The knowledge premium

Objective

As leaders we work in a business world which is increasingly commoditised. The emergence of increasingly sophisticated, but low-cost, manufacturing locations (especially in Asia) means that many goods can be sourced worldwide at competitive costs. In the same way, the emergence of large numbers of well-educated but lower-paid professional staff has driven the growth of lower-cost service centres, for example call centre, finance and legal back-office capabilities in India. This is a process which will continue as new low-cost centres emerge to replace existing ones. As these shifts take place, all organisations have to identify exactly where they contribute added value, and in many cases this can be defined as knowledge:

• of highly-specialised non-commoditisable processes, especially in engineering – e.g. in aircraft and high-speed train manufacture;
• of highly specialised information – and data-rich service processes;
• of technology and how it is changing business comprehensively across all aspects of product/service creation and customer interaction;
• of customers and of their behaviours – e.g. in the mobile world;
• of customer environments and cultures – e.g. HSBC as the ‘world’s local bank’;
• of running businesses smartly in such a fast-changing and internationalised environment.

This can sound remote, perhaps, from the daily grind of running teams and businesses, but it is not. I call knowledge a ‘premium’ precisely because it is that – it’s what will make you succeed above and beyond your competitors.

Your objective as a leader is to ensure that your team knows that knowledge is key. They need to know what they need to know.

Context

Knowledge is a key factor in managing change. Knowing that you need to learn, and that you need to learn increasingly fast, is a clear indicator of the demands, rapidity and complexity of change. Change will manifest itself in a wide variety of ways, some predictable but many not:

• the accelerating capacity of computing processes;
• the rapid emergence of new industry capabilities in so-called emerging markets;
• the huge growth in emerging-market middle classes, notably in India and China;
• significant growth in the availability of complex data ‘on the move’;
• the increasing availability of ‘big data’ about your customers;
• the convergence of traditional computing, telecommunications and media worlds to enable and empower new market entrants capable of delivering paradigm changes.

This is to name but six key shifts, any one of which can – and probably is – radically changing the competitive landscape of your business. To be able to meet the scale of this change requires you to recognise it for what it is – a new industrial revolution.

Challenge

The flipside of change is the challenge of time. The most significant business challenge you face right now is not simply recognising the nature of many major shifts taking place, but in appreciating the scale and pace of change. This requires you to challenge what may be some core and institutionalised assumptions within your industry, marketplace and organisation.

• Who do you regard as competitors? And how often do you ask this question?
• Who are your customers? What do you know about your potential customers? How often do you investigate this?
• How and how often do you measure what customers think of you?
• How long does it take you to get a new product or service to market?
• Do your investment models adequately reflect current forecasts of product and service life cycles?
• How often do you change your organisation structures to meet the demands of the business environment?

It is tough, but you have to play your role in creating and sustaining a culture that is never satisfied with where it is, that is restless about the change it faces and the changes it needs to make in and of itself, and that is constantly challenging the status quo.

The driver to achieve this is knowledge – a relentless upskilling in understanding the business environment and your capability to respond to it, and placing the highest level of value in the knowledge that your team possesses individually and collectively.

Success

Some organisations now have a chief knowledge officer. For your specific organisation, business unit or team this is the mantle you should adopt – the relentless champion of knowing, always underpinned by the humble acceptance that your team will know more than you in specialist areas. Setting considerable store on knowledge, showing that it matters, requires attention to several areas.

• Leadership – you talk about knowledge and its importance.
• A learning culture – across all domains of your business area you openly encourage team members to learn from experience (and yes, mistakes) and never to accept the ‘rightness’ of the status quo.
• Sharing learning – many organisations that are multi-business unit or multi-divisional have similar operational functions where people are also learning. Encourage your staff to network with them to make the most of the teachers on their doorstep.
• Bringing learning in – encourage your staff to be open with their suppliers about the need to learn, and create forums where experiences can be shared so that the learning network is extended outside your immediate employer.
• Personal development linked to learning – make sure that for your business as a whole, and for the individuals in it, you identify (at least annually) key areas where each team member needs to learn. Then support the personal development and training initiatives to support it.
• Celebrations of success and admissions of failure – within your organisation, and publicly so, herald success and be transparent about failure so there is never embarrassment about talking through either, and learn in equal measure from both.
• Pushing the boundaries – in your personal interactions with staff, try to push them to where they might be hesitant to go in learning new skills and trying out new ideas. Sometimes people need a push to follow their instincts and feel the need for support in being brave.
• Humility and respect – above all else, knowledge needs humility and respect to flourish. Bring humility in knowing that you don’t have many of the answers, and gain the respect that comes with recognising that others do.

Creating a knowledge culture is hard – it requires a constant rejection of the present for the unknown future and is at once, therefore, exciting and unsettling.

Pitfalls

The worst position an organisation can reach is to have a knowledge deficit – where it is significantly lacking the insight it needs to develop in its chosen market. This can arise because:

• learning is neglected – there is no open admission or acceptance that learning needs to occur;
• learning is equated with risk – this happens when the ‘new’ (the ‘learned’) is seen as being risky through its very ‘newness’, and the need to learn is confused with decisions that need to be made about the learning, so the learning is suspended;
• learning is compartmentalised – learning takes place but is ‘silo’d’ and becomes devalued or lost through isolation;
• learning is slow – learning does take place but it is simply too slow for the pace of the marketplace it relates to, and so remains (relatively) negative in its impact;
• learning is not respected – the organisation does not herald the power of learning and therefore devalues its relevance and currency.

All this risks creating an ‘unlearning’ organisation which actually learns less about its marketplace as time goes on, loses market share and ultimately its existence.

Leaders’ checklist

• Think of yourself as the chief knowledge officer.
• Be aware that much of what a business thinks it knows about its world and marketplace is already out-of-date.
• Be further aware, therefore, that most of what you need to know is currently unknown.
• Remember that knowledge is not hierarchical – you need all your team to be experts in their field.
• Never forget that knowledge respects no boundaries – it is there for the taking, especially by new competitors.
• Display humility about what you don’t know and respect for others about what they do.