Investing in people ? Are you kidding ?

Summary : the knowledge economy rely on people as an efficiency and growth driver. That’s a given. To ensure the competitiveness of businesses in the future, new operating models, frameworks and practices will be needed. That’s understood but not easy to implement. Investing in human and the frameworks that will ensure that the best use will be me made of their skills in the production process is a nonsense, most of all regarding to business and accounting indicators that were designed for other value creation models and lead businesses in the wrong direction. Knowledge accumulation and sharing, collaboration, frameworks based on trust which is essential in this context makes no sense regarding to rules that need change if we want to build a suitable environment that will favor business and employees’ development.

In a previous post, I mentioned that an economy relying on the intensive use of knowledge was, before all, a system relying on accumulation.

– knowledge accumulation : before being reused, knowledge should be shared, so made accessible so be formalized. In other words, if we take the example of an enterprise social platform supporting the way work is done, it will take time before a critical mass of knowledge can be found in the platform to make anyone found a reason to go there to take what they need and even bring their own knowledge.

– trust accumulation : trust is at the center of collaboration frameworks as well as of work models relying on knowledge sharing and exchange. But it can’t be ordered and only come over time, as people interact more and more the one with the other. Trust applies to lots of things : relationships between peers, with one’s manager and subordinates, with the enterprise as a cultural entity, trust in the tools one has to use, trust in the organization and work model. When anyone does not trust one of this elements, the whole system collapses.

– reputation accumulation : reputation is a kind of accelerator for trust because it says a priori that someone is legitimate, skilled, nice to work with, based on peers’ experience, before one starts to investigate to know if one is worth being trusted. It’s not the solution to everything but helps things to start and even accelerates them. But, like reputation, it takes time to build one’s internal reputation on any professional matter.

Let me add one more thing. Such a system also relies on combining. Combining knowledges, expertise and ideas that need to be continuously combined and re-combined to make decisions and solve problems in complex contexts that need a multidisciplinary and transverse approach. Since all these resources are embodied, are stored in people’s brain, it’s also about combining people and their work in an adhoc way, out of static and rigid structures.

Accumulation is nothing new. It was already there in the industrial economy we’re about to leave. It was about the accumulation of tangible capital. The cost for businesses was impressive but they were able to rely on rules that made it easier to follow the economic revolution that was on its way. Amortization with one this rules. Smoothing costs made investment possible. It’s only an accounting trick that made the spending acceptable on the balance sheet, keeping it nice-looking while lot of money was spent to prepare for the future even if the final cost was strictly the same. The only purpose was to make things acceptable without preventing businesses to invest for their future.

That’s the same with combining. When a department buys a machine they won’t use alone, their is a mechanism that makes sharing acceptable : the allocative key. Here again it does not chance anything to the price but makes resource sharing acceptable.

The economy we’re entering, usually called the knowledge economy, needs, to create value, an intensive use of intangible capital made of people, knowledge, relation or social capital that is key to agile and continuously evolving work.

At this point, there is an obvious conclusion : in the current state of things, investing on people and the levers that will make businesses more adapted to the world they’ll operate in is a nonsense. an heresy. The time needed for accumulation is seen as a loss. Helping one’s colleague, sharing knowledge with him, helping him to succeed is seems as a waste of time because local management has nothing to do with the needs of other parts of the company. And time is money. Unconsciously, everyone knows it would be beneficial but indicators tell the contrary so…

That’s not because future benefits do not exist or are not understood. That’s not because it’s impossible. That’s only because when some people will have a look at the columns of numbers that will tell if the businesses succeeded or not, no trick will make the necessary investiment acceptable on a wide scale. The reason is simple : contrary to past times,  othings as been done in order to make what is good and necessary acceptable, not make it like looking out of place on the balance sheet. In the end, the system provided accountants and managers with wrong business indicators that say “alert” when they’re on the right way and “that’s ok” when they’re digging their own grave.

Amon the many interesting things I read in Umair Haque‘s “The New Capitalist Manifesto” was that, generally speaking, our whole economic system relies on a stone edge framework that were designed in a specific context to meet a specific need. As the context and needs were changing, the framework stayed the same. Can we assess, measure and give actions and behaviors a direction to follow in 2011 by relying on concepts dating from the early days of taylorism or, for some, from centuries ?

I think you guess the answer. The consequences have been visible all around us for years. The knowledge economy needs frameworks and tools that fit its context.

The reasons that make it hard to make sense of enterprise 2.0 or social business and align new frameworks with the “real” world are only the consequences, among others, of this incongruity.


Head of People and Business Delivery @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler
Head of People and Business Delivery @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler

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