Impact of Digitization and Human Capital

Part 7: Making the Benefits of Collective Knowledge More Accessible

CHUMA Hiroyuki
Faculty Fellow, RIETI

Following the advent of the digitization era, the half-life of confidential information is getting shorter as symbolized by WikiLeaks, a secrets disclosure site. In addition, the emergence of the cloud-based mirror of society has led to the popularization of metacognitive information and hence a significant boost in economic benefits that can be derived from global-scale social experiments and learning. As a result, endless loops of ideas—such as one in which your idea prompts someone else to hit upon a new idea, which in turn prompts you to develop yet another idea, which in turn...—developed rapidly. Meanwhile, patent systems as they stand today are beginning to show their limitations. By going too far to protect their information and intellectual property, companies are ending up with letting the big fish get away, and the fish is getting bigger.

An attempt not to let big fish get away can be observed in the business model of, Inc. of the United States. The company make its database accessible to outside experts by offering its proprietary application programming interfaces (APIs) in various forms of licensing. has adopted this strategy because the benefits of collective knowledge that can be generated by making the database accessible to a large number of heterogeneous and diverse outside experts began to exceed the benefits of specialized knowledge that can be generated by limiting the use of database to a specific group of people within the company.

If we can generate the benefits of collective knowledge constantly in large excess of the benefits of specialized knowledge, it will enable us to defer decision making to reduce uncertainty.

Needless to say, pursuing diversity and heterogeneity is crucial to generating innovative ideas. However, the greater degree of diversity or heterogeneity makes communication among parties concerned more difficult. Therefore, intimate communication within a closed circle has often been a powerful driver.

This is probably the reason why, up until the advent of the full-fledged era of digitization, only a handful of companies with excellent organizational management capabilities, such as Toyota, have been able to recognize the power of collective knowledge and put in place an effective communication system (e.g., the Toyota Production System or TPS) to generate the benefit of collective knowledge based on the awareness and insights of diverse individuals including rank-and-file employees.

However, we have now entered a new era in which the benefits of informating or seeing the whole as in the TPS are accessible readily and cheaply. Today, any company around the world can implement collective knowledge-based management once its top management team recognizes its importance.

>> Original text in Japanese

* Translated by RIETI.

May 25, 2017 Nihon Keizai Shimbun

March 7, 2018

Article(s) by this author