A key question for today is: are we at the beginning of a "new                                                                                        
economy" or a "knowledge economy?"                                                                                                                    
                                                                                                                                                      
It is clear at the beginning of the 21st century that the                                                                                             
economy will have a greater base in knowledge than has been the                                                                                       
case in the past. A large and significant sector of the economy                                                                                       
will more or less directly depend on knowledge as a critical                                                                                          
factor.                                                                                                                                               
                                                                                                                                                      
There will still be manufactured or agricultural goods - there                                                                                        
have to be but, at least in part, the value of these goods will                                                                                       
be a function of the knowledge that lies behind them.                                                                                                 
                                                                                                                                                      
Whether or not this represents something really "different"                                                                                           
within national economies is open to debate, however. It is                                                                                           
hard to find any sector of the economy where knowledge is not a                                                                                       
critical asset, both for the pursuit of the business activity                                                                                         
in its own right, and as a source of potential competitive                                                                                            
advantage.                                                                                                                                            
                                                                                                                                                      
The "knowledge economy" seems to embrace every part of the                                                                                            
economy.  Moreover, knowledge has always been important.                                                                                              
                                                                                                                                                      
The shift that has taken place in recent years has been to                                                                                            
extract this knowledge from staff and manual records and make                                                                                         
it both codified and shared - knowledge has always been                                                                                               
critical, and what is different is the extent to which it is                                                                                          
being documented and utilised.                                                                                                                        
                                                                                                                                                      
So, has the knowledge economy changed the way we undertake                                                                                            
business activity?                                                                                                                                    
                                                                                                                                                      
Clearly, new knowledge management technologies have a number of                                                                                       
effects on the operations of an organisation, although their                                                                                          
full effect will take some time to develop and to become clear.                                                                                       
                                                                                                                                                      
Knowledge-based enterprises can now include far more data in                                                                                          
their analyses relating to product design, production and                                                                                             
sales, etc. There are other changes, such as the so-called                                                                                            
"network effect." This is where the value of a product or                                                                                             
service increases the greater the number of people who use it                                                                                         
(quite the reverse of traditional scarcity models of value).                                                                                          
                                                                                                                                                      
However, while these are important developments in terms of                                                                                           
business opportunities, there is little evidence to suggest                                                                                           
that the knowledge-based economy really represents a new kind                                                                                         
of economy.                                                                                                                                           
                                                                                                                                                      
Indeed, if the evidence of the past year is any guide on this,                                                                                        
there seems little reason for viewing recent developments as a                                                                                        
repeat of the kinds of technological changes that have greatly                                                                                        
affected enter prises in the past.                                                                                                                    
                                                                                                                                                      
We have seen business booms fed by hype before, and they all go                                                                                       
through the same cycle: "boom, bust, and eventual steady                                                                                              
growth." Companies in a "new industry" grow rapidly in the face                                                                                       
of opportunity; most collapse. Just a few survive, and often                                                                                          
they are hard to spot in the early, heady phases of the boom.                                                                                         
                                                                                                                                                      
As previous cycles have shown, there is no evident reason why                                                                                         
either the knowledge-based economy or new technologies of any                                                                                         
kind should change any of the essential characteristics of a                                                                                          
successful, ongoing business enterprise.                                                                                                              
                                                                                                                                                      
An enterprise still needs products, customers, cash flows, and,                                                                                       
most importantly, profits. It still needs good managers (which                                                                                        
is good news for business schools), market research, product                                                                                          
development, working capital, long-term plans and the                                                                                                 
actuality, or the very real prospect, of providing as good or                                                                                         
better a return on investment for its financial supporters than                                                                                       
readily accessible alternative uses of the invested funds.                                                                                            
                                                                                                                                                      
It is not obvious why the Internet or any other recent                                                                                                
technology changes any of these.                                                                                                                      
                                                                                                                                                      
A second issue is the impact of change. In the past few years                                                                                         
we have seen the effect of technological change, globalisation,                                                                                       
and a shifting regulatory environment.                                                                                                                
                                                                                                                                                      
Taken together, these forces of change have created a complex                                                                                         
and highly interdependent world, dramatically different from                                                                                          
that emerging at the time of the Industrial Revolution, when a                                                                                        
small number of trading countries could effectively rule (or,                                                                                         
at least, control) the world.                                                                                                                         
                                                                                                                                                      
Complexity brings uncertainty in its wake, with events having                                                                                         
unpredictable consequences. Political changes in one country                                                                                          
can have repercussions throughout the world, and many see this                                                                                        
as evidence that we are living "on the edge" (an allusion to                                                                                          
the interest in chaos theory as a way of describing and                                                                                               
understanding our environment, and the ways in which change                                                                                           
takes place).                                                                                                                                         
                                                                                                                                                      
All of these changes, coupled with the dramatic pace at which                                                                                         
information and communication technologies have developed, have                                                                                       
led many to conclude that we are going through an Information                                                                                         
Revolution (or a Knowledge Revolution).                                                                                                               
                                                                                                                                                      
We might summarise this by suggesting that the knowledge                                                                                              
economy can be understood as a phenomenon within a broader                                                                                            
paradigm shift from the industrial era to the next, perhaps the                                                                                       
"knowledge era?"                                                                                                                                      
                                                                                                                                                      
In the face of a more rapidly changing environment, we have                                                                                           
sought to change the structure of organisations and our                                                                                               
expectations of leadership. We are told organisations are to                                                                                          
become more flexible, responsive and have to develop a                                                                                                
"learning" approach.                                                                                                                                  
                                                                                                                                                      
Given this, leadership is no longer the prerogative of those at                                                                                       
the top, but critical throughout the new organisation. Now, it                                                                                        
seems, we need leaders everywhere, and, presumably, even fewer                                                                                        
managers!.                                                                                                                                            
                                                                                                                                                      
Some of the arguments about changes in organisations come from                                                                                        
observing some of the leaders in the knowledge economy. Many of                                                                                       
the companies that are said to typify this change are small,                                                                                          
flexible, and adaptive. Moreover, many are "fluid."                                                                                                   
                                                                                                                                                      
For example, it has been suggested that Silicon Valley is best                                                                                        
seen as one loose, amorphous and organic business, rather than                                                                                        
a series of discrete companies.                                                                                                                       
                                                                                                                                                      
People keep shifting and reforming activities, and are often                                                                                          
simultaneously involved in a number of ventures, at different                                                                                         
stages of development, even competing among themselves.                                                                                               
                                                                                                                                                      
The business practices of many of these companies require                                                                                             
strategic approaches that combine reactivity (at a higher                                                                                             
speed), anticipation (assessing change directions), and                                                                                               
leadership (determining the path of change).                                                                                                          
                                                                                                                                                      
This leads to strategies that are not concerned with plans, so                                                                                        
much as developing approaches that are unpredictable,                                                                                                 
non-directive, and experimental, and strategy is diverse,                                                                                             
proactive, and continuously changing.                                                                                                                 
                                                                                                                                                      
At the same time, the leadership challenge is to balance                                                                                              
structure against chaos, past competencies against future                                                                                             
skills, and established activities against continuous                                                                                                 
innovation.                                                                                                                                           
                                                                                                                                                      
The leadership required is one that combines "survival," in                                                                                           
competing against others; "development," to meet anticipated                                                                                          
changes; and "reinvention," to create business leadership for                                                                                         
the future. Some commentators have argued that companies need                                                                                         
to become "revolutionary," trying, as it were, to "bring                                                                                              
Silicon Valley inside," to change the nature of the business in                                                                                       
radical ways.                                                                                                                                         
                                                                                                                                                      
In tomorrow's organisations, we will still need to ensure that                                                                                        
operations are managed, but this will be a smaller part of the                                                                                        
working life of the "organisation person."                                                                                                            
                                                                                                                                                      
We might not want to call that person a manager, because only a                                                                                       
small part of what is being done will be traditional                                                                                                  
management, and people will work in more fluid and networked                                                                                          
structures than today.                                                                                                                                
                                                                                                                                                      
Indeed, you could say that tomorrow's organisation person will                                                                                        
have to exercise management, leadership, strategic and                                                                                                
analytical skills, and there will be little place left for                                                                                            
anyone who is "just a manager."                                                                                                                       
                                                                                                                                                      
In particular, there is an emerging set of ideas about models                                                                                         
of leadership for the next millennium that have at their centre                                                                                       
a rather different model of what we mean by leadership, and who                                                                                       
might be a leader. They are concerned with values and meaning                                                                                         
as much as outcomes and control, and are addressed to adaptive                                                                                        
challenges as much as instrumental outcomes.                                                                                                          
                                                                                                                                                      
They are predicated on a different fundamental precept about                                                                                          
how "leaders" relate to others, a precept that underlies the                                                                                          
so-called "servant leadership" approach.                                                                                                              
                                                                                                                                                      
The knowledge economy is not "new economy" (even if there is                                                                                          
evidence that we might need a new economy in the future).                                                                                             
                                                                                                                                                      
However, the knowledge economy poses challenges to the                                                                                                
prevailing industrial model of work, and that these require new                                                                                       
and different approaches.                                                                                                                             
                                                                                                                                                      
Given the deeper processes of change that are taking place,                                                                                           
within which the emergence of the knowledge economy is a                                                                                              
critical part, we need a new approach to leadership. It is the                                                                                        
challenge for the 21st century.