The Wealth of Knowledge: Intellectual Capital and the Twenty-first Century Organization
by Thomas A. Stewart
The Wealth of Knowledge is easily the best business book I've read in several years. The logic is sound, the metaphors communicate, and the prescriptions are practical. Some of the goodies I high-lighted follow.
All the major structures of companies – their legal underpinnings, their systems of governance, their management disciplines, their accounting – are based on a model of the corporation that has become irrelevant. There are no rules of thumb, no advice, no tried-and-true consulting methods, no academic work on how to make the oil-rig worker more productive during the five-sixths of his time he is not holder a wrench. Knowledge workers are on their own—getting a word of advice here and there from a colleague or a boss, or from self-help books about how to be better organized.
The single most effective way to strengthen employees’ loyalty is to increase their opportunities for growth.
We all know that we learned more from our classmates than from our classes.
Collaboration, customization, constant correction occur in a special kind of place, a place with Ba.
By the middle of 2001, dot-com schadenfreud had become as tiresome and unenlightening as e-business braggadocio was two years earlier.
An organization is defined from the inside out—by budgets, departments, org charts, and reporting relationships. A business is defined from the outside in—by markets, suppliers, customers, competitors.
The Four-Step Process for Managing Intellectual Capital
1. Identify and evaluate the role of knowledge in your business—as input, process, and output. How knowledge-intensive is the business? Who gets paid for what knowledge? Who pays? How much?
2. Match the revenues you’ve just found with the knowledge assets that produce them. What are the expertise, capabilities, brands, intellectual properties, processes, and other intellectual capital that create value for you? What is the mixture of human-capital, structural-capital, and customer-capital assets?
3. Develop a strategy for investing in and exploiting your intellectual assets. What are your value proposition, source of control, and profit model?
4. Improve the efficiency of knowledge work and knowledge workers. Bearing in mind that knowledge work does not necessarily follow the linear path that physical labor often does, how can you increase knowledge workers’ productivity.
Stephen Denning, at the World Bank, identified 114 knowledge domains, and for each, created a help desk, a who-knows-what Yellow Pages, a collection of key sector statistics, records of the bank’s previous projects (emphasizing best practices and lessons learned), an electronic bulletin board, and finally provision for outsiders (such as the bank’s client countries) to get into the system directly.
Collegiality (and knowledge-sharing) contends with subverters, wiggle-outers, and a few outright foes. Auditors, lawyers, security officers, personnel staff—everyone wants to keep secrets.
The Disciplines of a Knowledge Business
Traditional organizations are run like buses, with routes to follow and schedules to meet; real-time organizations are taxis, which respond to a waving armor a voice crackling on a two-way radio.
· Decisions that once were made internally are now made with and by outsiders—customers or the market as a whole.
· The more choices people get, the more they want.
· Time is present time and distance is zero.
· Volatility is baked in; live with it.
You find knowledge products not by looking at your own value chain, but by look at that of your customers.
“Never sell anything only once.” Art Buchwald
“If you’re not absorbing knowledge from your customer, you’re not doing anything.” Nick Bontis
Value creation itself, more and more, is a collaboration between buyer and seller.
A fully developed customer learning process will have four traits. First, it will emphasize communication over information mining. Without a process of mutual learning—which permits smarter buying and selling—there’s little basis for customer loyalty in a low-friction knowledge economy. Second, customer learning needs to be integrated across functions—that is, not just confined to marketing, sales, and service, but reaching into new product development and even HR and finance. Third, the process should create a kind of relationship capital that is as valuable to the buyer as it is to the seller. Finally, the customer learning process should be so visible day to day that you can’t imagine running the company without it.
Knowledge sharing builds social capital, trust, morale, and culture. Whatever your business imperative—speed, innovation, frugality, quality, customer focus—knowledge sharing helps it. (Yet a study of thousands of professionals by Korn Ferry found that only 12% had access to lessons learned within their own company!)
Bill Raduchel says, “You can’t have a virtual conversation unless you also have real conversations. The indispensable complementary technology to the Net is the Boeing 747.”
Consultantware = semi-finished products that consultants then tailor to their clients’ needs.
In a knowledge economy, where unthinking jobs have been automated, companies are asking all workers—and especially managers and knowledge workers—to make decisions. Their inner gyroscope must be aligned with the corporate compass.
How to Train More Effectively
Emphasize action learning. Classroom training has its place: a small one. It’s inefficient: Half the people in the room are secretly working on their “real” jobs….
Build informal learning into work. Make it easy—and culturally acceptable—to ask for help.
Train for today’s job, not tomorrows, and train to increase the overall flexibility of the workforce.
Focus on key skills and knowledge workers. A company’s training should emphasize what differentiates it from its competitors.
Organizations are not so much collections of parts as they are connections of brain cells, nerves, and sinews. To discover this is to discover the power of knowledge set free and of technology made human. It is to discover that it’s possible to improve not only a company’s performance today, but its responsiveness, its repertoire of skills, and its capacity to deal with the future.
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