaries then deliver a substantial return on capital to shareholders — they probably expect something like 20 percent, anything less would have made them vulnerable to private equity firms before the US financial markets turned nasty. Newsagents need to make a capital return, but something like a 10 percent return on money invested would satisfy most owners. Maybe it shouldn’t. Maybe that’s the lesson here.

PC World New Zealand has an ABC circulation of 15,565 and Nielsen readership figure of 148,000. That makes it New Zealand’s most-read specialist technology publication. Published monthly, in New Zealand that means 11 issues a year with a joint December and January edition.

In August 2006 Fairfax Business Media bought the New Zealand licence for PC World from IDG. In that year Fairfax acquired the bulk of IDG’s NZ business picking up four titles. IDG New Zealand sold two other titles; Unlimited and Actv8, to Infego under a separate agreement. IDG closed one title; Fast Forward.

Before August 2006 IDG published PC World. The had been published in New Zealand by IDG since 1989 when it was a tabloid supplement in ComputerWorld.

At the time of writing, PC World is typically 112 A4 colour pages. It is printed on gloss art paper, plus a cover on heavier stock. Advertising makes up about a quarter to a third of the pages. The magazine is perfect bound with a DVD disc which is inserted, not cover-mounted.

PC World New Zealand on bookstands

The magazine is mainly sold on bookstands with a cover price of NZ$8.90. This is competitive with larger, overseas published titles. You can also find the magazine in petrol stations and supermarkets. A significant number of readers are subscribers.

Most PC World readers are highly educated, well-heeled men. It occupies the same market niche as Australian Personal Computer, PC User and PC Authority. It has new product reviews, group tests, news features and plenty of how-to advice stories.

Typically well over half the editorial content is locally written. The overseas material is given a local slant and boosted with local information such as sidebars. PC World’s New Zealand staff and freelance journalists are highly regarded.

Strictly speaking PC World New Zealand doesn’t have any direct print competitors, its nearest local rival for readers and advertising revenue is ACP’s New Zealand NetGuide, but that title sells to less advanced users.

Two bloggers posted journalist perspectives on the power of blogs. Both are recent blogging converts. Both have worthwhile observations.

In why journalists must learn the values of the blogging revolution, The Guardian’s Roy Greenslade argues that in the past journalists were secular priests pontificating to the great unwashed. He says news was a one-way traffic. Blogging, with its built-in feedback mechanisms has turned that on its head.

Maybe. Here in New Zealand, there’s often plenty of negative feedback when you write something that somebody doesn’t like. The odd thing about blogging and online news is you also get positive feedback. This is strange and unusual to some of us.

Future journalist bloggers

Greenslade goes on to write:

“I have tended to predict that future news organisations will consist of a small hub of “professional journalists” at the centre with bloggers (aka amateur journalists/citizen journalists) on the periphery. In other words, us pros will still run the show.

I’m altogether less certain about that model now. First, I wonder whether us pros are as valuable as we think. Second, and more fundamentally, I wonder whether a “news organisation” is as perfect a model as we might think.”

I’d be concerned about Greenslade’s conclusion if I agreed with his hub and periphery prediction. My vision of the future of journalism is that it is more like a sports league with professionals operating on one level, semi-professionals working at another and the amateurs elsewhere. And, as with the English FA Cup, there’s always potential for the occasional upset.

Towards the end of his piece Greenslade writes:

When we journalists talk about integration we generally mean, integrating print and online activities. But the true integration comes online itself. The integration between journalists and citizens. Of course, there should be no distinction between them. But journalists still wish to see themselves as a class apart.

Funny, I’ve never thought of myself as being a class apart from my readers. I’ve always regarded them as my employers.

New Zealand blogger Bernard Hickey writes he feels liberated as a blogger. He likes the speed of the medium, the feedback and the ability to connect to his audience. As Hickey says, he is now a blogging evangelist.

Hickey’s blog interests me because it serves an audience that is relatively ignored in New Zealand. For want of a better label his target is middle class, aspirational and liberal in the British sense, not the American sense.

Mark Neely asks Is ‘Born Global’ the new normal for software start-ups?

Anyone who has played the board game Risk knows the smartest strategy is capture Australasia before setting out to conquer the world. Risk may have been a powerful metaphor in the past but it doesn’t apply to business in the digital age.

When the product you’re exporting weighs nothing and can travel to its destination at the speed of light, geographic barriers are meaningless.

New Zealand tech companies learnt this early. They latched on the Born Global idea earlier than their Australian counterparts. That’s partly because they are further out on the fringe of the global economy. But they were treading down a tried and tested path.

Global only  option for New Zealand start-ups

Unlike Australian firms, New Zealand companies had little choice. The local market is tiny and poor by OECD standards.

Almost every successful NZ business of the last 20 years has exported from day one. The list includes children’s clothes, fashion, biotechnology and booze as well as software and online services.

Most of the economic factors Mark mentions in his post (market size, ex-pat community etc) apply in spades to New Zealand. Here, exports are about 30 percent of GDP. In Australia exports are roughly 20 percent of GDP.

Incidentally, both figures are depressingly low by OECD standards where the average is almost 50 percent of GDP.

Tiny economy, aware of global issues

New Zealand is a tiny economy, but everyone working in it is painfully aware of its relative international insignificance. I’d argue Australian businesses are misled by their seemingly large and buoyant economy and are more complacent about exporting. That Risk strategy looks smarter in Sydney than Timaru.

One significant difference is NZ start-ups don’t tap into overseas investment as much as Australian firms – if this impression is wrong please let me know. Instead our entrepreneurs opt to cash out of their businesses at an earlier stage – in many cases when their business and products are still immature.

I’m not a finance expert, but this tells me New Zealand companies suffer from poor access to venture capital – or if they have access to VC funds, they don’t have access to the right kind of venture capital.