The problem with knowledge economy : it does not exist !

Summary : Enterprise 2.0 or social business initiatives aim at crafting organizations that fit what we call the knowledge economy. And that’s quite hard…for one reason. The knowledge economy does not exist. Knowledge work and workers do. Not the economy. What’s missing ? A global environment that would help its blooming, its take-off rather than forcing enterprises to make industrial decisions on matters that are not industrial. Education, law, tax system, accounting has to be rethought from a new angle. In the meantime, anything undertaken by organizations will be bricolage : it will need lots of efforts for marginal or even futile results regarding to the deep transformation challenges that are at stake.

When we talk about new organization or management approach, about the tools that support new ways to communicate or collaborate we often use the knowledge economy as a justification. Moving from an industrial to a knowledge economy means a deep change of context and responses of a new kind from businesses. That’s an obvious fact and none of the current social business or enterprise 2.0 expert has coined anything new : there already was an abundant literacy on these new forms of organization while most of os where still learning writing and counting at school. If we take the technology side apart, any old book from Peter Drucker could be a best seller if published today with the same texts and a socially fashionable title.

So knowledge economy is there and both organizations and people have to deal with it. But what do they do it so slow, with so much reluctance, fears and doubts ? Why can’t we see this draught, this collective march that happened when the world faced its last similar evolution ? The answer is easy : because the knowledge economy does not exist. Not because it’s a dream kept alive buy a few passionate and lunatic people but because it’s not a concrete reality, foundations on which we’ll be able to craft the future.

A field was not enough to craft the agrarian economy. A factory and some steam or electricity did not found the industrial economy. There were organization models designed for the factory. Labor laws evolved to lead the change. Financial mechanisms were set up to make the requires investment possible, what made industrial economy grow. A factory did not made the industrial economy but a set of rules, practices, mechanisms did. They turned a need and an opportunity into reality.

So, what’s about knowledge economy ?

One swallow doesn’t make a summer and a knowledge worker does not make a knowledge economy. Knowledge work exists. Knowledge workers too and they represent each day a bigger part of the working population. They are the resources that may help to build a sustainable growth for the future. But that won’t happen unless some requirements are met.

As a matter of fact, even if the potential exists it’s poorly exploited. First because businesses don’t do everything possible to make the most of it…but that’s an easy pretext. Businesses  also are  looking for sense, for reasons to do things. They don’t find these reasons because they are operating in an environment that did not change that much during the last 50 years. Consequence : they struggle to reinvent their model, to reinvent themselves. Evidence  is those that success, that find the way of a new durable growth, are those who made choices that were both “obvious” regarding to where the world is heading and crazy according to the current environment in which they operate.

What’s missing to craft the appropriate environment ? [Read more...]

Moving toward business models of a new kind : the example of “Danone Supporting Life”

One thing is sure : the “after the crisis world” will be very different from what it was before. It may seem obvious, but if we have a closer look at what happened in the past, we have to admit many upturns consisted of the rebuilding of what used to exist as it was. This time it seems that both economy and society learned things.

• growth is not and endless spiral. Especially if you want it to be strong.

• whoever creates value for onself while destroying value for the others will be impacted by the economical consequences of his behaviors one day or the orther.

• Companies are parts of an ecosystem (customers, suppliers, employess…). If a part of this ecosystem collapses, the company will soon follow because when value is destroyed at its periphery, it destroyes its own potential markets.

• Growing by developping new markets is healthier than using financial lever to balance the fact its current markets are finite.

• People, at the same time employees, clients, and member of the society, now want to fully play their part and judge corporate behaviors according to these lessons.

All this things are worth because management and work models will be impacted by these societal facts and, in the same way, being successful in this new context will imply new internal practices. This teaches us, once again, that the current crisis is not as economic as it may seem.

This can lead to predict the advent of business models of a new kind, close to Umair Haque’s smart Growth Manifesto d’Umair Haque. But many people wonder when it will happen and how it may look like. A first example is coming from France with “Danone Supporting Life”.

[Read more...]

Even in downturns, human capital has to be protected

Because they didn’t have the time (or the will) to make the structural decisions that would help to face a downturn, companies often react by acting on the easiest adjustment variables :

• Cuts in bugets

• investments putt offs

• employees lay offs.

It makes it possible to attend to the most urgent things first even if I think it only defers what’s unavoidable. The focus is on cost and not on revenue, and  costs can’t be endlessly cut except if you want to turn a company into an emplty shell. Any cut expenditure won’t be able to be cut again the next quarter or the next year because it won’t exist anymore.

I’m one on those who think that the goal of any enterprise is to make money and that thinking only in terms of expenses only makes it possible for directors to act like firemen. But it’s easier to cut costs instead of trying to find an innovative way to drive incomes.

Whatever, this kind of policy also have dramatically bad effects for the future.

[Read more...]

CE0 concerns : network driven business models

What are CxOs real concerns ? How do they undertsand current issues ? Lots of people are talking about the need for companies to change in order to evolve in the context that is theirs now but it supposes the “information” has reached the highest decision makers and that they really understand what it’s about if we want things to slowly happen.

It would be very usefull for all the people who are “pushing” ideas and evangelizing to know the gap (if any) between their ideas and what CEOs really think.

Fortunately the work was done by PriceWaterhouseCoopers in its 11th “CEO Survey”, titled : “Compete and Collaborate : What is Success in a Connected World”.

One year after predicting that three main trends will impact enterprises (Globalization, connectivity, communities), PWC follows the same way and focuses on the way business models will evolve and, most of all, on the way to create value with employees but also with competitors. With an underlying question : is building business networks a prerequisite to create value in today’s economy ?

Said in practical terms, companies are torn between two forces : collaboraton and collective actions in the one hand, competition and individualism in the other hand. The whole while considering the impact of a strengthened collaboration on power diffusion and control loss by management.

The report being freely downloadable, I’ll only focus on a few points.

1°) Current context

• New growth levers will be agility, talent and technology

• The downturn will bring many opportunities for mergers.

• An interconnected world is more exposed to risk but also offers much more opportunities

2°) Impact on business models

• Companies say their people are more important than ever but they still don’t translate it in concrete facts.

• Middle and junior management weakness is a real barrier to change

• In order to face this block, companies have to involve employees in the change process, build connected organization, develop people continuously, make people accountable at every level and make change become the norm.

• The HR function will have to work in front line, besides top management in order to drive change and not only being a support.

• Companies know of to collaborate on an opportunistic basis. But they still can’t “industrialize” that and learn from their experience. Opportunistic collaboration does not have to be an exception anymore but an organizational principle.

• Higer productivity will only be reached through new communication technologies, global networks and innovative management.

• Networks that were only use to transfer knowledge in a small perimeter will have to be deployed to deal with wider strategic issues; both internally (employess) and externally (partners,cliens…)

3°) Conclusion

• Growth must be responsible

• Defining the conditions for a long term success with clients is essentials. Short term objectives are not enough anymore.

• To make collaboration efficient, the objectives, the operating modes must be redefined, involving all the stakeholders?

PS : not a word on enterprise 2.0 : the evidence that the work around the concept has ended and the time of implementation has come. Lucky we are, it’s on CEOs agendas !