Safe is the New Risky – How to Prepare For the Impending Fourth Economy

Safe is the New Risky. Risky is the New Safe

Our collective understanding of a “safe career choice” is fundamentally flawed plain wrong.

Exponential technologies, global competition, and the rise of entrepreneurship are all contributing to a radically new world of work that we are just starting to see the contours of.

Consider the following points about the future we’re about to dive head first into as we speak:

  • “Safe” careers such as accounting are about to be eradicated by artificial intelligence. AI and robotics will do to white collar workers what industrial machines did to blue collar workers a generation ago.
  • Cut the crap about being the hardest worker – you cannot out-work the competition anymore. Today, you are competing for jobs with tens of millions of third world graduates per year, who speak better English than you, have better schooling than you, eagerly work 15 hours per day, and charge $4 per hour.
  • Trying “risky” entrepreneurial ventures teach you skills that the new economy desperately needs. This is valuable even if your ventures fail miserably, and even if you’re employed at a big corporation.

We are entering a distinctly new economic era as we speak. Realising that the game has changed sooner rather than later is the key to getting a head start in a new world of work, which is distinctly different from the working world our parents grew up in.

We, the millennials and those even younger, are joining a completely new board game. With a new game comes new rules, new players, and new strategies to win. This is frightening to most people, but incrediby exciting for those of us who are aware, curious and well prepared.

This post explains what the Fourth Economy is, why it is coming, and what to do if you want to surf this new economic wave instead of being drowned by it.

Fasten your seatbelts and join the ride into the Fourth Economy.

The Fourth Economy: A Book and a New Reality

A gentleman named Ron Davison has written a book that I’ve been pondering over for months – “The Fourth Economy: Inventing Western Civilization”. It’s a 700+ page behemoth of a history book, but I finished the whole book in three sittings. That says a lot about Ron’s fascinating perspectives, ideas and excellent delivery.

Over the past months, I have told practically everyone about this book and its core ideas. But it is not easy to pack 700 pages and 1000 years of history into a brief encounter with someone. Therefore, I’m writing this post as a brief summary of the book’s core concepts, and their implications for all of us going forwards.

This Post’s Content

  1. Making toys for fun and profit: Comparing the global economic system to a toy factory, to explain leverage and systemic limits to progress.
  2. One, two, three, NOW: A brief overview of the last 1000 years of Western history, divided into four distinct economic periods – the first, second, third, and upcoming fourth economy.
  3. Excess flour in urgent need of bakers: Explaining why we need more entrepreneurs with or without baking skills ASAP. Summarising the implications of the economic transition period we are experiencing now. Showing why we are facing an incredible opportunity to change the nature of work, and become financially free in the process. In other words, what you can do to benefit from the fourth economy, rather than get destroyed by it.

The Last 1000 Years in Four Distinct Economic Phases

Roughly speaking, the Western world has been through three economic phases over the last millennium, with a new, fourth economy about to enter the picture;

  • The Pre-Agricultural Economy (wasn’t really a functioning market economy at all),
  • The Agricultural (first) Economy,
  • The Industrial (second) Economy,
  • The Knowledge (third) Economy – we’re just about to leave this one,
  • The Entrepreneurial (fourth) Economy – we’re currently entering this one.

This graphic illustrates these economic phases, one after the other.

fourth economy end of jobs graphic

The graphic shows that each economic period is defined by certain characteristics:

  1. Each period has a distinct scarce resource which acts as a limit to progress and growth.
  2. Each period has a distinct power entity, which controls and cultivates the scarce resource.
  3. Each period has a dominant player who controls the power entity. This type of person makes the ultimate decisions, and thus has the power to exert massive influence over the economic system.

These are worth briefly expanding on, starting with the scarce resources which act as limits to progress and economic growth.

Limits and Leverage

In each economic phase, the scarce resource has been an effective limit to progress. This limit must be overcome in order to progress to the next level, the next economic phase.

Simply put, the economic system had to produce more of the scarce resource in order to create more wealth and economic growth. In economic terms, these resources are known as the four factors of production.

The Four Factors of Production

  1. Land,
  2. Capital,
  3. Labour,
  4. Entrepreneurship.

Tweaking the Right Lever

In a complex system such as global economics, many levers can be tweaked in order to bring about desired outcomes. But not all these levers will produce results. In fact, tweaking on a critical few levers will produce massive results, while tampering with others will yield no impact at all.

This brings us to leverage, and to Eliyahu Goldratt’s framework The Theory of Constraints for understanding progress and growth in complex systems.

Toy Production, The Global Economy, and Other Complex Systems

“Give me a lever long enough, and I shall move the world.” –Archimedes

The global economic system is very complicated. So let’s instead consider something much simpler – a toy factory.

This is the essence of the toy factory: some resources go in to the factory, some activities happen within the factory, and finally, finished toys come out the other side.

Inside the factory, the raw materials must go through four different machines in order to become toys. These machines have one job each:

  1. Cutting the wood,
  2. Drilling holes,
  3. Assembling the pieces, and
  4. Painting the final toy.

The conveyor belt pulls the materials through the machines, and the final painting machine pours out toys when they’re finished.

Each machine has a maximum toy producing capacity per hour, and it looks like this:

Screenshot 2017-05-10 12.40.45

As we see, the cutting machine is the slowest step in the process, with a maximum hourly output of only one toy. Because of this, the entire factory can only produce one toy each hour, regardless of the extra capacity in the other machines. Adding more raw materials to the conveyor belt will not produce more toys – the cutting machine is the limit to progress.

“The collective speed is controlled by the slowest mover of the group.” –Proverb From Somewhere

Imagine being the toy factory owner for a moment. You realise you must improve the cutting machine in order to improve output. So you get a better machine with double capacity. The cutting machine can now cut materials for two toys per hour. Your total hourly output of finished toys suddenly doubles, from one to two toys per hour.

The new situation is illustrated below.

Screenshot 2017-05-10 12.41.45

Hooked on this success, you come to believe that getting better cutting machines is the way to increase output in your factory. So you spend all your savings on a state of the art cutting machine which can cut enough material for SIX (!) toys per hour. You are excited to install it and see your toy business take off.

But nothing happens to your output after installing the super-duper cutting machine. You can still only get two finished toys per hour out of the factory. You are disappointed and confused – “it worked so well last time I did this..!”.

Screenshot 2017-05-10 12.42.08
New situation with super duper cutter machine installed.

What happened? The cutting machine is no longer the limit to progress. The limit has shifted to the next step on the conveyor belt, the drilling machine.

Investing in the previous limit no longer improves the overall outcome of the system.

“Identify a system’s limiting factor (constraint) that stands in the way of progress. Improve that constraint until it is no longer the limiting factor, then focus on improving the new constraint, and so on.”

–Eli Goldratt’s Theory of Constraints

Toys, Prosperity and a Need for More Entrepreneurs

The toy factory is analogous to the global economic system, and the economic situation of the Western world in particular. The economic system, too, has limits to progress, prosperity, and economic growth.

Those limits are land, capital, knowledge workers (labour), and entrepreneurship.

And here’s the kicker: we’re in the middle of another epic economic shift. The limit to progress is shifting from the quantity and quality of knowledge workers available, to the quantity and quality of entrepreneurship available.

Illustrating the Theory of Constraints at a global economic level looks like this:

Screenshot 2017-05-10 13.11.58

How did we get here, you ask? Let’s do a brief history lesson of past economic periods and the shifts between them.

One, Two, Three Economies – The Warm-Up to the Fourth Economy

The First/Agricultural Economy (1300–1700): Making Land Productive

During the first economy, the scarcity of land and natural resources was the limit to progress and economic growth. Land was not used effectively, so production of agricultural and artisanal goods was very low.

How did the West overcome the limit to progress?

  • People discovered more land and natural resources in the world (“The New World”), and started trading resources across geographical areas which were previously unavailable.
  • The Renaissance happened. This changed people’s attitudes and beliefs about work and reward. People went from believing God’s almighty power predetermined their lives’ outcomes, to seeking a better future for themselves through hard work instead.
  • Private property laws were invented in England, which gave people incentives to invest in their land. Before these laws, nobody could claim their property as their own, so nobody had any incentive to work hard at improving their living conditions nor agricultural lands.

When people had figured out how to make land productive, their agricultural needs and wants were fulfilled. Getting even more carrots out of your land lot was no longer making your life significantly better, because you already had enough carrots to feed your family. The limit to progress was shifting towards capital.

The Second Economy (1700–1900): Commoditising Capital

In the second economy, the scarcity of capital was the limit to economic progress. Capital, meaning money and other assets used for economic activity (machines, technology), was underdeveloped and largely unavailable.

This gradually changed during the ~200 years the second economy lasted, as the speed of technological innovations accelerated, and global financial markets were established.

How did the West overcome the limit to progress?

  • Patent law was invented, to give people an economic incentive to invent new technology. Where private property law had given people an incentive to invest in land in the first economy, patent law gave an incentive to invest in capital during the second economy.

“The idea of private property was one of the keys to the progress of the first economy. The idea that ideas could also become property (through patent laws) was one of the keys to the second economy.”

–Ron Davison, author of The Fourth Economy

  • Loads of new machines (a form of capital) were invented and used to massively increase effectiveness of production.
  • Railroads were invented and laid out wide and far. This connected previously unconnected areas, and facilitated a massive increase in trade across geographical distance.
  • Insurance was invented, which lowered the risk of investing in risky, yet often capital producing ventures (specifically sailing ships venturing out to new lands to trade – hence the notion of venture capital was born).
  • International financial markets were created by bankers such as Nathan Rotshchild and his five sons spread across Europe. These bankers profited by lending out capital to kings and nation states who needed capital, not more land, to keep wars going.

By the end of the second economy, capital is no longer the scarce resource in the economic system, as we had figured out how to make and multiply capital. This is most visible in the forms of new technology, fancy machines, and effective international capital markets.

Sidenote: It is worth noting that the commoditisation of capital continued on throughout the third economy as well, up until today. Today (I’m writing this in May, 2017), capital has become so wildly abundant that the interest rates, the price of money, is effectively zero. We always have, and always will, desire more and more money, but in fact, supply of capital has now outpaced demand for it. Borrowing money is free, for the first time in history.

Interest rates the fourth economy
200-year long trend: The interest rates (the price of money) falls as capital becomes more and more abundant. Source: CNBC.

The Third Economy (1900-2000): Knowledge Workers Everywhere

If you’re a millennial like me, our parents (Baby Boomers and Gen X) grew up in the third economy, and we grew up with their third economy based worldview.

This is the economy in which we learned what is “normal”.

This is also where it gets really interesting to see why we think what we think, and the inherent fallacies we’re grappling with as we are about to move into the fourth economy. But more on that later..

Entering the third economy, we had overcome both land and capital as limits to progress. At this point, we were producing goods and services faster than they were being consumed.

Plot Twist: Too Much Stuff, Too Little Shopping

This makes for an interesting plot twist in traditional economic theory. Consider “The Fundamental Economic Problem” from the first lesson of every single ECON101 class ever held:

The Fundamental Economic Problem:

Given insufficient resources to satiate all our needs and wants; what, how and for whom should we produce goods and services?

Up until the third economy, the fundamental economic problem was a resource allocation problem focused on covering the needs mentioned above. It was truly a problem of scarcity – how do we produce enough to satiate our collective needs? 

Entering the third economy, the fundamental economic problem did a 180 degree turn, changing focus from satiating finite needs, to satiating infinite wants. It became more of an abundance problem than a scarcity problem. 

Now, the Western world’s economic powerhouses were asking unprecedented questions such as..

  • “How do we get people to consume all this stuff we’re producing?”,
  • “How do we get people to want this?” Or, even better, the holy grail of marketing:
  • “How do we make people feel an imaginary NEED for this product/service?”

To solve this new “problem” of insufficient consumption, we didn’t need more land, nor more capital. We needed to stimulate demand for products and services.

We had to invent needs and desires which weren’t inherently present in us. And to do so, we needed clever knowledge workers. Lots and lots of them.

Overcoming the Limit: Knowledge Workers to the Rescue, and the Creation of Consumerism

Knowledge workers can fuel the collective desire to consume more and more and more. But in order to do so, they need training and knowledge about psychology, sales, economics, law, you name it.

The white collar knowledge worker was the Superman we needed, in order to get people to essentially buy more crap. So we set out to produce millions of him. Then, luckily, we could produce millions of her as well, when women entered the workforce en masse after World War II. Additional bonus effect? Two employed parents doubled a family’s available cash pile. Great news for anyone selling anything.

The College+Corporation Concoction 

Two institutions took upon themselves to create and cultivate a wave of much needed knowledge workers – universities and corporations. Universities educated white-collar knowledge workers. That was a good start, but not knowledge workers just sitting there weren’t very profitable (until the US system of higher education became a greedy Big Business scheme to boost the institutions’ endowment funds at the expense of its students – but that’s a rant for later).

The corporations came along and organised these workers into profit-producing entities, decorated with business cards, LinkedInflated titles, dark suits and corner office aspirations.

Many inventions came from this boom in knowledge workers on a quest to boost aggregate consumption:

  • Marketing, advertising and advanced sales tactics were invented and improved during the third economy,
  • Consumer psychology became a field of expertise. Its essence in one sentence? “How do we make people buy way, WAY more stuff than they could possibly need?”,
  • Faster and faster fashion, from two style seasons a year (winter/summer), to 52 micro-seasons a year, were invented to make you feel untrendy a mere week after your last shopping spree.

Training millions of knowledge workers worked well, in terms of overcoming limits to progress. Profits and wealth soared in Western world as consumption rose to unprecedented levels. It didn’t turn out so well for the natural environment of our planet, but that’s a different story and an inconvenient truth for another time.

Unprecedented Growth, The American Dream, and the Highway to Happiness

Remember that our parents grew up in the third economy, and we grew up with their third economy based worldview. This is the economy in which we learned what is “normal”.

This “normal” was the highway to happiness we’ve all been taught since birth.

It’s rather simple. Just follow three steps, and you’ll be successful, happy and all the rest of it.

Screenshot 2017-05-10 13.48.26

We all know this model, and the reason it is so well established is simple: IT WORKED! The reason it worked, was because it used a good lever, targeting the limit to progress of that economic phase. When the limit to progress was the amount of knowledge workers available, becoming a much needed knowledge worker was great!

For a LONG TIME (~100 years), this model delivered on its promises. If you followed the path, it did indeed lead you to a stable, secure job and income.

With that steady paycheck, you could afford the stuff they told you would make you happy. You know, the cars, vacations, and the house with a white picket fence for you, your perfect spouse and your 2.1 pristine children.

white picket fence
White picket fence, aka The meaning of life.

This was all fine and fun and jolly while it lasted. But get this: while this success recipe worked for our parents and grandparents, it won’t necessarily work for us. The old system is broken, because the limit to progress has changed.

The Number of Advanced Degrees Is Too Damn High

“Can one desire too much of a good thing?” –Shakespeare

degrees-highWhite collar knowledge work has been the path to wealth and security in the West for about one hundred years. During that time, more and more people wanted a piece of the pie. So increasing numbers of people followed the recipe – they pilgrimaged to college, got served degrees and bodies of knowledge at the altar of Ivy, and offered to sacrifice their time for money in the holy land of big corporations.

Nothing wrong with that. Until now.

Today, a lack of knowledge workers are no longer the limit to progress. The limit to progress has shifted. Yet we keep going to college at unprecedented levels, racking up debt in the hopes of attaining the American Dream we’ve been promised.

“In 1900, only 10% of 14 to 17 year olds were enrolled in formal education.
By 2000, fewer than 10% were not.

The number of knowledge workers continues to rise: today, there are more scientists alive on the earth than have lived in all of history up until now.”

–Ron Davison, author of The Fourth Economy

new yorker graduation
New Yorker Cover, May 2016

HOT DAMN! Take a moment to ponder that statistic about the scientists – it is mind-boggling!

I’m sure you know plenty of people in their mid 20s and 30s who have secured the holy trinity of underemployment: exceptional degrees, immaculate CVs, and lousy jobs. My favourite example? The barrister barista, who can argue court cases eloquently, can solve complex judicial twists, and, may I add, makes a killer double latte.

The coffee making lawyer, the MBA waitress and the engineering grad at your local supermarket may sound like extreme examples, but they are in fact quite normal.

If you don’t know anybody who’s overeducated and underemployed, you may not see this reality right away. That doesn’t mean it’s not real. It just means you’re not getting the memo. Here is some bedside reading to get you up to speed:

In brief, we’re facing a systemic problem: the system we’ve grown up is broken. Instead of seeing the writing on the wall and starting to seek out new solutions, we cling to and over-invest in the limit of the old, familiar system.

At this point, I must add that I do not mean that degrees are not worth pursuing. They might very well be. In fact, I believe that a college experience is inherently valuabe for most people. But – and this is a big but – I don’t believe a degree is enough anymore, as it used to be, as a guaranteed stepping stone to prosperity and happiness.

China, Silicon Valley and Other Fine Places to Blame

We can’t take credit (nor blame) for getting ourselves into this situation purely by our own accord, as several factors got us to this point. I could go on for hours about this, but just consider the following two contributors to the diminishing value of formal credentials and the traditional knowledge worker:

  1. Globalisation: our grandparents competed with their regional classmates for jobs. Our parents competed with people on a bigger map, perhaps state- or nation-wide. We compete GLOBALLY thanks to better communication technologies and improved English skills all over the world.
    Do you think you can out-work, out-degree or out-specialise the millions of Chinese students who diligently study 12 hours a day, and work for $3/hour? Really?
    (Note: I am personally a proponent of globalisation, as I believe progress moves faster when different people interact, co-create new technologies and push the world forwards together. But if you’re planning to just out-work everybody else in a menial job, think again.)
  2. Massive technological advances: what industrial machinery did to the blue collar worker ~50 years ago, artificial intelligence and machine learning will do to the white collar worker very soon.
    If you’re an accounting major who believe you’ve chosen a safe, future-proof career path, I believe you’re naïve and uninformed. Sorry about that, but it’s the truth.

Degree-Obsessive Investment Advice: Over-Invest in Depreciating Assets

The less valuable formal degrees and credentials become, the more time and money we pour into getting MORE degrees and letters behind our names, so not to be left behind everybody else.

The notion that degrees = success = happiness is so prevalent that I’m sure you’ve heard some variation of these popular maxims repeated ad infinitum:

“The master’s is the new bachelor’s degree, ya know..!” –Well-Meaning Dad

“Better get a PhD to survive in this economy..” –Auntie Anxious

I can certainly understand people’s desire to “keep up with the Joneses” in educational terms. Call it an educational FOMO if you like. That being said, if you’re a student, beware of spending hundreds of thousands of dollars you don’t have in order to get a degree you don’t need, hoping for a job you don’t want, to ultimately please people you don’t like. Once you’re in that hole, it is hard to stop digging.

Don’t get me wrong, an advanced degree is indeed valuable, but it’s not necessarily the one and only valuable asset we can invest in anymore. In other words, it’s no longer the limit to progress it used to be, therefore its leverage is severely weakened. Therefore, unlike for your parents and grandparents, your fancy degree cannot guarantee you a path to prosperity and happiness anymore.

So, if expensive, advanced degrees don’t necessarily lead to the end result we’ve been promised, why do we keep stacking credentials behind our names? Because it is the only acceptable cultural narrative at the moment. It’s the only “right” choice, or even the only perceived “possible” choice for many people.

But the collective results of this unquestioned pursuit of degrees aren’t just sunshine and rainbows. The fetishisation of credentials results in overeducated and underemployed lawyer barista types, crippling college debt all across the board, and systemic financial stress for the upcoming generations.

It is time to consider doing something different.

“The definition of insanity is doing the same thing over and over, expecting a different outcome.”

–Albert Einstein

Entering The Fourth Economy: A New Limit to Progress, and the Rise of the Entrepreneur

At this very point in time, we are no longer limited by the amount of land, capital or knowledge workers available, because these resources are abundantly available in the marketplace. The limit to progress has shifted to the final economic factor of production, entrepreneurship.

“Entrepreneurship will be to the fourth economy what technological invention was to the third economy.”

–Ron Davison, author of The Fourth Economy

Imagine a small bakery for a minute. In this bakery, there are three ingredients available; water, flour, and sugar. The baker mixes these ingredients together in interesting ways to make good pastries come out the other end.

baker
Try stuff. Make things. Be like this guy.

Now, let’s look at the economy of a country with the same lens. Land, capital and labour are merely the raw ingredients available to make things with.

The entrepreneurs in this economy are the proverbial bakers, who mix the ingredients together in interesting ways to make good economic outcomes pop out the other end.

Without a baker in the bakery to experiment, fail, and try again until a great cake is made, nothing happens in the bakery. It may as well shut down.

Similarly, without entrepreneurs who take initiative and mix up land, capital and labour in interesting concoctions, nothing happens in the economy. 

The more bakers who dare to experiment and look for new ways to create tasty value, the more good pastries will inevitably be invented.

The more entrepreneurs who dare to experiment and look for new ways to create economic value, the more good ideas, products and services will inevitably be invented.

By now, we have enough water, flour and sugar in our Western world bakery – that means enough land, capital and labour in the economy, if you’ve fallen off the analogy wagon. But we need more entrepreneurs in order to make more dough (pun most certainly intended).

We Must All Become More Entrepreneurial (Yes, You Too)

In pursuit of prosperity and economic growth, the Western world has worked towards overcoming the limit to progress present in each economic phase. Looking back, this has worked well, but during the phase shifts from one economy to the next, there was always chaos.

The transition towards the fourth economy is happening as we speak, and the clever folks among us are not only aware of this shift, but planning for it.

Every one of us must become more entrepreneurial if we are to thrive in the world of the fourth economy. 

lean
LEAN Startup Methodology: A fancy way of saying “fuck shit up, learn from it, repeat”.

That does not mean we all need to become entrepreneurs per se, but we do need to acquire certain skills associated with entrepreneurs and innovators. Such skills include experimentation, taking smart risks, learning from market feedback, and experimenting more based on the learnings of previous testing cycles. I can also include the ability and courage to think and act in creative, non-conventional (aka innovative) ways to this list.

So, if you’re an employee at a big corporation, you don’t need any of this, right? Wrong!

You too must learn to think and act in an entrepreneurial manner to thrive within the organisation. There’s even a fancy, MBAesque term for folks who apply innovative methods within established companies – intrapreneurs.

Cultivating intrapreneurs within organisations is essential, because any company that isn’t innovating and disrupting itself, will inevitably be disrupted by someone else, or simply lose relevancy and slowly fade away. Don’t even get me started on Kodak.

think-differently-reimagining-resource-management-in-a-disruptive-age-4-638
Big companies die younger than ever.

Future-Proofing Yourself: How to Think and Act Entrepreneurially

If you’ve followed along this far, let’s get to the juicy, tactical bits. We’re entering a new economic phase, with a new rulebook to boot, but how exactly should we play the game to win?

I strongly believe that entrepreneurship is a learnable skill (yes, I did make an entire 8-week intensive entrepreneurship course based on this belief) . As with all skills, the way to become good at it, is to practise. Since practice is a constant cycle of failure, iteration and trying again, the best way to learn entrepreneurship is to go out and try it.

Luckily, we live in the best time IN HISTORY for entrepreneurs. The risks, costs and barriers to entrepreneurship have never been lower, yet the rewards and upside has never ever been higher. Consider this:

  • 10 years ago, calling someone internationally cost a fortune. Now? Skype for free with just about anyone, anywhere.
  • 20 years ago, getting paid online was impossible. 15 years ago, it was expensive and complicated. Now, it’s practically free, and you set it up in 5 minutes via Stripe or Paypal.
  • 20 years ago, your potential customer reach was severely limited by geographic distance and the high price of advertising. Now, you can sell anything to anyone (at least to the billions of people connected to the internet), and you can reach specific niche groups of people via online advertising for a few bucks.

It has never been easier, safer nor cheaper to dip your toes into entrepreneurship. You can literally start selling things on Shopify within half an hour of getting an idea, for a few bucks a month.

Let me repeat that more bluntly: Trying out entrepreneurship HAS NEVER EVER BEEN EASIER THAN NOW.

Let me wrap it all up with a few bulletpoint suggestions for what you might do right now to start thinking and acting more entrepreneurially:

Getting “the System” On Board

If you’ve read this far (phew!), you’re probably among the people who get it, and to you I don’t need to explain what it is, because you clearly get that.

This is a problem. The people who truly need to read this post, Ron’s book, Choose Yourself, The End of Jobs and all the rest of it, aren’t here. If they found this article, they fell off long before the baker entered the picture. They’re like a turkey before Thanksgiving Day, as Nassim Taleb puts it – thinking everything is all fine and dandy, not realising it’s accumulating massive silent risk of being butchered.

“The System”, the establishment, the rest of society, need to come to terms with the fact that the times they are’a changin’.

Education in particular lies close to my heart. The Industrial-Educational complex allows universities to extract huge profits while chucking the bill to the students and taxpayers, without even preparing kids for what employers want. What is that about?

Furthermore, the teaching methods are outdated, the goal of education is outdated, and the educational content they shove down our throats is outdated too. Consider the concept called half-life of knowledge, defined as the time it takes for 50% of your knowledge of a subject to become obsolete. As the world’s development speeds up, old information loses value. Fast. Old white males lecturing hundreds of talented youngsters a standardised curriculum worked well back in the day, when the goal of education was to produce compliant, standardised factory workers. Not so much today.

Assume the half-life of knowledge in a given subject is four years, a conservative estimate in dynamic, technological domains today. By definition then, the first two years of your four-year degree is obsolete, worthless, by the time your square hats go flying around in the air. Not cool.

MEGA: Make Entrepreneurship Great Again

The goal of policy – for schools, corporations, and governments – now needs to be the popularization of entrepreneurship.

The popularization of knowledge work transformed the 20th century and the popularization of entrepreneurship will transform this one.

–Ron Davison, author of The Fourth Economy

I’ve tried my best to contribute to the popularisation of entrepreneurship, and the spread of entrepreneurial skills to curious people.

By creating Early Stage, we made the learning arena we would have wanted when we embarked on our first startup ventures. In short, we let curious students come together in an 8-week “entrepreneurship simulator”, where they get to try, fail, learn and succeed in the process of going from zero to one, from idea to market, all without taking personal economic risk.

In Early Stage, there are no study credits to attract participants with wrong incentives – only an opportunity to learn A LOT.
There are no business plans involved – only talking to scary customers about their problems, from day one.
There is no red tape paperwork or fancy logo design being done, only what truly matters first: finding customers who vote for your idea with their hard earned dollars.

And it works.

Right now, entrepreneurs are like knowledge workers were in the late 1800s. They are largely self-made. What if entrepreneurs didn’t have to be self-made any more than engineers or doctors had to be self-taught? Imagine redesigning schools and businesses to create and enable entrepreneurship by a wider swath of employees.

–Ron Davison, author of The Fourth Economy

Entrepreneurship can be taught, I’ve seen that proven with my own two eyes. But key takeaways in this domain come from doing the work, screwing up, and trying again – not by listening to the business plan theories from some soon-to-be prof emeritus who never got his hands dirty in the messy world outside his university cubicle office.

Writing splendid SWOT analyses for 6 months might get you a B+ in ENT101, but it won’t get you a customer. No, that is not a Threat, just a reality check. Sorry to be so blunt about it.

square FB pic
Early Stage – an 8-week entrepreneurship simulator programme for students.

That’s why we need more arenas like Early Stage – arenas designed for screwing up in a safe environment. I’m doing my part, and I’m hoping you’ll join me doing yours (in which case, get in touch and let’s talk!).

Join the fourth economy, folks. Let’s make entrepreneurship great again.

 


A note on college (to hedge against overt hypocrisy, since I’m about to re-enroll as a student as we speak): I’m not anti-college, I’m pro choice. 

I’m not necessarily proposing you drop out of college right now to go find your inner self in India, then start some wild tech venture to take over the world or whatever (hi Steve Jobs). Indeed I do believe that college is a very valuable experience, most notably to build strong networks and get to know yourself better. That being said, I am very much opposed to the idea that college is the ONLY way to become a successful, content, worthy member of society. That’s simply not true.

I plan to finish up a master’s degree in a few months myself. I’ll lay out my reasoning and ROI calculations on this matter in a future post.


Further Resources on Similar Topics:

A special thanks goes out to Ron Davison for personal input and feedback for this article. Check out Ron’s own blog here.


Also published on Medium.

1 comments On Safe is the New Risky – How to Prepare For the Impending Fourth Economy

  • Very interesting read! I have worked with China for a while and seen the competition facing my children in the future from hard working smart young people – in abundance!
    This perspective on entrepreneurship (combined with the welfare structures in Scandinavia, society based on trust – and a well functioning system and infrastructure) could be our future “edge”!

Leave a Reply

Site Footer