Source of Wealth

We now know that the source of wealth is something specifically human: knowledge. If we apply knowledge to tasks we already know how to do, we call it “productivity”. If we apply knowledge to tasks that are new & different, we call it “innovation”. Only knowledge allows us to achieve these two goals.

The beacons of productivity & innovation must be our guide-posts. If we achieve profits at the cost of downgrading productivity or not innovating, they aren’t profits. We’re destroying capital. On the other hand, if we continue to improve productivity of all key resources & our innovative standing, we are going to be profitable.

The 1950 edition of the Oxford dictionary, did not yet list productivity in its present meaning. By now it is commonplace that productivity is the true competitive advantage.