Row Two: The Business Owner s View
Row Two: The Business Owner's View Times Change...In the modern enterprise, the business owner is usually concerned with five specific relationships:
The relative weight of these relationships changed dramatically in the second half of the twentieth century. In the past, only certain departments dealt with customers and vendors. The dominant relationship for most people was with the boss, with the relationship to subordinates coming in a close second. Immediate colleagues were part of the employee's world, but these were relatively few. Most communication was up and down the chain of command. Education about one's specialty and one's industry was via books and university courses outside the company. This picture has now changed. Thanks to the wonders of modern communication, each employee is in direct contact not only with many more fellow employees , but also with colleagues outside the company who are specialists in the same fields or participants in the same industry. Moreover, decisions do not always have to be made by going up and down the organization chart. Decisions instead are now often based on collaborations among people from what used to be disparate organizational units. Now many specialties are pursued by organic groups of people from many enterprises all over the world, who, on a daily basis, exchange ideas electronically about the best ways to do things. Most significantly, nearly everyone has some direct involvement with clients , customers, and vendorsor at least has the facility to do so. Probably the most important relationship of all has become that of every employee to the company's customers. A Very Short History of the WorldTo put this cell of the Architecture Framework (the business view of people and organizations) into perspective, it is important to understand the remarkable place at which we stand in human history. That history is, of course, far more complex than can be described in a few pages here, but a few points are worth noting. Before the nineteenth century, people worked primarily on farms or as single artisans producing products one at a time. Wealth was measured in acreage of land. This period, which lasted for millennia, is often called the agricultural age . Early in the nineteenth century, things changed dramatically. Now people began to work in factories, producing hundreds or thousands of copies of the same product at once. Instructions were passed down an organizational hierarchy, and performance monitoring was passed up the hierarchy. The nineteenth and the first half of the twentieth century have been called the industrial age . The driver of this new economy changed from land to capital. Where before, wealth was determined by an aristocrat's land holdings, now anyone could produce wealth with a factory, if one could accumulate enough capital to build it. [1] The people who worked in these factories simply carried out the owner's instructions for making wealth. Where before, serfs did the labor that created the wealth from the land, now factory workers played the same role, creating wealth from capital.
In response to all this, Karl Marx, Charles Dickens, and others wrote of people's alienation when they worked simply as appendages to machinery. People didn't own the equipment they used. They were interchangeable. The jobs were narrow and offered no intrinsic satisfaction. Divisions grew up between owners and management on the one hand, who wanted the most output for the least money, and labor on the other, who wanted at least a living wage and respect for their efforts. In spite of these conflicts, because of the nature of the work to be done, this remained the most economically attractive alternative well into the twentieth century, at least in the west. The Soviet Union tried to change the premises in 1917, and while the factories were then owned by the State instead of by private capitalists, and some attempts were made to provide for the general welfare, the underlying dynamic was no different. The economies were different, but the economics didn't change, and the work was still alienating. Eighty-four years later, the experiment was abandoned . In the second half of the twentieth century things changed again. Suddenly information and knowledge became more important than physical capital. A company that is smarter in getting the most use out of a physical device will be more successful than one that is not. Marx's observations are no longer relevant, at least in the developed world, because the relationships between labor and capital have fundamentally changed. We each own our own knowledge, and this knowledge turns out to be the company's most important asset. [2]
For this reason, the age we are now in the information age . There are those who would call it the knowledge age . Actually, as Jonas Ridderstrle and Kjell Nordstrm asserted, Marx, Ho Chi Minh, Lenin, and Chairman Mao Zedong were all right . "They were right because they subscribed to the Marxist view that the workers should own the major assets of society, the critical means of production. We now do. And, perhaps, we did all along but we just didn't have the insight to realize it" [Ridderstrle and Nordstrm, 2000, p. 17]. While factories certainly have not gone away, fewer people work there, and even working there has changed. Much less of the work is done with unskilled labor. More of the work in manufacturing, for example, requires technical (knowledge- related ) skills. Now the worker chooses what to work on and how to go about it. Because the company is dependent upon the worker's knowledge, it must permit this to happen. It is in the nature of knowledge that it is communal, so people are no longer working on isolated tasks . The working environment is becoming clusters of people who share an area of interest or an objective. Most significantly, their motivation is now in the work itself, not just the benefits bestowed by the corporation. We own the means of production because those means are in our own heads. The physical capital on the balance sheet is no longer as important as the collective knowledge of the enterprise. The management of knowledge itself has become the primary focus of progressive companies today. Thomas Stewart, in his 1997 book by that name , lists three kinds of "intellectual capital":
Each of these is critical to a modern company's operation, but none of them show up in its chart of accounts. Human CapitalA company often has much more knowledge and expertise than it realizes. Many companies are very poor at exploiting the knowledge they have. Traditional corporate organization has often prevented companies from gaining full benefit of employees' expertise. Many companies hold thousands of patents that they don't even know they own. Microsoft is one of the most successful companies of all time, yet it produces virtually no physical product and has relatively little physical capital. True, it does deliver physical media, such as compact disks, but customers are not buying the media. They are buying the knowledge that is encoded on the media. Consider the microchip in your computer: The value of all the chips produced in a year exceeds the value of all steel produced in the same period [Stewart, 1997, p. 13]. [3] The value is not in the material, of course: it is in the design of the chip and in the design of the complex machines that make it. The value is in the knowledge required to build them.
Even companies that sell physical products, such as automobiles, have had to radically increase the intellectual content of their products. To compete , a car must now be more sophisticated, economizing on weight, cleverly getting the engine not to emit harmful gases, and providing just the right "feel". All these things come from the auto maker's investment in knowledge and expertise, not from its investment in steel and rubber. In 1998, The Berkshire Hathaway Company's net worth was $57.4 billion, the largest of any American corporation. The company sells insurance and other financial instruments, plus shoes, jewelry , other manufactured products, and ice cream. The company's market value, however, was only one-third that of knowledge companies Microsoft and General Electric [Berkshire Hathaway, 1998, p. 4]. Structural CapitalThe second component of intellectual capital for an enterprise is the technical infrastructure that makes a company's knowledge accessible. This includes everything from the Internetfor sharing ideas and thoughts on various subjectsto data warehouses that publish the operational data for a company. Success in accumulating structural capital directly affects an enterprise's success in the marketplace . Wal-Mart, for example, has revolutionized the retailing business by building what may be the world's most sophisticated information systems to support it. The company became the nation's largest corporation (in sales) in 2002, while during the same year its nearest competitor, K-Mart, declared bankruptcy. Customer CapitalIn the days of smokestack capitalism , the economy consisted of factories producing thousands of copies of the same thing. Marketing consisted of persuading lots of people that the thing was exactly what they wanted. The customer was at the mercy of the producer. Now, the balance of power is devolving onto the customer. Customer relations is turning out to be the "hot button" of modern business. Customers expect custom-made products. (Land's End just published an ad for swimsuits that are cut precisely for your shape.) This means that the company's relationship to the customerits ability to understand clearly what the customer wantsis critical. Companies that have established such relationships are worth a great deal more than companies that have not. Requirements for Knowledge ManagementSo, what does all this mean to those of us who build systems? Knowledge management can be divided into two areas. Natural knowledge management is concerned with the way people learn and communicate with each other directly. In the past it has not been concerned with technology, but this is slowly changing. Artificial knowledge management is all about information processing using technological tools. This is the current concern of our operational systems and our data warehouses. While we in the information industry have traditionally focused on artificial knowledge management, natural knowledge management is important too, and our success from now on will be measured in terms of our ability to manage both. As we provide tools to support knowledge management, we must keep in mind these things:
The New Workplace and Knowledge ManagementThe study of knowledge is both very old and very new. Philosophers have been writing about it for millennia. But attention to the relationship of knowledge to the structure of the workplace is relatively new. Most of what has been written about this topic has been published since 1990. The changes described in this chapter have had a profound effect on the nature of the workplace. The traditional model of an enterprise has always been its organization chart. This has sometimes been a reflection of the structure of the work that the enterprise does, but not always. The boss wanted something and transmitted instructions to the employees. Their messages were then returned to the boss, describing how successful they had been in carrying out the instructions. The definition of work ultimately came from the boss. The worker contributed very little to the definition of the task. For factory workers carrying out well-defined tasks this worked reasonably well. The boss described the tasks and the employees carried them out. [4]
Where the tasks are intellectual, however, the hierarchical approach doesn't work at all. As "knowledge workers", many of us no longer work for a "boss" who simply tells us what to do and makes sure that we do it to a specification. The boss may describe an objective, but the employee is now responsible for understanding the objective, plus the business environment, available technology, constraints, and the impact of various options on achieving that objective. The boss cannot possibly know all that is involved and is dependent on the worker's knowledge and skill. Many of us have become " consultants " (even within our own companies), hired to assist "clients", using our expertise and knowledge. The worker is now in the position not only of assisting the client in achieving objectives, but also of telling the client whether the objective is reasonable in the first place and, if it is not, recommending alternative objectives. Instead of focusing on the politics of keeping various bosses happy, our entire transaction with the client now comes down to whether or not we are providing a useful service. Not only is the client free to let us go if we are not being useful, but we probably want to go if the environment is not one where we can be productive. This is a much happier arrangement than we have known in the corporate world, where we always had to be alert to making the right people happy, in ways that often had nothing to do with our skills or abilitiesor the job at hand, for that matter. Our motivation is no longer security and money. [5] We work on projects because they stimulate our imagination and intellect. We will work for a company as long as it provides interesting and meaningful projects. When it stops doing so, we will go somewhere else.
This has a profound effect on how companies are managed. Suddenly managers must be alert to the dynamics of their departments in ways they never were before. This has not been easy. For years, employees at a Canadian software company lobbied management to revamp their products to make them more integrated, more reliable, more robust, and more effective. Their pleas fell on deaf ears, but at one point the company published a brochure, falsely claiming that the products had exactly the qualities the employees were trying to promote. Management's intransigence , along with its lack of understanding of what the employees were trying to do, caused 20 of the company's 25 employees to quit. Twelve of them created a competing company. On a happier note, one company has launched a four-year plan and has organized its personnel entirely around it. It is a matrix, where the rows are groups of projects and the columns are areas of expertise. There are three columns that are the basis for maintaining quality work: Applications, Data, and Technology. The rows address such project areas as "People and Organizations", "Physical Assets", "Finance", and so forth. The people, then, all work at the intersection of a row and a column. The idea is that each person is supposed to be working toward implementation of one or more projects as expeditiously as possible. But each also has the obligation to do quality work, as defined by the column involved. Data people are obligated, for example, to follow the best practices in industry in organizing and acquiring quality dataeven if it may affect the project plan. This is one example. Other companies have different kinds of matrix organizations (or hierarchical ones) as well. Thomas Stewart describes the opinion of Frank Walker, president of GTW Corp., that in the years to come there will ultimately be only four types of career:
The fact of the matter is that the business owner's view is of a world that is changing under our feet at an astounding rate. This affects our personal lives, how we relate to our work, and how our employers relate to us. We have incredible new opportunities for creativity and self-discovery, but it comes at the cost of an overwhelming amount of uncertainty and chaos. Companies must deal with this, and we must deal with it as individuals. Is there anything out there that can help us come to terms with all this change? As it happens, there may be....  |
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