HEF Indian Journal of Higher Education ISSN 0976-1314

HEF Indian Journal of Higher Education ISSN 0976-1314

 Transitioning from Knowledge Economies to Human Economies

Implications for Management Education

Over the progression of the 20th century, the developed economies of the world evolved from
being industrial economies to knowledge economies. Interestingly the world is now,
transitioning to human economies—and the shift will have an intense implication for
management education. The term “knowledge economy” was popularized by Peter Drucker
(1969) as the title of Chapter 12 in his book ‘The Age of Discontinuity’. He described the
knowledge economy as the use of knowledge to generate tangible and intangible values.
Seidman (2014) noted that mature economies have evolved from being industrial to
knowledge and had arrived at a watershed moment, transitioning to human economies and
catering for all of its implications. Here, he proposed, everyone is a leader doing the next
right thing. He further elaborates; in economic terms, the movement has advanced from an
Industrial Economy – where employers hired for physical strength and dexterity -- to a
Knowledge Economy –where employers hired for intelligence and command of specialized
information-- to what is now a Global Human Economy – where employers are hired to
engage in collaboration, to display perseverance and to give business a human face.

The objective of Human Economics is to formulate economic concepts and analytical tools
that permit the maximization of human well-being subject to ecological constraints. This
definition places humanity and the environment on a rather even footing. A business must
maximize human well-being and safeguard the environment. Companies are trying to
compete by branding themselves as “human” (Chevron is the “human energy” company and
Cisco is the “human network”).Organizations are upgrading to the ‘Human Operating
System’ as opposed to traditional governance operating system which includes formal
policies, procedures, processes, financial objectives and performance targets wherein leaders
use rewards and punishments to motivate employees to adhere to these rules and to achieve
these objectives.

The know-how and analytic skills that made individuals indispensable in the knowledge
economy no longer are able to give them an advantage over increasingly intelligent
machines. Unlike tangible assets, employees do not depreciate; in fact, the value most
employees provide to organizations appreciates over time. To thrive in the human economy,
businesses will essentially have to provide employees with the ‘Freedom To Be Human’.
This means allowing them to be their fullest and most complete selves and to contribute

HEF Indian Journal of Higher Education ISSN 0976-1314

toward an organizational effort that provides them with a sense of purpose. The ability to
leverage on strengths like creativity, passion, integrity, perseverance, kindness and a
collaborative spirit will be a source of competitive advantage for the organizations of the
future. This shift from a knowledge economy to a human economy will have huge
implications on how managers and leaders approach their organizational roles and hence
there will be a cascading effect on management education. What are the implications of these
changing business dynamics on management education?

Management education is moving towards being more student-centric with a shift from
teaching to learning. Dynamic platforms and emerging technologies particularly social
media, mobile, analytics and cloud computing (SMAC) are reorganizing management
education. Competency-based learning models are transforming the education landscape to
address differing learning objectives across student groups. Competency-based learning
allows students to progress at an individual pace, taking their own time to attain proficiency
in the relevant skills. These blended learning models provide a greater autonomy to learners
and are able to cater to students across the various levels of learning. The core value of
competency-based learning is to grant program credits to students based on their actual
mastery of the subject instead of evaluating students’ progress based on lectures attended or
time spent in the classroom. Assessments are meaningful and offer a positive learning
experience for students.

Students and budding entrepreneurs with insights into current business strategies embedded
in concepts like the ‘Circular Economy’ and ‘Human Centered Design Thinking’ along with
their regular business curriculum are in demand. David Young outlines seven global
competencies which would be essential to succeed in human economies. These are;

1. Appreciation of culture. Students see their own cultures as strengths, seek to understand
the cultures of others, are aware of similarities and differences among cultures and
understand that behaviours and values are often tied to cultures.

2. Evaluation of information. Students regularly question easily accessible information to

seek deeper understanding and thoughtfully evaluate materials and perspectives, rather than
accepting things at face value.

HEF Indian Journal of Higher Education ISSN 0976-1314

3. Cross-cultural communication skills. Students effectively exchange ideas with peers and
adults from different backgrounds — either virtually or in person — and have the skills to
enter new communities and spaces.

4. Perspective taking skills. Students demonstrate curiosity and empathy and may show
compassion for the perspectives of others.

5. Intelligent humility. Students understand that their knowledge is not finite and appreciate
how much more there is to learn about the world. Students understand the grandiosity of the
world and its complexities.

6. Divergent thinking. Students see alternative or original solutions to existing problems and
can envision the world differently from how it currently exists.

7. Technological literacy. Students utilize and explore existing technologies to communicate

and collaborate with others, and to learn and share new ideas and information. Students
create new technologies or discover new uses for technologies that help them and others
navigate their worlds.

In the past because the "business of business [was] business", the only goal was to chase
bigger profits and to grow bigger. Today we realize this old way of thinking is unsustainable.
Adjusting to the Human Economy concept and our altered world means facing the truth, this
means we will have to chase ‘significance’ instead of ‘success’ by implementing business
strategies , systems, processes and practices for a more inclusive and sustainable world. In an
article published in Harvard Business Review Dov Seidman established; “The path ahead for
leaders—as Peter Drucker foresaw with such prescience—is to create human operating
systems that allow humanity to be expressed”.

In conclusion, amid new technologies, proliferating media, and layers of transnational

associations, “global citizenship education is a ‘must have’ and not a ‘nice to have’ — for
every business student. In the emerging Human Economies it will be essential do the right
things and just not focus only on doing things right and hence it will no longer be enough to
just follow rules and be legally compliant. The scientific management emphasis on efficiency
and profit at all costs can no longer take precedence over human values.

Perhaps, it’s time to create business leaders and managers who assist organizations to
empower their workforces with the essential tools to think creatively and co-create even as

HEF Indian Journal of Higher Education ISSN 0976-1314

they seek to collaborate effectively with machine intelligence. It’s time create business
strategies and learn from successful business case studies integrated with the United Nation's
Sustainable Development Goals. It’s time to develop our faculty and educators to initiate
these changes in their syllabus, teaching methodology and meaningful continuous
assessments. It’s time to put philosophy and the humanities back into the core of our business
education. It’s time to acknowledge human capital management as a core discipline rather
that treating it as an optional subject in business schools and as just a supporting business
vertical. It’s time we equip our business leaders to successfully contribute at rebalancing
corporate governance, human operating systems and harmonize them.

In the future, successful companies will be those which focus on the humanity of work, and
capitalize on what humans can uniquely do. Successful managers and leaders will be those
who appreciate the complexities of what it means to be human, as well as understand the
organizations role and contribution in sustaining an inhabitable, healthy planet along with an
emphasis on profits. Therefore effective management schools will be those who will create
inspired global professionals who are animated to action by a deep connection to the
underlying mission of improving the world by creating and demanding sustainable business
practices which reflects not just the scale of economic activity, but how opportunities, income
and wealth are distributed.

Author
Dr. Farida Virani , Prof & HoD HR and Behavioural Sciences
MET – IOM
Bandra – Mumbai

HEF Indian Journal of Higher Education ISSN 0976-1314

References

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David Young, Feb 2016, ‘What do Globally Competent Students Look Like?’ retrieved from
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Dov Seidman , June 2015, ‘Surviving And Thriving In The Human Economy’, Forbes ,
retrieved from https://www.forbes.com/sites/dovseidman/2015/06/25/surviving-and-thriving-
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Dov Seidman, Nov 2014, ‘From the Knowledge Economy to the Human Economy’, Harvard
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Dov Seidman , May 2011, ‘Upgrade to the Human Operating System’ retrieved from
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HEF Indian Journal of Higher Education ISSN 0976-1314