Thoughts on the Shift to the Knowledge Economy

February 2, 2010 by  

I had a great time last week with the Association for Strategic Planning in Boston. I shared with the group a summary of the shift to the knowledge era and then led them in an exercise to talk about the significance of this shift to business.  Having been involved with ASP and well as the Institute of Management Consultants (IMCNE), I told the organizers that I wanted to avoid being a talking head–but rather to engage the group in a conversation. And it worked really well!

The group was great. It included consultants and corporates as well as grad students and professors from Suffolk University’s business school (our hosts).

dscn00231For the exercise, the audience broke into three groups. Their assignment was to come up with two icons to represent the industrial and the knowledge era approaches to management, strategy and accounting/management information.

The management group contrasted a pyramid to a network. I was really excited to see this as these are the two images that we use in our book Intangible Capital.

The accounting/MIS group came up with a lot of images. One of the members summed it up as the difference between a stop sign and a light bulb. They also used a network drawing to suggest the knowledge era organization.

The strategy group contrasted a tortoise to a group of cells (I apologize, I was enjoying the conversations so much that I neglected to take a photo of this one). The cells were another way of suggesting a network as well.

dscn0022In the closing discussion, we talked about how fast these shifts are happening. Everyone could think of companies that were wholly stuck in the industrial era as well as many that were quite well along towards the knowledge era. A few audience comments that I found especially striking:

  • One gentleman felt that the conversation about intangible capital was killed by the fall of Enron–which had put itself forward as an exemplar of the value of the intangible. Of course, it’s ironic because they had intangibles without transparency–something that remains a problem today. Until we face up to the intangibles information gap, we will continue to be vulnerable to surprises (such as the meltdown of the financial system….).
  • A woman talked about how she had worked at a high-tech firm that was very enlightened in its management. Lots of contact and sharing across the company, including with senior management. When there was a management change, the new team (all quite young) shifted the tone. The new team (she called them MBA types) was all about metrics and results. They closed off the lines of communication with the employees. She grew dissatisfied and left. She said that the discussion helped her understand what had happened.
  • This led one of the professors to volunteer that the rising gap between the compensation of CEO’s and senior managers from the rest of the employees works against the shift to knowledge-era management. In this scenario, the contribution of a few at the top is over-valued and the knowledge of the rest of the company is under-valued. Since innovation comes from leveraging the knowledge at the bottom, this creates a dangerous dynamic.
  • The group generally agreed that the shift to more emphasis on knowledge-era management was necessary and inevitable, although there will always be a need for both sets of skills. One of the Suffolk professors volunteered that the business schools were not helping this, “look at how we teach based on silos: marketing, strategy, finance” that resemble an industrial org chart much more closely than a knowledge era network.

Lots of great fun. Thanks to all.

Here are the intro slides I used.

If you were there, let me know what I missed. If you weren’t, let me know what you think anyway!

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