An Emphasis on Knowledge Workers and Knowledge-Based Companies

Grassroots companies in the IE are different from the more traditional industrial ones according to four main dimensions: the nature of the task they perform, the nature of the asset they provide, the nature of the work force, and the nature of the value creation process itself. Thinking in the IE is shaped by computer technology. The average number of computers per home (including non “high-tech workers) in Silicon Valley is 1.7. One-third of Israeli homes have a computer. And 65% of the Finnish population is online.

The Nature of the Task

Knowledge-intensive tasks have to deal with problem solving and non-standardized operations where creativity is needed. Intellectual processes are emphasized to transform information, as opposed to labor-intensive or capital- intensive operations, to transform raw materials.

The Nature of the Asset

Knowledge-intensive companies mostly rely on individual intelligence and are less dependent on material assets. What is critical is in the minds of employees . For these companies, market value far outstrips conventional assets and rests instead on intellectual capital.

These domains have their rules and one must be admitted into the right networks. This admission depends on personal reputation, competence, and the respect of local customs . You have to be a recognized professional and know how to give as much information as you receive. In these environments, it is assumed that a person is worth what his projects are worth. Professionals who work in Silicon Valley don't have relationships, but references. In regions of strong immigration , nationality networks can also play a role in situations where the risk of isolation exists.

Executives move from high-tech companies into venture capital, professionals teach in the universities, and R&D labs are the grassroots for future entrepreneurs. Many faculty members are also advisors, consultants , and board members . Venture capitalists are often involved in the management of start-ups. At Stanford business school half of the students are directly or indirectly involved in a venture project. The famous institution has incubated numerous successful technologies and companies, among them Silicon Graphics, Sun Microsystems, and Yahoo.

The Nature of the Work force

The workers of the IE have abandoned the idea of a job for life within one organization. They are looking for an employer of choice who will enable them to develop, to meet challenges, and to work with brilliant people on exciting projects ” all while earning a lot of money.

A significant proportion of the personnel in knowledge-based firms have advanced education ( engineers , Ph.D., MS) and a high degree of professionalism through experience. They posses complex, domain-specific expertise that does not readily transfer to other unrelated activities. Workplace demographics have also shifted significantly with the addition of a younger generation that has learned self- reliance . They have a direct style, act as independent problem-solvers, are attracted to a risk-laden environment, and are willing to be more mobile and impulsive regarding career opportunities.

Employees appear far more loyal to innovation than to their employers . Coupled with the absence of a stigma for changing jobs regularly, this attitude often results in rapid turnover of employees.

The Nature of the Value Creation Process

In knowledge-intensive companies, the added value is created directly by individuals, based upon their expertise, creativity, energy, and talent, rather than associated with the organization's routines, organized work processes, size , or volume factors. Innovation or even anti-conformist behavior is highly regarded. The HP commercial shown worldwide depicting a child inventing his own toy, with the voiceover " He could work for us! " was a perfect example of how highly independent thinking is valued.

Hierarchies lose meaning in this context. Many executives (notably in HR) don't have titles on their business cards, where only their name is printed. When they are asked why, they reply in the following way: " If I don't have a title on my business card, it's because my function is not a lasting one. Today, I have an added value for the company as vice president of HR. Tomorrow, I may be most valuable as a simple collaborator, in a project team ."

In addition, proximity within a small and well-defined geographic location enables formal and informal networking and a rapid transmission of information, knowledge, ideas, resources, and technology. This phenomenon is sometimes called the "Internet paradox," to underline the importance of physical location in a virtual medium. ^[1]

Finally, the IE has been characterized by unequalled growth over a very short period. From 1995 to 2000, more than 300,000 jobs were created in Silicon Valley. Almost one-third of all the world's venture capital went to feed its frenzied appetite for development. Nearly 10 new firms were incorporated every day. Even with the financial downturn of 2001 “2002, it seems that high-tech activities will contribute to the long- term economic growth.