No century in human history has seen such radical and swift social transformations as the twentieth century that is now drawing to its close. In the first decades of this century up to the first world war society in all developed countries, even in the most highly industrialized ones such as the U.K. or Belgium, was in its structure still pretty much what it had been since the first humans became farmers and settlers on the land some five thousand years earlier.

Even in the U.K. and Belgium, farmers were still the largest single group in the population in most other developed countries, e.g., the U.S., they were still close to being an absolute majority. The next largest group actually the oldest group in civilized countries were live-in domestic servants. The next group almost as numerous as the domestics were small tradesmen and small craftsmen and their apprentices and employees. Blue-collar workers in industry, in mining, in transportation largely the creation of the nineteenth century were growing very fast between 1870 and 1914. But in 1914, they still constituted a fairly small minority at most one-sixth of a nation s work force. They alone worked for an organization (though that term did not then exist as yet it dates back no further than World War II). Everyone else, that is four-fifths of the total labor force, worked either for themselves and by themselves; or they worked for a master or a mistress. (In fact, few people then, if any, spoke of an employer. ) Farming as an occupation is now a negligible portion about 3 percent in developed countries like the U.S. and about the same proportion elsewhere. Live-in domestic servants have become extinct. Small tradesmen and independent craftsmen have grown in this century, but far less than the total population or total work forces. They and their employees now account for less than half proportionately of what they accounted for 80 years ago.

Blue-collar workers grew phenomenally in the first half of this century to the point where workers making and moving things in factories, in mines, in transportation were by the mid-1950s an actual majority of the working population in the U.K., in West Germany, in Japan, and at least two-fifths of the total even in the U.S. In the last 40 years they have declined equally rapidly first as a proportion of the total, and since the early 1980s, even in absolute numbers. By now they are down in the U.S. to the fraction they were before World War I and by the end of this century, they will have shrunk to one-eighth. Yet industrial production everywhere is actually growing faster than ever before in peacetime s and especially in the U.S.

These are unprecedented developments, profoundly affecting social structure, community, government, economics and politics. What is even more astonishing and even less precedented is the rise of the group which is fast replacing both history s traditional groups and the groups of industrial society; the group which is fast becoming the center of gravity of the working population; the group, incidentally, which is fast becoming the largest single group (though by no means a majority) in the work force and population of post-industrial society and in every developed country: knowledge workers.

THE EMERGING KNOWLEDGE SOCIETY

Knowledge workers, even though only a large minority of the work force, already give the emerging knowledge society its character, its leadership, its central challenges and its social profile. They may not be the ruling class of the knowledge society, but they already are its leading class. In their characteristics, their social positions, their values and their expectations, they differ fundamentally from any group in history that has ever occupied the leading, let along the dominant position.

In the first place, the knowledge worker gains access to work, job and social position through formal education.

A great deal of knowledge work will require high manual skill and substantial work with one s hands. An extreme example is the neurosurgeon. The neurosurgeon s performance capacity rests on formal education and theoretical knowledge. Absence of manual skill disqualifies one for work as a neurosurgeon. Manual skill alone, no matter how advanced, will never enable anyone to be a neurosurgeon. The formal education that is required for knowledge work is education that can only be acquired in and through formal schooling. It cannot be acquired through apprenticeship.

In the amount and kind of formal knowledge required, knowledge work will differ tremendously. Some will have fairly low requirements, some will require the kind of knowledge the neurosurgeon has to possess. Even if the knowledge itself is quite primitive, it is knowledge that only formal education can provide. Filing is hardly advanced knowledge work. However, it is based on a knowledge of the alphabet or in Japan on a knowledge of Chinese ideographs which can be acquired only in and through systematic learning, that is, in and through formal schooling.

The first implication of this is that education will become the center of the knowledge society and schooling its key institution. What knowledge mix is required for everyone? What is quality in learning and teaching? All these will, of necessity, become central concerns of the knowledge society and central political issues. In fact, it may not be too fanciful to anticipate that the acquisition and distribution of formal knowledge will come to occupy the place in the politics of the knowledge society which acquisition and distribution of property and income have occupied in the two or three centuries which we have come to call the Age of Capitalism.

Paradoxically, this may not necessarily mean that the school as we know it will become more important. For, in the knowledge society, clearly more and more of knowledge, and especially of advanced knowledge, will be acquired well past the age of formal schooling, and increasingly, perhaps, in and through educational processes which do not center on the traditional school, e.g. systematic continuing education offered at the place of employment. But, at the same time, there is very little doubt that the performance of the schools and the basic values of the schools will increasingly become of concern to society as a whole, rather than be considered professional matters that can be left to the educator.

We can also predict with high probability that we will redefine what it means to be an educated person. Traditionally and especially during the last two hundred years at least in the West (and since about that time in Japan as well) an educated person was someone who shared a common stock of formal knowledge what the Germans called Allgemeine Bildung and the English ( and following them, the nineteenth- century Americans) called the liberal arts. Increasingly, an educated person, will be someone who has learned how to learn, and throughout his or her lifetime continues to learn, especially in and out of formal education.

There are obvious dangers to this. Society can easily degenerate into one in which the emphasis is on formal degrees rather than on performance capacity. It can easily degenerate into one of totally sterile, Confucian-type Mandarins a danger to which the American university, particularly, is singularly susceptible. It can, on the other hand, also fall prey to overvaluing immediately usable, practical knowledge, and underrate the importance of fundamentals and of wisdom altogether.

This society, in which knowledge workers dominate, is in danger of a new class conflict: the conflict between the large minority of knowledge workers and the majority of people who will make their living through traditional ways, either by manual work, whether skilled or unskilled, or by services work, whether skilled or unskilled. The productivity of knowledge work still abysmally low will predictably become the economic challenge of the knowledge society. On it will depend the competitive position of every country, industry and institution within society. The productivity of the non- knowledge services worker will increasingly become the social challenge to the knowledge society. On it will depend the ability of the knowledge society to give decent incomes and with them dignity and status to non-knowledge people.

No earlier society in history faced these challenges.

Equally new are the opportunities of the knowledge society. In the knowledge society, for the first time in history, access to leadership is open to all.

Equally, access to the acquisition of knowledge will no longer be dependent on obtaining a prescribed education at any given age. Learning will become the tool of the individual available to him or her at any age if only because so much of skill and knowledge can be acquired by means of the new learning technologies.

Another implication is that the performance of an individual, an organization, an industry or a country in acquiring and applying knowledge will increasingly become the key competitive factor for career and earnings opportunities of individuals; for the performance, if not the survival of the individual organization; or of an industry, and for a country. The knowledge society will inevitably become far more competitive than any society we have yet known for the simple reason that with knowledge being universally accessible there are no excuses for nonperformance. There will be no poor countries. There will only be ignorant countries.

The same will be true for individual companies, individual industries, and individual organizations of any kind. It will be true for the individual, too. In fact, developed societies have already become infinitely more competitive for the individual than were the societies of the early twentieth century let alone earlier societies, those of the nineteenth or eighteenth centuries. Then most people had no opportunity to rise out of the class into which they were born, with most individuals following their fathers in their work and in their station in life.

I have been speaking of knowledge. But the proper term is knowledges. For the knowledge of the knowledge society is fundamentally different from what was considered knowledge in earlier societies, and, in fact, from what is still widely considered knowledge. The knowledge of the German Allgemeine Bildung or of the Anglo-American liberal arts had little to do with one s life work. It focused on the person and the person s development, rather than on any application both nineteenth-century Allgemeine Bildung and liberal arts prided themselves on having no utility whatsoever. In the knowledge society, knowledge basically exists only in application.

Knowledge in application is, by definition, highly specialized which was why Plato s Socrates some 2500 years ago, refused to accept it as knowledge and considered it mere techne, that is, mere skill.

Some knowledge work requires a fairly limited amount of knowledge examples are some paramedical technologists, the X-ray technologist, the technologist in the clinical laboratory, or the pulmonary technologist. Other knowledge work requires far more advanced theoretical knowledge, e.g., most of the knowledge work required in business, whether in market research; in product planning; in designing manufacturing systems; in advertising and promotion; in purchasing. In some areas the knowledge base is vast indeed, as in neurosurgery and in a good many areas of management, e.g., managing a major hospital, a big and complex university, or a multinational enterprise.

Whatever the base, knowledge in application is specialized. It is always specific, and therefore not applicable to anything else. Nothing the X-ray technician needs to know can be applied to market research, for instance, or to teaching medieval history.

The central work force in the knowledge society will, therefore, consist of highly specialized people. In fact, it is a mistake to speak of generalists. What we mean by that term, increasingly, will be people who have learned how to acquire additional specialties, and especially to acquire rapidly the specialized knowledge needed for them to move from one kind of work and job to another, e.g., from being a market researcher into general management, or from being a nurse in a hospital into hospital administration. But generalists in the sense in which we used to talk of them are becoming dilettantes rather than educated people.

This too is new. Historically, workers were generalists. They did whatever had to be done on the farm, in the household and in the craftsman s shop. This was true of the industrial worker as well. Manufacturing industry only expanded and became dominant when it learned to take the specialized skill out of the work. This was when it converted the skilled craftsmen of preindustrial times into the semiskilled or unskilled machine operator of the nineteenth and twentieth centuries.

But knowledge workers, whether their knowledge be primitive or advanced, whether there be a little of it or a great deal, will, by definition, be specialized. Knowledge in application is effective only when it is specialized. Indeed, it is more effective the more highly specialized it is. This goes for the technicians, e.g., the person who services a computer, an X-ray machine or the engine of a fighter plan.1 But it equally applies to work that requires the most advanced knowledge, whether research into genetics or astrophysics or putting on the first performance of a new opera.

As said before: the shift from knowledge to knowledges offers tremendous opportunities to the individual. It makes possible a career as a knowledge worker. But it equally presents a great many new problems and challenges. It demands for the first time in history that people with knowledge take responsibility for making themselves understood by people who do not have the same knowledge base. It requires that people learn and preferably early how to assimilate into their own work specialized knowledges from other areas and other disciplines.

This is particularly important as innovation in any one knowledge area tends to originate outside the area itself. This is true in respect to products and processes where, in sharp contrast to the nineteenth and early twentieth centuries, innovations now tend to arise outside the industry or process itself. It is true just as much in scientific knowledge and in scholarship. The new approaches to the study of history have, for instance, come out of economics, psychology and archeology all disciplines that historians never considered relevant to their field and to which they had rarely before been exposed.

HOW KNOWLEDGES WORK

That the knowledge in the knowledge society has to be highly specialized to be productive implies two new requirements: 1. knowledge workers work in teams; and 2. knowledge workers have to have access to an organization which, in most cases, means that knowledge workers have to be employees of an organization.

There is a great deal of talk these days about teams and team work. Most of it starts out with the wrong assumption, namely, that we never before worked in teams. Actually, people have always worked in teams very few people ever could work effectively by themselves. The farmer had to have a wife, and the farm wife had to have a husband. The two worked as a team. Both worked as a team with their employees, the hired hands. The craftsman also had to have a wife, with whom he worked as a team he took care of the craft work, she took care of the customers and the business altogether. Both worked as a team with the journeymen and apprentices. The present discussion also assumes that there is only one kind of team. Actually there are quite a few.2 But until now the emphasis has been on the individual worker and not on the team. With knowledge work being the more effective the more specialized it is, teams become the actual work unit rather than the individual himself.

The team that is being touted now as the team I call it the jazz combo team is only one kind of team. It is actually the most difficult kind of team, and the team that requires the longest time to gain performance capacity.

We will have to learn to use different kinds of teams for different purposes. We will have to learn to understand teams and this is something to which, so far, very little attention has been paid. The understanding of teams, the performance capacities of different kinds of teams; their strengths; their limitations; the trade-offs between various kinds of teams, thus, increasingly, will become central concerns in the performance of people.

The individual knowledge worker will also have to learn something that today practically no one has learned: how to switch from one kind of team to another; how to integrate one s self into a team; what to expect of a team; and, in turn, what to contribute to a team.

The ability to diagnose what kind of team a certain kind of knowledge work requires for full effectiveness, and the ability, then, to organize such a team and integrate oneself into it, will increasingly become a requirement for effectiveness as a knowledge worker. So far, it is not taught or learned anywhere (except in a few research labs). So far, very few executives in any kind of organization even realize that it is their job, to a large extent, to decide what kind of team is needed for a given job, how to organize it and how to make it effective. We are now in the very early stages of work on teams, their characteristics, their specifications, their performance characteristics and their appraisal.

Equally important is the second implication of the fact that knowledge workers are, of necessity, specialists: the need for them to work as members of an organization. It is only the organization that can provide the basic continuity which knowledge workers need to be effective. It is only the organization that can convert the specialized knowledge of the knowledge worker into performance.

By itself, specialized knowledge yields no performance. The surgeon is not effective unless there is a diagnosis, which, by and large, is not the surgeon s task and not even within the surgeon s competence. Market researchers, by themselves, produce only data. To convert the data into information, let alone to make them effective in knowledge action, requires marketing people, sales people, production people and service people. As a loner in research and writing, the historian can be very effective. However, to produce the education of students, a great many other specialists have to contribute people whose specialty may be literature, mathematics or other areas of history. This requires the specialist to have access to an organization.

This access may be as a consultant. It may be as a provider of specialized services. For the overwhelming majority of knowledge workers it will be as employees of an organization full-time or part-time whether it be a government agency, a hospital, a university, a business, a labor union or hundreds of other types of organizations. In the knowledge society, it is not the individual who performs. The individual is a cost center rather than a performance center. It is the organization that performs. The individual physician may have a great deal of knowledge. But the physician is impotent without the knowledge provided by a host of other scientific disciplines, i.e., physics, chemistry, genetics, etc. The physician cannot function without the test results produced by a host of diagnosticians that run the imaging machines whether X-ray or ultrasound, making and interpreting blood tests, administering brain scans, etc. The hospital is the lifeline to the physician. It administers the services to critically ill patients, and provides the physical and/or psychiatric rehabilitation without which there would be no full recovery. To provide any of these services, whether the electrocardiogram, the analysis of the blood samples, the magnetic resonance imaging or the exercises of the physical therapist, physicians need access to the organization of the hospital, that is, to a highly structured enterprise, organized to operate in perpetuity.

THE EMPLOYEE SOCIETY

The knowledge society is an employee society. Traditional society, or, society before the rise of the manufacturing enterprise and the blue-collar manufacturing worker, was not a society of independents. Thomas Jefferson s society of independent, small farmers each being the owner of his own family farm and farming it without any help except that of his wife and his children, was never much more than a fantasy. Most people in history were dependents. But they did not work for an organization. They were working for an owner, as slaves, as serfs, as hired hands on the farm; as journeymen and apprentices in the craftsmen s shops; as shop assistants and salespeople for a merchant; as domestic servants, free or unfree, and so on. They worked for a master. When blue-collar work in manufacturing first arose they still worked for a master.

In Dickens s great 1854 novel of a bitter labor conflict in a cotton mill (Hard Times), the workers worked for an owner. They did not work for the factory. Only late in the nineteenth century did the factory rather than the owner become the employer. And only in the twentieth century did the corporation, rather than the factory, then become the employer. Only in this century has the master been replaced by a boss, who, himself, ninety-nine times out of a hundred, is an employee and has a boss himself.

Knowledge workers will be both employees who have a boss, and bosses who have employees.

Organizations were not known to yesterday s social science, and are, by and large, not yet known to today s social science. The great German sociologist, Ferdinand Toennies (1855-1936), in his 1888 book Gemeinschaft und Gesellschaft (Community and Society) classified the known forms of human organization as being either community, which is organic, and fate, or society, which is a structure and very largely under social control. He never talked of organization. Nor did any of the other sociologists of the nineteenth or early twentieth century. But organization is neither community nor society, although it partakes of some characteristics of each. It is not fate. Membership in an organization is always freely chosen. One joins a company or a government agency or the teaching staff of a university. One is not born into it. And one can always leave one could only emigrate from traditional communities. It is not society, either, especially as it does not embrace the totality of its members. The director of market research in a company is also a member of half a dozen other organizations. She may belong to a church, to a tennis club, and may well spend especially if an American five hours a week as a volunteer for a local nonprofit organization, e.g., as a leader of a Girl Scout troop. Organizations, in other words, are not true collectives. They are tools, i.e., means to an end.

There have been earlier organizations. The professional military as it arose after the seventeenth century was an organization; it was neither a society nor a community. The modern university, as it emerged after the foundation of the University of Berlin in 1809, was an organization.

Faculty members freely joined and could always leave. The same can be said for the Civil Service as it arose in the eighteenth century, first in France, then on the European continent, and finally in late nineteenth century in Great Britain and Meiji, Japan (though not until 1933 or World War II in the United States). But these earlier organizations were still seen as exceptions. The first organization in the modern sense, the first that was seen as being prototypical rather than exceptional, was surely the modern business enterprise as it emerged after 1870 which is the reason why, to this day, most people think of management, that is of the organi-zation s specific organ, as being business management.

With the emergence of the knowledge society, society has become a society of organizations. Most of us work in and for an organization, and we are dependent for our effectiveness and equally for our living on access to an organization whether as an organization s employee or as a provider of services to an organization, as a lawyer, for instance, or a freight forwarder. More and more of these supporting services to organizations are, themselves, organized as organizations. The first law firm was organized in the U.S. a little over a century ago until then lawyers practiced as individuals. In Europe there were no law firms to speak of until after World War II. Today, the practice of law is increasingly done in larger and larger partnerships. It is also true, especially in the U.S., of the practice of medicine. The knowledge society is a society of organizations in which practically every single task is being performed in and through an organization.

WHAT IS AN EMPLOYEE?

Most knowledge workers will spend most if not all of their working life as employees. The meaning of the term is different from what it has been, traditionally and not only in English but in German, Spanish, or Japanese as well.

Individually, knowledge workers are dependent on the job. They receive a wage or salary. They are being hired and can be fired. Legally, each is an employee, but, collectively, they are the only capitalists. Increasingly, through their pension funds and through their other savings (e.g., in the U.S. through mutual funds), the employees own the means of production. In traditional economics and by no means only in Marxist economics there is a sharp distinction between the wage fund all of which goes into consumption and the capital fund. Most social theory of industrial society is based, one way or another, on the relationship between the two, whether in conflict or in necessary and beneficial cooperation and balance. In the knowledge society, the two merge. The pension fund is deferred wage and, as such, a wage fund. It is also increasingly the main source of capital, if not the only source of capital, for the knowledge society.

Equally important, perhaps more important: in the knowledge society the employees, that is knowledge workers, again own the tools of production. Marx s great insight was the realization that the factory worker does not and cannot own the tools of production and therefore has to be alienated. There was no way, Marx pointed out, for the worker to own the steam engine and to be able to take the steam engine with himself when moving from one job to another. The capitalist had to own the steam engine and had to control it. Increasingly, the true investment in the knowledge society is not in machines and tools. It is in the knowledge of the knowledge worker. Without it, the machines, no matter how advanced and sophisticated, are unproductive.

The market researcher needs a computer. But increasingly this is the researcher s own personal computer, and a cheap tool the market researcher takes along wherever he or she goes. And the true capital equipment of market research is the knowledge of markets, of statistics, and of the application of market research to business strategy, which is lodged between the researchers ears and is their exclusive and inalienable property. The surgeon needs the operating room of the hospital and all of its expensive capital equipment. But the surgeon s true capital investment is the twelve or fifteen years of training and the resulting knowledge which the surgeon takes from one hospital to the next. Without that knowledge, the hospital s expensive operating rooms are so much waste and scrap.

This is true whether the knowledge worker commands advanced knowledge like the surgeon, or simple and fairly elementary knowledge like the junior accountant. In either case, it is the knowledge investment that determines whether the employee is productive or not, rather than the tools, machines and capital the organization furnishes. The industrial worker needed the capitalist infinitely more than the capitalist needed the industrial worker the basis for Marx s assertion that there would always be a surplus of industrial workers, and an industrial reserve army which would make sure that wages could not possibly rise above the subsistence level (probably Marx s most egregious error). In the knowledge society the most probable assumption and certainly the assumption on which all organizations have to conduct their affairs is that they need the knowledge worker far more than the knowledge worker needs them. It is the organization s job to market its knowledge jobs so as to obtain knowledge workers in adequate quantity and superior quality. The relationship increasingly is one of interdependence, with the knowledge worker having to learn what the organization needs, but with the organization also having to learn what the knowledge workers needs, requires and expects.

Because its work is based on knowledge, the knowledge organization is altogether not one of superiors and subordinates.3

The prototype is the symphony orchestra. The first violin may be the most important in the orchestra. But the first violinist is not the superior of the harp player. He is a colleague. The harp part is the harp player s part and not delegated to her by either the conductor or the first violinist.

There was endless debate in the Middle Ages about the hierarchy of knowledges, with philosophy claiming to be the queen of knowledges. We long ago gave up that moot argument. There is no higher knowledge and no lower knowledge. When the patient s complaint is an ingrown toenail the podiatrist s knowledge controls, and not that of the brain surgeon even though the brain surgeon represents many more years of training and gets a much larger fee. Conversely, if an executive is posted to a foreign country, the knowledge he or she needs, and in a hurry, is the fairly low skill of acquiring fluency in a foreign language something every native of that country has mastered by age two without any great investment. The knowledge of the knowledge society, precisely because it is knowledge only when applied in action, derives its rank and standing from the situation and not from its knowledge content. What is knowledge, in other words, in one situation, e.g., the knowledge of Korean for the American executive posted to Seoul, is only information, and not very relevant information at that, when the same executive a few years later has to think through his company s market strategy for Korea. This, too, is new. Knowledges were always seen as fixed stars, so to speak, each occupying its own position in the universe of knowledge. In the knowledge society, knowledges are tools and, as such, dependent for their importance and position on the task to be performed.

One final conclusion: Because the knowledge society perforce has to be a society of organizations, its central and distinctive organ is management.

When we first began to talk of management, the term meant business management for large-scale business was the first of the new organizations to become visible. But we have learned in this last half-century that management is the distinctive organ of all organizations. All of them require management whether they use the term or not. All managers do the same things whatever the business of their organization. All of them have to bring people each of them possessing a different knowledge together for joint performance. All of them have to make human strengths productive in performance and human weaknesses irrelevant.

All of them have to think through what are results in the organization and all of them have to define objectives. All of them are responsible to think through what I call the theory of the business, that is, the assumptions on which the organization bases its performance and actions, and equally, the assumptions on which organizations decide what things not to do.

All of them require an organ that thinks through strategies, that is, the means through which the goals of the organization become performance. All of them have to define the values of the organization, its system of rewards and punishments, and its spirit and its culture. In all of them, managers need both the knowledge of management as work and discipline, and the knowledge and understanding of the organization itself, its purposes, its values, its environment and markets, its core competencies.

Management as a practice is very old. The most successful executive in all history was surely that Egyptian who, 4,000 years or more ago, first conceived the pyramid without any precedent designed and built it, and did so in record time. Unlike any other work of man, that first pyramid still stands. But as a discipline, management is barely fifty years old. It was first dimly perceived around the time of World War I. It did not emerge until World War II, and then primarily in the United States. Since then, it has been the fastest growing new function, and its study the fastest growing new discipline. No function in history has emerged as fast as management and managers have done so in the last fifty to sixty years, and surely none has had such worldwide sweep in such a short period. Management, in most business schools, is still taught as a bundle of techniques, e.g., budgeting or organization development. To be sure, management, like any other work, has its own tools, and its own techniques. But just as the essence of medicine is not the urine analysis, the essence of management is not technique or procedure. The essence of management is to make knowledges productive. Management, in other words, is a social function. And, in its practice, management is truly a liberal art.

CONCLUSION

Is there still a social question? It overshadowed the second half of the nineteenth and the first half of the twentieth centuries. It is still being discussed and very much in its old meaning as having to do with the status and function of Marx s proletarians in academia and by politicians, even though yesterday s proletarians long ago became bourgeois and are now disappearing altogether from the center of the stage. To be sure, there are social problems lots of them. And the rise of knowledge workers and the emergence of the knowledge society will pose any number of new social problems and new social challenges which will occupy us for decades to come. But the central fact about the emergence of the knowledge society is not that it poses social problems. The central fact is that it is creating unprecedented social opportunities.