The Black Knowledge Economy

The term the “black economy” refers to those parts of the economy which are underground and out of legislative and supervisory sight. It covers a raft of activities from the sinister to the mild, from extortion, drugs, illegal weapons trading and human trafficking, to money laundering, tax evasion and moonlighting. The bigger the black economy is, the less transparent the real economy is, and the harder it is to legislate for or manage (as in purposefully influence) in any significant way. In fact, the harder it is to do legitimate business too, because the lack of price transparency makes it difficult to plan for costs and profits. That’s quite apart from being able to collect enough tax to govern properly.

It strikes me that if we consider the flows of information and knowledge within organisations, and looked at it like an economy, then we often have very large, opaque, “black” knowledge economies, where most of the transactions are underground and out of sight, much of it moving through email. And just as with real black economies, the greater the attempts to govern and rein in these activities, the more they evade capture. I’m thinking of one former client in particular, where whenever there is a push towards using the formal knowledge management system, token visible efforts are made, but there is a surge in the improvisations around personal hard drives and email attachments.

So the question for many information and knowledge management initiatives is, how do (a) we design the environment and (b) improve our governance so that the transactions come out into the open, and so that our knowledge consumers start to get some visibility into the value that can be created from knowledge sharing. And can we learn from the strategies employed by economies that have successfully controlled their black markets?

10 Comments so far

Gordon Rae

Black Markets are generally supposed to be criminal, whereas you are describing the normal way knowledge work gets done in firms: peer to peer, improvised, with management holding people accountable for outcomes, but giving them discretion over how they accomplish them.

My first question is, what’s wrong with that?

Posted on March 17, 2009 at 05:14 PM | Comment permalink

Patrick Lambe

Actually the black economy has a whole spectrum of activity, not all of it has to be criminal. I wasn’t interested so much in the criminality aspect, more in the visibility, transparency aspects, and the consequent failure of the economy to manage itself or be subjected to policy and governance.

One of the major obstacles I see to KM adoption is the perception of managers that there’s no point or value in sharing - because they can’t get any visibility into what’s “out there”. In fact, nobody really can, until you do a knowledge audit of some kind and start building knowledge maps.

Posted on March 17, 2009 at 05:21 PM | Comment permalink


Brilliant metaphor! Gets me thinking from a fresh perspective. Wondering whether web 2.0 (linked in, FB, blogs, twitter etc) enabled conversations aren’t already making a difference...these web 2.0 platforms definitely expose the conversations....make them searchable etc.

Which reminds me. Any specific reason why you are not on Twitter as yet??? tongue laugh

Posted on March 17, 2009 at 05:43 PM | Comment permalink

Matt Moore

Well there are three approaches often deployed against black economies:
- Launch a “War On ....” Heavy crackdowns. Lots of resources thrown at it. Escalating hypocrisy & corruption.
- Decriminalisation. Make the core illegal activity, well, less illegal.
- Just ignoring it and hoping that it’ll go away…

Posted on March 17, 2009 at 07:28 PM | Comment permalink

Stephen Bounds

I like the analogy Patrick, but it seems to me that you are really describing a “grey market”, not a black market.

From the Wikipedia article:  “A grey market ... is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.”

Or perhaps knowledge sharing is better thought of as sharing of music MP3s through peer-to-peer:  technically illegal, but no one ever gets punished for doing the wrong thing or even if a couple of token people are reprimanded to make an example of others, the net benefit to those doing the sharing far exceeds any potential negatives.

Posted on March 17, 2009 at 08:27 PM | Comment permalink

Gordon Rae

If you’re interested in visibility and sharing, look at the term “invisible work”. Lots of interesting research there about work that contributes to an organization’s performance, but management (not to mention KM) aren’t aware of it, don’t take it seriously, and don’t value it. Key author is Bonnie Nardi.

Posted on March 17, 2009 at 09:28 PM | Comment permalink

J.K. Suresh

An interesting metaphor. However, at the risk of re-kindling an old (?) and provocative debate, I believe this may only help us reify the (perhaps legitimate) concept of “responsible, open and measurable sharing” at a heavy cost - of creating ‘scary’ imageries to take another shot at explicitizing what cannot be - the rituals, routines and the implicit relationships between humans that go beyond the contractual and the expressible, and that lead to the rich ecosystem of knowledge exchange, unfettered by rules and unimpeded by procedures for KM! While the debate on this has been inconclusive thus far, it does appear to stand to reason that what is manifest in KM activity in a community can only serve as a proxy for what is not - it is the latter that provides the foundations for the former’s effectiveness; and for one to become the other may not just be impossible, but an attempt to force this may even be counter productive to KM.

Posted on March 18, 2009 at 12:39 PM | Comment permalink

tony joyce

It is an interesting idea Partick. And it might even be testable in industries where intellectual property is highly valued. R&D labs and legal departments have strict codes and policies regarding knowledge sharing, and yet it occurs on a regular basis as people talk across organizational boundaries. Email analysis or other approaches could perhaps uncover how influential outside contact is.  I just can’t imagine any company volunteering to participate in such a study.

Posted on March 21, 2009 at 08:44 AM | Comment permalink

Christian Young

I have to agree with Stephen that it sounds more like a Grey Market, but Black Market sounds much more sexy and interesting smile

For my part, I have always tried to account for this type of knowledge sharing activity in my Knowledge Audits - in the comparison between formal policy and practices (how things ‘should’ be done) and informal expeirence practices and behaviors (how things are actually being done) and then working to create some sort of synergy between the two.

Unfortunately, I find that too many organizations take the approaches that Matt describes which only reduces trust, increases anxiety and paranoia, and takes away from KM initiatives.

Posted on March 22, 2009 at 04:36 AM | Comment permalink

Jay Shaw

Black goes grey and gets scrubbed to off-white at least with enough sunlight and washing. Examples help. Whenever someone asks me a question whose answer I think might be of general interest, I don’t hit reply. I post it to our wiki and I tell the emailer who asked the question to go to the wiki to get the answer (in the nicest possible way).

If I get cc’d on an email discussion that I think might be of future, general use I email the entire email chain to the wiki, which has a plug-in to make a home for the email and index it along with its attachments for search purposes.

Posted on May 11, 2009 at 01:07 AM | Comment permalink

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