25 March 2005

Private Industry's Role

Hot on the heels of two fascinating posts comes the third installment excerpted from The Jenius' "Puerto Rico: Online or Flatline." It is here where the rubber meets the road and thus We are the Leaders of Puerto Rico's transition into a global Knowledge Economy player.

Read on. Agree with Me and tell Me I'm Wonderful. Disagree with Me, be cogent about it and then tell Me I'm Wonderful. Either way, We exchange Knowledge. Funny how simple that is and yet, We choose to avoid it.

The implementation of information in the knowledge economy is in the hands of private enterprise. Though there are elements in private enterprise that contribute to infrastructure and education, the bulk of private enterprise can look outward to create and secure niches in the global economy. Doing so requires a visionary shift and the support of Government (in Puerto Rico's case), along with a tighter partnership with Education.

The Government’s strongest contribution to private enterprise would be focusing all economic incentives to support knowledge economy growth. In its simplest form, this would mean avoiding Internet taxation. Whether this requires lack of action or defensive action against a currently-improbable Federal level of taxation, a tax-free Internet sales base is the strongest public platform a nation can provide.

Anticipating a blanket reaction, “incentives for the knowledge economy” does not mean short-changing any other economic sector. The tendency to react defensively first, second and third amongst business people in Puerto Rico can be sidestepped by making evident that knowledge management, the focused and creative harnessing of these new economic tools, is a benefit to all businesses. No need to force businesses to see this: The development of incentives and successful companies will lead them to the promised land.

In general terms, companies will divide themselves into three large groups:

1) Those that create knowledge – Research and Development

2) Those that inject knowledge into markets – Infomediaries

3) Those that do both.

It makes sense to try having most of the local companies be of Type #3, but these are, obviously, the hardest type to establish. It is appropriate to aim at this (and emulate the ones we have) while pragmatically pursuing the growth of the other two types.

Type #2 is the most common. Their primary profit basis is fairly simple to explain: Too much information and too little time. In an economy of abundance, the only scarcity is attention. Whether it is organizing, describing or filtering information, infomediaries seek to simplify chaos. No matter how many cultural differences there might be amongst a global population, the basic characteristics of human understanding are almost identical: visual access dominates, simplicity reigns supreme, basic needs being met is very valuable, cheaper is better and consistency rules over irregularities.

A key component of developing a productive and profitable knowledge economy is having a strong Research and Development sector. As an outgrowth of an educational system, an R&D sector does more than provide a workshop for college graduates: it fuses business and academia into a powerful, synergistic unity. Where business is pragmatic and profitable, academia is idealistic and iconoclastic. The combination is vital to success in the knowledge economy for change is constant and the horizon constantly shifts; academia has traditionally shown itself to be a better “lookout”. Business is obviously more concerned with “now”, and has shown itself to be a better “guard,” because if “now” is not profitable, “later” is severely jeapordized.

Fusing both is the key component of most economic development plans and there is no reason for Puerto Rico to buck the trend. What does slow down the process is continuing to believe that “corridors”, “alleys” or “broom closets” (okay, I made that last one up) are physical constructs, that a “cluster” is a bunch of building sharing the same large acreage. As much as humans still feel the need to interact in “meatspace”, the bulk of development in “industry centers” occurs from interconnectivity based on goals, markets and processes, and most of the results occur outside the cluster areas. It makes sense: there’s simply more world outside a cluster than in.

Puerto Rico’s size and digital infrastructure lends itself very well to create an entire “Silicon Island.” With a small leap in imagination, “Island” can become “World.” And that’s where Puerto Rico can choose to go.

The Jenius Has Spoken.

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