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For centuries a successful business has been one that bought raw material cheaply, used skill to create something from it, and then sold the result at a profit. So what's changed? Why are businesses who do exactly this, failing every day?
Managing a business is about:
- managing the supply and safe storage of your raw material,
- managing the skilled workers that transform it, and
- managing the process of selling and distributing the finished goods to the consumer.
Business has always been about managing "things" and managing "people". And then they invented the computer.
Computers not only helped us manage things and people, they created a whole new industry where the "product" is knowledge. Knowledge about your staff and their productivity, knowledge about your physical assets and their value, knowledge about how those important human resources can do their job better, knowledge about customers and what they buy, why they buy and where they buy.
In 20 years the human race built a whole new way of sharing knowledge, selling raw materials, buying products, organising businesses and training people.
The IT industry boomed when people identified the potential that was inherent in the system. It bust when people realised that managing "information and knowledge" isn't any easier than managing "things and people".
Managing a "knowledge-based" consulting or service business is about
- managing the supply and storage of your raw information,
- managing the skilled workers that transform it, and
- managing the process of selling and distributing the finished result to consumers.
So before we all get carried away with the exhilaration of the possibilities of e-commerce, online communities, social networking, workflow and intranets it's worth stopping long enough to identify some operating principles.
Knowledge-based strategies begin with strategy,
not knowledge.
Intellectual
capital is meaningless without the old-fashioned objectives of
serving customers and beating competitors. If a company does not
have its fundamentals in place, corporate learning, knowledge management
and information technology are merely costly diversions. A company has to know the kind of value it intends to provide
and to whom. Only then can it link its knowledge resources in ways
that make a difference:
- serving customers around the world
in a coordinated, consistent manner;
- responding quickly to new trends and
- offering faster, cheaper and better products or services.
Managing a business is
not about
managing knowledge;
it's about nurturing people with knowledge.
Learning has a unique human dimension – you need to tap
into the knowledge locked in people's experience. Most companies
have elaborate systems to capture and share their "explicit
knowledge" - the data that shows up in forms, databases, and
employee handbooks. This kind of knowledge never translates into
a winning strategy. Databases usually don’t include what
the employees really know!
Knowledge-based strategies must link to
traditional measures of
performance.
Despite the many limitations of financial systems to measure “intellectual
assets” fairly, the hard truth is that knowledge must be
connected to measurable improvements in performance - including
improvements on the bottom line.
Superior use of knowledge must prove to have a clear impact on
sales, costs, cycle time, productivity and profitability. Yes,
learning and education are "good for the company" - perhaps
even "good for society." But the point of a knowledge-based
strategy is not to save the world; it's to make money.
Knowledge is leveraged through
networks of people -
not networks of technology
People who don’t want to collaborate, to share and develop
new knowledge will not do so despite any technology tools. Interconnectivity
begins with people who want to connect. After that, tools and technology
can make the connection.
People networks leverage knowledge through
"pull" rather
than centralized "push."
Knowledge development and sharing is driven by the employee's
need for help in solving business problems; the power comes from
the demand side rather than the supply side. Ultimately, learning
is up to each individual, and all the company can do is raise each
employee’s aspirations to learn. Don’t forget, these
are the people whose contributions and ongoing development are
the primary providers of your bottom line. |
