Orchestration Is New Command and Control

In the tangible economy, mechanization and mass production drove huge productivity gains as manufactured goods replaced those made by hand. These efficiencies came through strict discipline. Managers could describe to their employees in great detail the smartest way to accomplish their work: “Take Part A, attach these two screws then join Part A to Part B.”  Through time and motion studies, the fastest and most efficient way to do things could be identified. To achieve these results, employees had to adhere to strict guidelines. In such an organization, decision-making was an activity that resided with management. Like military commanders, the word of managers was the guide for corporate action. This was a classic command and control model.

But in today’s world, your company is really a series of networks. These networks include both internal and external players. Knowledge is dispersed throughout the network—it is not concentrated in the managerial class. And the organization needs that knowledge to succeed. This means that a traditional hierarchical approach where knowledge and power flow from the top down will not get you the results you need. To describe this model, we borrow the image of orchestration from Peter Drucker.

Drucker used the metaphor of the orchestra conductor over and over again to describe the challenge of management in the knowledge era. He explained that an orchestra conductor does not know how to play each of the instruments of an orchestra.  Yet, the conductor clearly is the leader and manager of the team making up the orchestra. In his or her work, the conductor cannot and should not get too deeply into the technical details of each individual instrument and musician.  Rather, the conductor chooses the music, sets the pace, and ensures that all the musicians are playing together. “A great orchestra,” he asserted, “is not composed of great instrumentalists but of adequate ones who produce at their peak.”

Sound easy? Of course not. But it captures the essence of the challenge of management in the knowledge era. And makes it clear that a new management model is needed because workers underneath a manager have special talents and skills that the manager does not possess. This approach contrasts sharply with the widely understood dynamic in the industrial model. Industrial workers were expected to do as they were told. They were not valued for their knowledge or creativity. While this is an overly simplistic statement, it is more true than most people would care to admit, even today. Because the majority of organizations are still set up as if they were running factories where workers are interchangeable and dispensable—rather than businesses dependent on knowledge workers to create and preserve competitive advantage.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

CFO Magazine published my comments on reputation

In the September issue of CFO a comment by Intangible Capital author, Mary Adams:

Prevention Is the Best Approach

It’s important to understand how damaging reputational crises can be (”What’s a Reputation Worth?” May). But the real story is how to prevent them.

Seventy percent of the value of the average company is intangible. This is because processes, knowledge, and networks (all considered intangible by accountants) are the core drivers of competitive success — and reputation.

Managing reputation starts with managing these intangibles. That’s why we say reputation is the new bottom line.

Mary Adams
Founder and Principal
I-Capital Advisors
Winchester, Massachusetts

 

Intangible Capital Reading List on Twitter for 2010-09-01

• Intangible capital will change every industry: Knowledge intensive agriculture - the case of Brazil http://bit.ly/bfhzRd /cc @feedly #
• New issue of Management 2.0 - IC digest for August http://conta.cc/b7KQqa via #constantcontact #

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Program this Friday: Intangibles and Security

Tax payers expect police, national guard, and military to provide “real” security. Government expects the private sector to provide the lion’s share of security investment. Is there a business case that can help the private sector rationalize the investment and bridge the expectation gap?

Join us Friday, 3 September, at 12h00 EDT for the Mission Intangible Monthly Briefing. Sean Lyon, principal, R.I.S.C. International (Ireland), corporate defense pioneer and the architect of the emerging cross-functional discipline of corporate defense management (CDM) in conversation with Robert Liscouski, member of the Board, Implant Sciences (NASDAQ:IMSC) and former Assistant Secretary, US Department of Homeland Security will explore the business case.

Registration, as always, is complimentary. Slides and an exemplary downloadable program are posted on the EVENTS tab (Link to our Summer 2010 News page, our new RepuStars composite indices, and other content below). Mary Adams, I-Capital Advisors, moderates.

If you are a senior executive, a board member, or have a financial interest in any publicly traded security, you (or a colleague Send to a Friend) won’t want to miss this event. Learn more.

Intangible Capital Reading List on Twitter for 2010-08-31

• Emerging job: development and management of intellectual / intangible capital (tools, templates, processes) http://bit.ly/aL6f2D #
• U.S. missing the boat: RT @Baoman: 9 & 23 Oct 2010 The Management & Reporting of IC - Hong Kong http://is.gd/eGCUB (no English version?) #
• Past 10 years, over-invested in housing, underinvested in intangible capital: Why We Struggle http://bit.ly/d1sNmf /cc @feedly #

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