Knowledge Economy – fact or fad?

This is shame and also dangerous be-
cause the risk is that it will be reduced to the same level as long succession of management fads that we have experienced over the last 50 years. It’s far too important for that.
Knowledge economies are reality. They are new economic order in the world. Undoubtedly driven by the rapid technological advances that first brought us the information and now the knowledge era, the result is one of the biggest changes in the history of mankind. The last change of significance, the industrial revolution, took 100 years and spread in an orderly fashion from Europe. By contrast the knowledge revolution is occurring almost simultaneously across the world and in fraction of the time. It has been described as uncontrollable.
I suspect that the real meaning of knowledge economy isn’t fully understood.

Know-how for knowledge
Perhaps the word ‘knowledge’ leads to the misunderstanding. Since knowledge is commonly used to describe what people know, the knowledge economy is immediately translated into an education issue. Of course education is essential but it is only one part of the whole picture. Throwing money, for example, at producing more PhDs is not going to move New Zealand to knowledge economy.
A knowledge economy is much more. Whether it’s at the company or country level there’s whole bunch of other intangible assets that go with knowledge. Our relationships with trading partners, customers and suppliers, distribution networks, our intellectual property, patents, our image and the uniqueness of the way we do things are all elements of knowledge economy. The sum of all of these intangible assets represents our intellectual capital. Becoming knowledge economy means we have to integrate and leverage our total intellectual capital.
One of the characteristics of intangible assets, apart from the fact that it is difficult to put financial value on them, is that it is very easy to constrain or destroy them. If structure, governance and management processes are not properly aligned to support knowledge culture, any investment in building intellectual capital will be largely wasted.
There is no single or simple model to be followed. To make the shift from what we have been, that is from being driven largely by commodity mentality, to knowledge economy will require new pattern of thinking and the integration of many different strategies and practices — in both commercial and public sector organisations.

First we have to create knowledge
The starting point for knowledge creation is the formal education system. We have to take it for granted that there is system in place to deliver base knowledge. This could be described as the taxpayers’ contribution to the economy.
But creation of the knowledge in ‘knowledge economy’ is much more. Enterprises need to build specific knowledge in order to generate wealth. This will be knowledge that is adapted to that organisation, the means by which it differentiates itself from others — its competitive edge. Equally though the enterprise must know how to apply this knowledge to devise solutions for its customers. These two activities are inseparable if value is to be added.

Choose your partner
What we now need is new partnership between academia and the community; one that supports ongoing learning of the individual but delivered in new ways. It’s fashionable to talk about university/business partnerships.
At business level, learning is not luxury, it is undertaken so that an individual can fulfil need, usually within an organisation. Both have stake in the outcome. This calls for change in the nature and contribution of all partners to the relationship.
The notion of life long learning is move in the right direction but it must become much more tailored — learning that is in direct response to actual needs in real time.
The good news is that we now have the technology to do this. The bad news is that without virtual revolution in the academic sector, overcoming the inertia to make it happen will be very difficult.

Global learning for managers
The global economy is bringing with it global learning. National educational institutions are losing their mortgage on the role of learning providers. particular example of that is manager education. Managers now have access literally to world of knowledge. The question asked is why would they choose to sit in local class when, via technology, an international guru can guide them personally. We can now begin to contemplate the kinds of customised learning until recently impossible. Global learning is here whether New Zealand institutions or organisations are ready or not.
Formal knowledge is only one part of the equation. In becoming knowledge economy we mustn’t overlook the fact that many other intangible assets are important as well. These must also be built. Relationships with other organisations, our intellectual property and our image are key elements that must be created and managed. As country and individual organisations we must put in place processes to ensure this happens.

Leveraging knowledge
The crux of creating wealth in knowledge economy is leveraging or applying the knowledge. That is doing something with it that results in product or service that someone else actually wants. Amassing knowledge for its own sake might be intellectually stimulating but unfortunately the reality is that unless at some point it is converted to something for which customer is prepared to pay, it’s not of much use.
Using knowledge as core resource for value adding opens up new paradigms. For example, it is no longer necessary to own physical assets, the only requirement is having access to and the right to use them. The skills of innovation and research take on new importance. For managers, the ability to think and learn becomes more critical than being the current expert. Managers are no longer the authority. Leveraging things that are not completely owned calls for different skill sets.
If leveraging knowledge is crucial aspect of the new era we should ask the questions, how and where do we align the development of our future managers to these new paradigms? Who is doing it?

Managing knowledge
A third area and one that has been most neglected in the whole debate on the shift to knowledge economies is the critical need to support the move by effective management.
No amount of money directed at education, no amount of effort spent in building up intellectual capital is going to be of use unless the environment in which people work allows it to be converted into value.
An organisation would be foolhardy if it didn’t have plan to protect its major assets. But what if these major assets are knowledge and other intangibles? In practice there should be no difference.

We need to ask:
• Do we know what knowledge we have and, what we need to achieve our vision?
• Do we know how and where we’ll acquire or develop the knowledge needed?
• Is our organisation’s structure, usually based on control/command, the right one for knowledge environment?
• Does our culture encourage people to share what they know?
• Does our reward system reinforce the importance of applying knowledge?
• Does our management and governance process allow innovation?
This list is not comprehensive, there are many other questions that can and should be asked. The responses will highlight the significant task ahead.

Change or die
Managers must realise that business as usual is not an option for the future. It really is question of change or die. For companies it could be classic case of here today, gone tomorrow.
I began by talking about the need to integrate many different events and practices if we are to build knowledge economy and I have outlined some of the issues. To go with these we must generate change of mindset in those people who make and influence decisions — in all sectors and levels of the economy. We should not underestimate th

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