How to profit from knowledge-based models

There has been a lot of talk about the fact that we are now entering the Knowledge Age in American business. Terms such as Knowledge Economy, Knowledge Worker and even Knowledge Districts are becoming more common every day. But to date most of those using the terms have been intellectuals, academics and those who deal in emergent industries.
While conversation at that level is important it will have little impact on local or regional economies until it is operationalized. For that to occur those who are currently responsible for growing the economy, i.e. those running existing businesses, must become familiar with, and begin implementing the new concepts, organizational designs and management paradigms this new age is bringing forth.
Until that happens the economic benefits will be few, far between and unsustainable. So, we must do what we can to help one another to embrace the “new normal” and to convert the theoretical into the practical.
For the past several years I have been working side by side with many forward-thinking businesspeople as we work to transform organizational models from those designed for the industrial age into “knowledge-based” organizations.
The lessons learned about how to operationalize this predominantly academic conversation into relevant practices in ongoing businesses are becoming clearer, more exciting and more natural every day.
In an effort to shine some light on our discoveries I am listing some of the basic paradigm shifts that I have found to be fundamental to the conversion of a traditional organization into one that is designed for the 21st century.
• Knowledge capital trumps financial capital:
Money doesn’t make money anymore than money loses money. It takes people to do both or either. For instance, if you put a thousand dollars on a table and come back in five years you will still have a thousand dollars. However, if you add intelligent and resourceful humans to the equation, when you return those people will have used that money to make more money. But without the actions of the humans and the wise use of their knowledge the money is inert.
And if there was any doubt about the superiority of knowledge capital over financial capital, just think back to the Internet bubble of 2000. Literally billions of dollars were poured into startups that were filled with backward-hat wearing 20-somethings who were cash-rich but knowledge-poor.
• Organizations are knowledge networks and organization charts are liabilities:
Organization charts are liabilities to knowledge-based organizations because they neither accurately reflect how the organization operates nor do they allow for the efficient use of the most assets in the organization: communications, work flow and idea flow.
Organization charts depict organizations as siloed and linear entities, when in actuality every organization is a group of highly active, complex and dynamic “knowledge networks” comprised of people functioning as tribes.
Modern “org charts” look more like tribal-network maps and as such the level of increased detail they reveal about the organization can best be described as the difference between an MRI and an X-ray. One simply shows the skeleton while the other reveals much more relevant information about the subject.
And the more you understand your organization the more you get out of it.
• Command and control kills productivity and profits: One of the driving forces behind the emergence of the knowledge era, in addition to the rapid proliferation of technology, is the fact that the modern workforce is comprised of the three most independent-minded and mobile generations in human history: The boomers, The X’ers and The Y’ers.
While these generations are very different they do share a few things in common. They do not respond well when overly controlled; they have a lot to offer; they want input on how they do their jobs, they view themselves as equals and they are not afraid to quit if not respected.
Therefore, leadership teams in knowledge-based organizations are moving from command-and-control management to communication and collaboration-leadership methods as a way to activate, mine and maximize their knowledge- based assets.
• Everyone is a teacher, a learner and a steward of the culture:
The two most important assets in today’s organization are its knowledge capital and its culture. Committing to building a learning organization and a healthy culture always drives profits directly to the bottom line.
But being humble enough and disciplined enough to embrace this paradigm shift will be one of the most difficult challenges you and your organization may face. But if you can get it right you will reap generous profits.
You will also gain a powerful competitive advantage that only increases over time as you continuously build, replenish, sustain and master the power of your knowledge networks.
The world is a network and so is your organization. Learn it. Feed it. Profit. •


Jeffrey Deckman is founder of Capability Accelerators. He can be reached at JDeckman@CapabilityAccelerators.com.

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