How Marvellous Minds Make Money
Originally published in Executive Excellence
The application of technology is rapidly and dramatically changing the face and form of business. We’ve read it, we’ve seen it, we know it. The business models of Internet companies—and increasingly all companies—are constantly changing in response to unpredictable shifts in the way business is done. Currently few seers in business attempt to look beyond a few years out, and even then they risk being proved wrong within a far shorter timeframe.
What this amounts to is an eternal game of catch-up, with extremely ephemeral phases of leadership for a few. The ubiquity of technological developments, as well as the shortening of the product development and marketing cycle, means that leadership in the implementation of technology can differentiate you from your competitors only fleetingly. The investment in technology which is necessary to gain leadership can be immense, yet provide advantage only briefly. Substantial investment and carefully considered implementation of technology will be fundamental to the survival and success of all businesses from now on, but this alone will by no means ensure competitiveness or success.
So what will make the difference into the 21st century? The answer lies in the distinction between information and knowledge. Information is what is or can be digitised, and thus easily stored, copied, communicated and accessed through databases and systems. Knowledge is the capacity to act effectively in complex situations, which for a long time hence will be only a capability of humans. In the realm of information, by its very nature, it is almost impossible to gain lasting advantage. Knowledge, however, whether it be held by individuals or in the capabilities of effective teams, is extremely difficult to replicate, and is itself the source of innovation in technology, marketing, product development and strategy that creates superior value for the organisation and its clients.
So while technology will provide the backdrop for business into the next millenium, the only lasting source of differentiation will be in the knowledge of the people in the organisation, and how effectively those people can work together to create results. The so-called field of knowledge management is beginning to address the issues of providing the technological links and storage which allows information to be shared between people. This is an important but limited part of how to develop knowledge capabilities. Real improvement of individual’s and teams’ knowledge capabilities is based on understanding how people acquire, use and create knowledge. In this, business has an immense amount to learn from the field of cognitive psychology, which has very practical application in presenting information and ideas more effectively, assisting effective high-level thinking, and making better decisions as individuals and groups.
The productivity and effectiveness of knowledge workers—whatever the field or industry in which they work—are almost by definition based on their skills at dealing with information and knowledge. When adding value to information, generating knowledge, and applying knowledge to business processes are the primary source of value creation, then people’s capabilities at information and knowledge processes such as filtering information, analysis, decision-making and conceptual communication will determine success. Human skills are increasingly become the primary source of differentiation, and while many knowledge workers are already excellent at knowledge tasks, their skills can and must be developed further on an ongoing basis in order to to maintain and develop competitive advantage.
In many ways the most valuable knowledge skill in the next millenium will be facilitation, in the sense of assisting groups to pool their expertise and knowledge constructively in making effective decisions and creating new knowledge. Most organisations hold immense knowledge in their staff and executives, however in many teams and committees the diversity of views and opinions represented can result in decisions and actions which reflect power and politics rather than what will be best for the organisation. Good facilitation uses frameworks that allow a wide variety of perspectives to be synthesised and integrated into a richer view of the whole to result in better decisions, rather than resulting in destructive arguments and conflict.
The complexity of the business environment in the 21st century will undoubtedly continue increasing ever further; in this world effective strategic thinking and action will require richer ways of thinking. While computers will take more and more low-level work functions from people, the domain of high-level strategic decision-making will remain the work of humans. Thinking, creating knowledge and making decisions more effectively as individuals and groups will emerge as the only true source of sustainable differentiation and competitiveness, despite the popular focus on the ever-changing context of technology, which will remain a tool and not an end in itself.
While arguably the primary field of business competition is already in attracting and retaining the best talent and knowledge, it is exciting to envisage a world in which developing the dynamic knowledge capabilities of individuals and organisations is recognised as the key source of advantage. We stand on the threshold of that world, and those that leap into it before others will have a great headstart in what will be an incredibly challenging and exciting race.