Why are some people paid a lot?

by | Feb 12, 2021

Not all knowledge is created equal. Some forms of knowledge are more highly valued than others because they are harder to find and harder to quantify. We’ll delve into the broad changes that have swept across society and how this “high value” knowledge has changed the fortunes (quite literally) of individuals. Perhaps it may change yours?

We’ll be a touch more theoretical this week, but I hope you’ll gain insights that could help your personal development and career progression. This email is a bit different, please do hit reply if you enjoyed it to let me know.


The beginning of the democratisation of knowledge


On the day Johannes Gutenberg invented the printing press, the democratisation of knowledge got a jolt. A trend was born that has lasted to this day. The printing press enabled knowledge to be disseminated via books much faster than before. Just as important though was that it reduced the cost of printing those books.

Prior to Gutenberg’s invention, books were exceedingly rare and expensive. A book in the 1100s cost around 2 shillings (the actual cost dependend on the length of the book). This Reddit answer claims that it was nearly a year’s wage for a thatcher (never mind that a thatcher probably didn’t know how to read). Books back then were entirely copied by hand which made them laborious to produce and expensive to purchase.


What would the world have looked like without this beauty of a press?


A few hundred years later (1609) the first newspapers started to show, then we got the telegraph a couple of hundred years afterwards. Later public schooling was introduced, literacy rates increased and we find ourselves smack bang at the birth of the internet. All these improvements increased the speed of information flow. With the birth of the internet, information could be transmitted across the world instantaneously. Nowadays, whether you use email, Twitter, Facebook or WhatsApp, almost anyone in the world has all knowledge at its fingertips. Or do we?


Explicit vs Tacit knowledge


Explicit knowledge is knowledge that can be passed on via some form of communication. Most often this happens in written or verbal form. For example: 1+1=2 . Simple right? Here’s another one: A tree needs water to live.

What we learn in schools and university is mostly explicit knowledge. Mostly but not entirely.

The other form of knowledge is tacit knowledge. This knowledge is difficult to transfer. It also encapsulates a range of different ‘knowledges’ within it. For example, if you described the taste of a particular glass of wine you might describe it as sweet, dry and/or fruity. Perhaps with hints of chocolate? The other person may seemingly understand what you mean but you can’t tell for sure. It’s not as explicit as 1+1=2. Likewise, how does a tennis pro explain how to swing a racket? Or a piano teacher explain how to play a certain piece?

Tacit knowledge is hard to express and hard to acquire. It cannot easily be communicated and often one only learns this type of knowledge via experience.


This is an iceberg


The democratisation of knowledge is largely confined to the Explicit


In the past (before the internet was born), explicit knowledge held people and even entire countries back. Over 200 years ago, Britain invented the power loom: a water-powered machine that weaved textiles automatically. This was akin to the invention of the assembly line in that it made a very manual process much quicker and cheaper. Due to Britain’s protection of trade secrets, it took the US 25 years to get hold of its own power loom. In 1812 the plans for the machine were ‘borrowed’ and brought to the US from where it spread.

Today, much explicit knowledge is accessible if not always free. Textbooks are available to read online. Course content that used to be taught in person is now on-demand and can be taught across the globe simultaneously. This knowledge-sharing presents huge opportunities for humanity to exchange ideas that were previously geographically constrained or only passed on to those with privileged access.


Tacit knowledge is the new battleground


Bar censorship, explicit knowledge has reached its momentary pinnacle. It cannot be spread faster than instantaneously. So where does this leave tacit knowledge?

We’ve not found a way to improve the transmission of tacit knowledge, since we’ve not found a way to accelerate ‘learned experience’. This means that the storage unit that holds this knowledge is increasingly valuable and sought after. Which means that each one of us (yes, we are the storage units) who holds valuable tacit knowledge is increasingly sought after.

Regardless of whether you think it’s right or wrong, it’s the reason why CEOs, star financial traders, star sportspeople and other star performers are paid so much more than the average worker. They have access to highly sought after tacit knowledge that few others have.




See the “blip” on the right?


I love this graph. Even though it’s nearly 15 years old you can clearly see the massive bar of people on the right-hand side who earned a very handsome income for their tacit knowledge.


What this means for all of our careers


Many people strive for a Masters in this or a certificate in that thinking that it’s going to unlock access to a range of roles they were previously not able to get. And in some cases it’s true. However, credentials and certificates are so commoditised that in many roles it doesn’t matter anymore that you are a certified or chartered ‘something’. When I look at applications for roles we’re hiring for, a certificate means that the applicant at worst sped through a course and passed a multiple-choice test. At best it means that you gained some explicit knowledge which is abundantly available in the marketplace.



There are some exceptions. Tax regulation is an example of explicit knowledge, but just because it can be codified and put on paper does not mean it is easy to understand. Good tax accountants are highly sought after for their comprehension of complex tax regulation. However, a good tax accountant is not made in a day. An experienced accountant has gained both explicit and tacit knowledge due to years of practice. In the US, business for low-end tacit knowledge tax accountants is increasingly being taken over by cheap tax prep software (e.g. TurboTax).

What is really sought after is what you ended up experiencing and what you’ve learned by doing. Since it’s hard to codify and transfer tacit knowledge, it’s also hard to automate tasks that involve tacit knowledge.

Some types of innovation are first captured as tacit knowledge before someone takes the time and has the ability to turn their tacit knowledge into explicit knowledge. If (and it is an if) and when this occurs it doesn’t take long for that explicit knowledge to spread.

All of this doesn’t mean that once you’ve acquired high-value tacit knowledge, you can rest on your laurels. People with high-value tacit knowledge aren’t immune to being disrupted. A basketball player who specialises in three-pointers may find themselves out of a job if the game tactics evolve to make three-pointers impossible. They are wise to watch and see what’s happening around them so they can evolve and stay ahead of the game.


What can we do to gain more high-value tacit knowledge?


Thank you Albert for your input.


We can take a leaf from Einstein’s book. We need to gain more experience to develop our tacit knowledge bank. But experience itself will not yield miracles or riches (if that’s what you’re after). We need to be smart about where we gain those experiences.

Just over five years ago, I moved from a big corporate to the startup world. I figured, if I want to be at the bleeding edge why not go work for companies that are trying something completely new. Many startups fail, but if you understand the reasons why they fail or succeed, you’ll have first hand experience of it. Your experience will help build that tacit knowledge that can be applied to grown-up business just as easily.


Future high-value tacit marketing knowledge areas


Being more granular, there are certain trends within a field that are hot whereas others are seen less favourably. Sometimes, this can be a fad but often this can also be a start of a long trend. Strategically picking an area that looks like a growth area can help you develop high-value tacit knowledge that is sought after for years to come.

In the digital marketing world, Search Engine Optimisation (SEO) has been such an area that has grown in importance in the last two decades. Social Media Marketing, on the other hand, is something that mushroomed with the arrival of Facebook and collapsed as Facebook started prioritising ads over organic posts in the newsfeed.

If you’re a marketing professional, have an honest look at your skillset and try to establish what skills are higher value than others.


My ‘scientific’ take on what’s “hot” in Marketing


An area that I see getting more traction recently is ‘community marketing’. I totally made that term up but the movement behind it is real. Companies are focusing more and more on building up their own community of customers to build a relationship with them. If they can get repeat purchases from the same people, they can grow their business without having to pay much away to the ad tech giants.

Another area that is not new but is getting a lot of focus is copywriting. Copy is everywhere and affects everything in marketing. A good copywriter can make ads, emails, articles, press releases and social media posts stand out and increase conversion rates. So it’s surprising that it took this long to see a resurgence of the importance of copy.

I may write separate posts about copywriting and community marketing in the future, but I’ll need to collect my thoughts a bit more about these topics.

Hope you enjoyed it, please do forward it to a colleague or friend who may find it useful.

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