New Economy:

Institutional Excellence

Knowledge-based Enterprise

Knowledge Management as a Key to Sustainable Competitive Advantage

Business Strategies in Different Economies

By Jim Botkin²

In the information economy (1970 to 1995), the best strategy was to overinvest in crunching power. Competitive advantage accrued to those who invested more than their competitors to process more data and information more quickly.

In the knowledge economy (1995 to date), the best strategy is to invest in connecting power. Competitive advantage accrues to those who invest more than their competitors to connect to more people and share knowledge faster and farther.

In the information economy, Moore's Law was the operating rule. Moore's Law says that the price/performance of computing doubles every eighteen months.

In the knowledge economy, Metcalf's Law is the operative rule. Metcalf's Law holds that the value of a computer is proportional to the square of the number of connections it makes.

Sources of Knowledge

A knowledge-based enterprise derives knowledge from various sources that include:

• Customer knowledge: customer needs, perceptions, and motivations, who to contact, customer buying power, what differentiation strategy and customer services need to be developed to win and retain customers, etc.

• Competitor knowledge: what competitors are selling now and what they are planning to sell in the future, what is their strategic intent, what competitive strategies they use to win in the marketplace.

• Product knowledge: the products in the marketplace, who is buying them and why, what prices they are selling at, and how much money is spent on such products now and may be spent  in future.

• Process knowledge: best practices, technology intelligence and forecasting, systemic innovation, cross-functional synergy opportunities, etc.

• Financial knowledge: capital resources, where and how to acquire venture capital and at what cost, and the integrating in financial practices.

• People knowledge: knowing people and what motivates employees, obtaining feedback, the expertise available, and how to go about finding experts.

Managing Knowledge

While most managers agree that managing knowledge is important, few of the can articulate what the value is or how to become a learning, teaching, or coaching organization. The majority of companies have their knowledge embedded in people and organizations. It is often intuitive, tacit, rather than explicit, and is rarely detailed enough to be especially valuable.

Such knowledge often gets lost when someone leaves the company. "All too often, knowledge exists with multiple points of view instead of the collective best thinking. It is occasional but not integral to the business. And, most important, it is available but not used very much."⁴... More

Managing Knowledge Workers

To lead knowledge workers effectively and unlock their true potential, you need to define:

• What knowledge work professionals do?

• How they do it best?

• What drives them to do it?... More

Managing Knowledge Enterprise...

Managing Creativity...

Idea Management...

Creative Chaos Environment...

Employee Empowerment...

Creating Relentless Growth Attitude...

Organizing Knowledge Communities...

e-Ventures...

Dangerous Attitudes Characterizing Old and New Organizations...

 Case in Point  Dell Computer Corporation...

 Case in Point  British Petroleum...

 Case in Point  Microsoft...

 Case in Point  GE...

 Case in Point  Google...

References:

1. "Vision of the Future", Corporate Leadership Council, Washington, D.C.

2. "Smart Business", Jim Botkin

3. "The Cycle of Leadership", Noel M. Tichy with Nancy Cardwell

4. "The Centerless Corporation", Bruce A.Pasternack and Albert. J. Viscio

5. "SMART Executive," Vadim Kotelnikov

6. "SMART Business Architect," Vadim Kotelnikov

7. "Systemic Innovation," Vadim Kotelnikov

8. "Strategies of Market Leaders," Vadim Kotelnikov

9. "25 Lessons from Jack Welch," Vadim Kotelnikov