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journal.gif (8802 bytes) Viewpoints - Business Improvement
Charles M. Savage, Ph.D.

Envisioning the Knowledge Era

The Information Era is a small step beyond the Industrial Era. What's needed is a giant leap.

Charles M. Savage, Ph.D.

Much has been written about the benefits organizations can derive by moving from Industrial Era thinking, which relies on physical assets, to an Information Era mindset, which emphasizes intangible assets. But the majority of an organization's intellectual capital is tacit knowledge that can never be captured in a database. What's needed is both the vision and passion to leap beyond the Information Era -- to the Knowledge Era.

What would it be like to work in a Knowledge Era organization? Instead of focusing only on physical assets, the company is also accounting for the value of its knowledge capital.

What would it be like to work in a Knowledge Era organization? Imagine the energy you feel as you arrive at work and several of your colleagues are eager to discuss a new business opportunity. You are not surprised, because your company has redefined its balance sheet and its profit-and-loss statements. Instead of focusing only on physical assets, the company is also accounting for the value of its knowledge capital, eight times book value, and now your knowledge is really valuable.

These are not hollow changes. Indeed, people in the organization have figured out ways to tap into the wealth of knowledge you and your colleagues have. First, the management team has itself become a "community of leaders," authentic and honest with one another and the rest of the organization, light years away from the petty political game played so readily in the Industrial Era. Second, as they model natural human approaches, these values and behaviors are echoed throughout the company in a most comfortable way.

You still remember the pain you used to feel when your colleagues would notice only your weaknesses and the mistakes you made. Now they are much more interested in your strengths, your capabilities, and even your aspirations. You can bring your whole self to work each day. Even meetings are different: Instead of power struggles, people listen to one another and spontaneously build on one another's ideas. There is a sharing of thoughts and feelings undreamed of in the past. People realize they not only create products and services but also co-create one another.

You ponder buzz phrases such as "learning organization," "knowledge management," "innovating with customers," "core competencies," and so forth. These are no longer vague concepts, but fit together in a larger picture. Your leadership team has mastered the art of strategic dialogue, listening between the lines to the deeper aspirations of your customers. Because of the trust with customers, it is possible to be more innovative with them. Each can build upon the other's knowledge. Each can team competencies. Each is able to roll the learnings back into the organization. Investments in learning capital easily outpace physical investments.

In addition, your company holds regular meetings with customers to discover ways you can strengthen their capabilities so that they can better meet the needs of their own customers. Suppliers are also involved in these meetings, and together you all identify opportunities no company could identify by itself. The excitement of discovering profitable opportunities helps the company grow revenue in new ways.

Your company easily puts together teams, based on people's competencies and aspirations. These teams often include people from both supplier and customer organizations. And professionals are often involved in more than one team, so it's easier to move learnings among teams. In fact, the company does not talk about having teams but the teaming process. You have become excellent at teaming and reteaming competencies around ever-changing profitable business opportunities.

The company has also changed its budgeting approach. Instead of committing 100 percent of the budget by functions, 30 percent is held in an internal venture-capital pool, to be used for well-thought-out proposals for leading-edge projects with sound business plans. HR, IT, and Finance have worked together to create a powerful supporting infrastructure that greatly enhances this dynamic teaming process through team rewards, "teamware," and the new budgeting process. In fact, the company has abolished the distinction between line and staff, because the staff functions are as valuable for overall success as any of the line functions.

How was your company able to master the basics of Knowledge Era enterprising? It started when your chief executive realized that the basic notions of the Industrial Era were bankrupt. He came to the painful conclusion that the factory model too often leads to structured distrust. He remembered reading how Adam Smith, in Wealth of Nations, broke up the pin-making process into 18 steps. This fragmentation of work was magnified into separate departments, each with its well-protected silo. It was reinforced by the writings of Frederick Winslow Taylor and Henri Fayol. Taylor's scientific management should really be called "stupefying management," because it assumed the worker was not smart enough to know what to do. Fayol locked people into managerial boxes with his chain-of-command model, a true chain around people's creativity.

Recently you attended a knowledge management conference. You raised questions with the speakers because you have come to understand the focus should be on the dynamics of knowledge, not on how to manage explicit knowledge. Sure, intranets, extranets, and the Internet are making it much easier to make knowledge accessible, but you know that most knowledge is tacit, not explicit. And it comes alive when there is clear business focus. You also know that your organization would have not reached its present state of agile responsiveness without having spent a year thinking through the underlying values of the company. Through this process people gained a rich sensitivity to one another that has given meaning and purpose to your efforts.

Finally, you have come to the realization that knowledge and the co-creative process of combining knowledge is giving your company competitive advantage unexpected only two years ago. Your are glad your company is a pioneer in shaping the knowledge economy along with Skandia, Monsanto, Intel, Nomura, and other innovative companies. The abundance of talented professionals, each with unique capabilities, and your organization's ability to team these competencies have brought new excitement and energy to everyone. And the benefits extend beyond your company to not only your customers and partners but also your families and communities. The leap has been giant indeed.

Charles M. Savage, Ph.D., is president and mentor of Knowledge Era Enterprises Inc. (Boston) and author of Fifth Generation Management: Co-Creating Through Virtual Enterprising, Dynamic Teaming, and Knowledge Networking.

Exec,  September 1998 
  1998  Unisys Corporation, All Rights Reserved.
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