Normally eschewing corporate smarten-me-up type books, I read Living on Thin Air on a recommendation. The reason I don’t read them, or more particularly never buy them, is that they often have one particular idea that might make a good journal or magazine article, but not much else.

Living on Thin Air is an interesting book, in that it appears to be an early exposition of the growing strength of the knowledge economy in contemporary OECD countries. These days this is no big news to the majority of thinking people. With high capital mobility, and low costs of labour in developing countries it is hardly surprising that old-economy activity like manufacturing is heading off-shore. Again, this is nothing new. People have been talking about these issues ever since I was in first year.

There’s a couple of things that Leadbeater discusses that I found interesting. First of all, he discusses the idea that ideas themselves are the new units of production in contemporary economies (forgive my extremely basic – or wrong – economic explanations… social scientist writing…). No longer are big tangible “things” what our economy should be geared for. Certainly, production and the ownership thereof remain important, but they’re no longer pivotal. Instead, it’s the intangible ideas people carry around that are what our economy should be geared to develop and produce.

And that is an interesting proposition, one that Leadbeater spends most of the book unpicking and discussing. Which leads us to his second point, that our economy and more particularly governance systems are not geared towards supporting such an economy. And, personally, I think he’s right.

To use New Zealand as an example, our political, economic and social institutions are essentially Victorian in their construction. All the precursors of our current institutions were conceived or implemented during the massive expansion of the British Empire in the mid to late 1800s. Leadbeater asserts that the Victorian era was the most innovative and dynamic period in recent Western history, one that far eclipses our own, especially in social and economic institutionalisation. In fact, we’re considered extremely conservative!

Where I departed from the book was when Leadbeater began to outline his manifesto for the reform of Western institutions. Essentially it was too much for me. However, a few of his points were highly interesting to me as a public servant. One of which was his assertion that civil service, to use the English term, stifles innovation.

In short, Leadbeater argues that institutions as they stand are geared to channel and preserve knowledge. This serves to ensure continuity and provide assurance to the public that they will be consistently treated by the state. This is of course uncontroversial. But, Leadbeater also argues that innovation requires high levels of failure to ensure eventual failure. In fact, he goes so far as to argue that without failure there can be no innovation.

Now, in a corporation that is fine, they’re spending their own money and do with it what they will. But how the hell do you encourage failure and experimentation in the public service?! The taxpayer would have a fit!

I’m certain that there’s some kind of public policy/bureaucracy guru out there who’s addressed this question already, so I’ll not try to venture into the conundrum too far. The question remain though, how do we encourage innovation and experimentation in the public service?

Web2.0 is a good example of how it could work, in my opinion. There are numerous groups within the public service who are adopting, trialling and adapting social media to suit their purposes. The normal justification for this is of course that it will allow savings in time or other resources. But, it also encourages innovation in order to make savings. The real money losses, the bleeding edge, is brought around in the private sector. We in the bureaucracy just watch and learn without squandering. Hopefully. If you’re aware of any squandering then let your conscience be your guide…

Anyhow. I’d recommend Living on Thin Air as a good (if not slightly tedious at times) introduction into how to make it in the knowledge economy. As the recommending person said to me, it is indeed a good era in which to be a thinker.