The New Management: Finding the right balance

As you probably know by now, we see the modern business as a knowledge factory. This means that all managers need to become expert in the management of a knowledge factory. There are three critical management concepts that you will need to add to your toolkit in order to get the best results possible from your knowledge factory: networks, orchestration, and innovation. Read more

6 principles of management in the knowledge era

We often use the image of a “knowledge factory” to talk about the infrastructure of the today’s business. A huge percentage of this infrastructure is in intangible knowledge assets that work together as a system, the knowledge factory. Once you begin to understand the power of the combination of your knowledge assets, you are on your way to becoming building a smarter company–and you are ready to think about what this model means.

What are the business implications of the knowledge factory? These principles explain why management of a knowledge factory is different than management of a physical factory. Here are the main points, followed by an explanation of each:

1. The KF is greater than the sum of its parts
2. Ownership of the KF is dispersed
3. Power in the KF flows down…and up
4. The KF is held together by reputation, not control
5. The KF runs on information technology
6. The KF is a business

Read more

A Lego Model of a Medical Device Company

Here’s one more example of a Lego model of the knowledge factory of a company. This one is for a medical device company that sells a physical product that is supported by a service. The product is used by consumers in their home. But the company does not have direct contact with the consumers until they call to order the product. Instead the company relies on referral sources. Read more

Another Lego IC model: A Specialty Contractor

With the Google model, we told the story of how the company developed and built its knowledge factory starting with human capital.

But to model the IC of an established business, it often helps to start with how a company gets paid. This gets the focus directly on the value creation process and also ensures that the model is of maximum usefulness—making that direct link between IC and financial results. Read more

Modelling the IC of Google’s search business

Google’s search business is a great example of a knowledge factory. While it is driven by highly complex math, the business model developed a decade ago is very simple. It all started with the competencies of two computer science graduate students at Stanford, Sergey Brin and Larry Page. The year was 1995. Page was looking for a thesis topic and was intrigued by the emerging “World Wide Web.” He saw it as a math problem. Brin got involved and by 1998, they had launched Google.

Here’s the story told through the construction of a model of this knowledge factory using Legos.  Read more

Why visualization is so important for intangible capital

One of the big reasons that folks don’t do more explicit thinking about intangible capital is that they have no frameworks or mental models about IC.

We see this disconnect in a lot of businesses. Just about every manager knows that our economy has shifted. They know that knowledge is an important driver of their company’s success. But very few have a vision of how to operationalize this understanding. We believe that visualization is an important first step.

We have struggled with the need for a good visual model of intangible capital over the last decade. Many approaches in use today use diagrams and flow charts to show how all the components of IC work together. But the truth is that there is no one way model that describes every business. that knowledge intangibles are put together in a company. In our client work, our writing and speaking and our continued research, we often help our clients create their own models.

Why do we put so much emphasis on a model? Because models, drawings, graphics are an important aid to clear thinking. They are the visual corollary to stories, which are another powerful form of communication. Every businessperson today is so overwhelmed with data and information that they easily lose sight of the big picture. Visuals help them see it.

We actually used guides on visualization and communication in developing this book. Two books influenced us. The first, Made to Stick by Dan and Chip Heath, helped us come up with the ideas for the ten chapters in this book—breaking down the elements of intangible capital into digestible concepts and making the connection between each and its knowledge-era equivalent. The second, Back of the Napkin by Dan Roam, helped us think about how to represent the elements of intangible capital in a visual way, a journey that eventually led us to the family room of our house and the tub of Lego blocks belonging to our two sons.

We began using the Legos when we were struggling to come up with a way to model a client’s business. We started using the physical bricks. Then we discovered that Lego also has a free drawing tool so now we also create pictures of the models. We start with a knowledge inventory, similar to the one described in Chapter 2. We use a worksheet to assign each of the items on the inventory to one of the four different shapes we have picked to represent the three traditional kinds of intangible capital plus one for products. The only color that has meaning is gold—it is used for any knowledge or product for which a company gets paid. Then we put them all together.

There are a couple ways to approach this:

• Start with competencies. Build the model from there, attaching processes to related competencies then adding relationships.
• Start with your revenue (gold) blocks. Link these with the processes, competencies and relationships together in a way that illustrates how work gets done.

As we work, we try to link related assets directly together. For example, unionized workers (human capital) should be connected to the union (relationship capital) as well as the processes that they support (structural capital). A product needs to be linked with all the processes that are needed to produce and distribute it.

When you are starting out, we recommend that you don’t focus on the support services that each of the businesses have such IT and human resources. Each of these could be modeled as well. One situation where you might want to model support services is when you are doing extensive outsourcing, so that you are clear where the knowledge for that function is coming from.

Over the next few days, we’ll run some examples of models of specific businesses.

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

The Knowledge-Era Plant Tour

When we were bankers, one of the required parts of our jobs was a “plant tour.” Managers would walk a banker (or sometimes a gaggle of us) from the raw materials warehouse along the production lines to the finished goods stocking and shipping departments. Of course, bankers are not manufacturing experts.

We couldn’t really critique the details of the operation. But we could get a sense of the strengths and weaknesses of the operation from seeing the condition of the facility and the knowledge that the manager demonstrated as he or she walked us from point to point. We also got a sense of the workforce and the level of teamwork. Most of all, however, we got an orientation that we could match to the financials we had sitting back on our desks. The tour made the numbers for inventory and property, plant and equipment come alive for us.

Today, when we visit a factory, Read more

Intangible Capital is the New Factory

The core of the tangible economy is the factory. Simply put, a factory is a building where production equipment converts raw material into finished goods. Companies make their money by selling these finished goods. The story of the tangible economy is the story of organizing and running these factories.

The modern knowledge business can also be understood as a factory, a place where the knowledge raw materials get put to work. This factory is where you create value for customers and make money. The story of the intangible economy is the story of organizing and running the knowledge factory in combination with physical processes.
Read more

Relationship Capital and the Growing Importance of Partners

When thinking of relationship capital, most people default to customers, who obviously are fundamentally important to your business.

However, relationships with other kinds of partners are growing stronger and more important for the same reasons as those described yesterday for customers: increased outsourcing, increased linking of systems and the need for co-creation and innovation. I’ll talk about partnerships in value creation and those that provide support systems for your organization. Read more

The Two Families of Organizational Assets in a Knowledge-Era Organization

As we begin to broaden our discussion of intangibles, there is a distinction we want to make about the organization of businesses. It is inspired by the Value Chain graphic created by Michael Porter back in 1985. Read more

Next Page »