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Organizational Innovations for Modern Enterprise

6    Knowledge Economics

THE TRUTH: The ability to capture knowledge and share it rapidly is power.

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  Unlike the myth above, this truth offers guidance on what to do with knowledge once you have it, and what this truth counsels is exactly opposite to what the myth implied. You see, both knowledge and power become more valuable when they are put to use and shared throughout the company. When knowledge is jealously guarded from others in an attempt to maintain personal power, the knowledge actually becomes a mental roadblock, locking us into our old ways of thinking and behaving.
 
  By sharing our knowledge with others, we give them the opportunity to add to that knowledge in truly meaningful ways. This improves the quality of the knowledge for all concerned. Make no mistake, this is not just the right thing to do for some abstract reason. It is a major requirement for effective competition in this era of rapid and constant change. When people in organizations treat knowledge as power, they hold on to that knowledge so that they alone may have its power – by making all others less powerful. As a result, the collective enterprise suffers. Information sharing and corporate knowledge transfers are thus, high leverage means unto greater combined power. These are two of the most important keys to long-term business success.
 
  The new way of thinking demands that people in organizations handle knowledge as a tool — which is of course, exactly what it is. Only when this realization is universal, can everyone’s job security increase together, and not at each other’s expense.
 
  Using knowledge effectively in business requires a three dimensional approach that integrates each dimension in a seamless and complementary way. In each dimension, this is carried out by the rapid and complete diffusion of knowledge to others.
 
  The first dimension is how the company uses knowledge to effect continuous process improvement – that is, the constant improvement of how companies create value for customers. (Self Directed Teams) This value is not within the product or service itself, but in how that product or service is created and delivered.
 
  Under the old system, people would hoard their knowledge in an attempt to become or remain an "integral and indispensable component". Factory workers guarded their shop-floor knowledge from supervisors, and middle managers did the same with their higher-ups. As a result, no one had a clear idea of what was going on throughout the entire process. This meant that no one could alter his or her own activities in ways that could better complement what others were doing.
 
  The irony here is that while everyone may have been the model of productivity within their own little sphere of know-how, taken as a whole, the entire process was a disaster of disjointed decisions and unsynchronized activity. To succeed at continuous process improvement, people in organizations must share their knowledge with each other so that everyone gains at least a basic understanding of how their efforts impact people elsewhere in the company. When companies can master this, newfound synergies spring up from dissonance and echoes.
 
  The second dimension is how companies use knowledge in their research and development efforts. For many companies, the effective use of knowledge in R&D efforts has an added urgency. Being the first out with a winning product or service can spell the difference between cornering the market or chasing it. Ensuring that the left hand knows what the right is doing is a critical concern. Often, time to market can lag when costly changes in direction occur partway through the development process.
 
  Dysfunctional flows of information and knowledge can frustrate even the most innovative ideas and valiant efforts. Getting your company’s product or service to market first depends entirely on how quickly and completely knowledge can be shared throughout your company, and perhaps beyond. (Technological Innovation with Cross-Company Teams)
 
  The third dimension regards how companies use knowledge to build customer service excellence. This dimension is part and parcel to the previous two dimensions. However, it is of such great importance, that it deserves separate and specialized attention from top management.
 
  We have all heard the business directive that "the customer is always right". Well, customer service excellence is about proving it – it is about putting your company where your mouth is. Being successful at this critical dimension of organizational knowledge use, is becoming a basic necessity of doing business. It is based on the realization that the company’s reputation is heavily dependent on customer service personnel. These front-line employees must be empowered with both knowledge and the authority to act on that knowledge, without seeking approval from superiors.
 
  Even the best companies receive complaints from customers. What sets these companies above their competition, is the way complaints are handled by front-line employees. These employees must set things right with prompt politeness, assuring displeased customers that their problems are the company’s problems, and that whatever it takes to make them happy will be done.
 
  Out of necessity, these employees must have the authority to act immediately in the customer’s best interest. Getting the customer to prove their case will not help. If they have something to say, by all means listen to them. But remember that the problem is the company’s burden, not the customer’s. The point here is that disgruntled customers will go out of their way to share their grief with anyone who will listen. Customers whose problems were handled to their satisfaction, with every courtesy and all possible speed, will tell a better story.
 
  Because we all make mistakes, you must choose which scenario you prefer for your company and your customers. Luckily, there is a win-win situation. Doing the right thing for our customers is the right thing for our companies as well.
 

 
Real competitive advantage
is found only in those things
that are not easily copied
by your competitors.

 

 
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