Growth of Knowledge Workers

A recent Harvard Business Review article had a sidebar trying to show that knowledge work is growing as a basis of our industries. The statistic they showed was a chart of the portion of Cost of Goods Sold (COGS) and Sales-General-Administration (SGA) expenses as a portion of revenue for the Dow Jones 30 from 1972 to 2012. Like many statistics used, especially those in the Prudential commercials, the answers don't really answer the question, or the question is meaningless and unhelpful.

This statistic that the HBR article used is more about the composition of the DJ30 than it is about the growth of SGA within the companies. If the statistic had stayed with the same companies, and looked at the portion of product sales versus service sales and then compared the ratio of COGS to revenue, it might be more meaningful. In 1972, all of the companies were basically manufacturing companies. Even AT&T had a significant manufacturing effort, and research and development effort (part of the SGA in the article?), and some others like oil companies were drilling and exploring. Today the DJ30 has such notables as Citigroup and American Express which would have a hard time with finding a high COGS or Cost of Services Sold. Their gross margins are in the 75-85% range. The shift in higher SGA portions may be more reflective of the changing landscape in the top companies in the US, than a shift in more decision making within the corporations.