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How to Profit from Ignorance

(originally published by Booz & Company)

The idea that ignorance could be of any value runs against the grain of today’s conventional wisdom that knowledge, ideas, and intelligence are the keys to wealth creation.

While knowledge is on a par with green open spaces, dolphins, and organic food as unquestionably good, ignorance is considered a thoroughly bad thing, ranked alongside body odor and bad breath. Yet ignorance has far more going for it than most people think. Knowledge and ignorance are two sides of the same coin in the modern economy. The growing significance of ignorance means we need to invest as much in ignorance management as we have invested in knowledge management in the past. Let me explain why.

Under the right conditions, ignorance can make us more efficient. As consumers, we rely on the knowledge of other people, often embedded in the increasingly complex products we need, rather than learning it all ourselves. Imagine if you had to gather all the knowledge you needed to build a computer.

Or take the mobile telephone. Millions of people have cell phones packed with power and software. Yet which of us could explain crisply how a digital mobile phone works? Only a tiny minority. Every time most of us turn on the phone we depend upon the intelligence of the engineers, designers, and software programmers who made it. The growing sophistication of the technology allows us, the consumers, to remain in blissful ignorance of how it works: We just use it.

This kind of ignorance has become more pervasive because of the explosion of new knowledge. Compared to any previous point in history, today modern societies engage in more science more productively, and translate the results into more commercial products that are developed more quickly and spread faster and farther around the world.

And whereas we invest in knowledge creation and innovation in a systematic and highly collaborative fashion today, in the 19th century innovation was largely due to inventors and mavericks working on their own. In 1900 there were about 20,000 scientists and technologists in U.S. industry. By the end of the 20th century there were 1.2 million.

Yet knowledge tends to expand only by becoming more specialized. At the start of the 20th century there were a handful of scientific disciplines: physics, biology, chemistry. Now every science is broken down into dozens of specialist components. Postgraduates don’t do biology anymore; they study distinct branches of the science.

As our society’s knowledge becomes more specialized, individuals know relatively less. That is why we need to manage our growing relative ignorance more effectively.

Ignorance can lead to a slavish and unquestioning dependence on experts that exposes us to potential abuse and exploitation. For example, most of us trust doctors because of the way they were trained and their ethical codes of conduct. And yet that trust can be easily abused.

The less we know about a product, the more difficult it is to assess its risks. Which of us really understands the risks associated with genetically modified food or cellular telephones?

Innovative companies need to recognize that tough and transparent consumer regulation is vital, so consumers can see that the risks associated with new products are being properly addressed.

Companies generally must be more adept at managing the public risks their inventions generate, or they will find it harder to win consumer trust in their new products.

Innovations prosper only when consumers are willing to suspend their skepticism and trust a product. That is one reason brands have become so important. Through brands, consumers are encouraged to trust not just products but entire companies.

In the knowledge economy, we all become richer by becoming relatively more ignorant. We trade our know-how with one another but reveal our ignorance in the process. Ignorance is not quite bliss, perhaps, but it can be far more productive, creative, and efficient than people give it credit for.

Charles Leadbeater,
Charles Leadbeater is a member of the British government’s Competitiveness Council and an adviser to Prime Minister Tony Blair’s Downing Street Policy Unit. He has written widely on entrepreneurship, innovation, and the future of business. His latest book is The Weightless Society (Texere, 2000). He has served as editor and Tokyo bureau chief at the Financial Times.
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