Chicago is renowned as a distribution hub, which began with its proximity to water. Since it was already a distribution hub when rail and air transport were born, this infrastructure was hard-wired into Chicago; a similar dynamic made it a fiber infrastructure hub. Transporting pigs is quite a different proposition from lumber, iron ore or hydrochloric acid. The process of meat packing is subject to spoilage, the type of animal, the markets and locations of customers. Dealing with these things is in Chicagoans' DNA. Mastering their foibles is what made Chicagoans excel, and it's hard to give up.

As discussed in The 3.x Economies, the agrarian economy preceded the industrial economy, and it was even more imbued with physical constraints. The point here is that we humans have hardwired into our brains the imprint of these economies' lessons and impulses. Many of these do not apply in a knowledge economy, and that stymies us. The impulses are often so profound, we are not aware of them. People don't change unless they have to. The fact that we are alive is testament to the fact that we made the right decisions in the past. This is a profound truth and difficult to deal with. It often makes us stick with something longer than we should.

Transformation is so difficult because it challenges us to selectively unlearn part of what we knew before. We have to figure out what parts of what made us successful in the past will help us in the future, and we have to modify the rest or throw them away.

To illustrate what I mean, here are some of the lessons that have made us successful in the past and which are altered drastically in the knowledge economy. Be warned, they contain myriad generalizations, and exceptions abound. Since we're talking about deep beliefs of Chicagoans as a group of people (i.e. critical mass), I think they are relevant:

In the knowledge economy, inputs are mainly information and knowledge. Hence, the importance of universities and the leverage of repeat technology entrepreneurs and tech-savvy financiers, attorneys and marketers. Moving product means FTP or email. Waste? Empty the trash with no environmentalist consequences. Workers can be anywhere. Plug these differences into Ronald Coase's economic theory around transaction costs, and you will see a gigantic difference between industrial transactions and knowledge transactions. That is why knowledge economy companies and products develop so fast; they warp our industrial economy perspective.

Transformation means profound change by definition, and people don't like change. They need powerful, galvanizing and persistent motivation. In being more successful than Massachusetts, Silicon Valley, Austin or North Carolina during the industrial economy, Chicago is challenged to forget many of the lessons that it learned during the industrial economy. We are still too successful today to be universally motivated. Jerry Mitchell pointed out to me that the Route 128 phenomenon was born of the fact that area textiles and other manufacturing were devastated, and there was simply no alternative to taking the risks necessary to build something new. In Chicago, we have not and will never reach that point, which is a curse in the short term and a blessing in the long term. We have a diverse economy, and the industrial economy will continue to be important, although its value will continue to slip relative to the knowledge economy.