Knowledge work is the traditional foundation of the modern business. But, as it becomes a commodity delivered at ever-decreasing costs, what does that mean for the future of business?
In the knowledge economy, the business was typically considered “a machine.” Companies perform a certain function, so they’re designed and built specifically for it. This works well in a stable environment. But over time, things change. The company grows. New systems are needed. Demand changes. Customers want different products and services. And the business needs to be redesigned and rebuilt to serve new functions.
Rebuilding an organization goes by many names: reorganization, reengineering, right-sizing, flattening, and so on. Unfortunately, no matter what you call it, such initiatives are not complementary to the nature of a machine. Machines remain static; however, companies must grow. This conflict causes all sorts of problems because you have to constantly redesign and rebuild the company while operating it.
Ironically, the process of improving efficiency is often inefficient. And the faster things change, the more of a problem this becomes. Companies are not machines; they are complex, dynamic, growing systems. After all, companies are really just groups of people who have banded together to achieve some kind of purpose.
Although a machine does whatever it was designed to do, organisms control themselves. An organism’s purpose does not come from an outside designer or controller, but from within. An organism strives over time to realize its goals in the world. As conditions in the environment change, an organism responds by adjusting its behavior to improve its performance. In other words, it learns.
For many years, the “machine” mindset has prevailed. As a result, many companies are designed as information-processing and production machines – which are paragons of the knowledge economy. But information processing is not learning. Production is not learning. Learning is a creative process, not a mechanical one.
Inherent in the mechanical viewpoint, all knowledge is explicit and can be represented in manuals, documentation, and quantitative metrics. This is a behaviorist concept that harkens back to Frederick Taylor, the father of scientific management. His theory of management is based on measuring and analyzing work with the idea of reorganizing it to make it more efficient. Scientific management is focused on defining and measuring work in the form of words, charts, and numbers. In other words, what can be seen and recorded is the only thing that matters.
Hyperconnectivity is an assault on stable environments, which has been the foundation of running a business in the knowledge economy. The pace of change in the business world is accelerating to unprecedented speeds.
For example, a retailer can engage with customers in the moment in a personalized one-to-one online relationship that is immediately known to a sales associate who helps the customer in a brick-and-mortar store. In another instance, employees build scenarios for the latest marketing campaigns that draw on real-time company data intermingled with live social network feeds.
We are now living in a new reality where data can come from anywhere at any time in the new hyperconnected enterprise. The modern business needs to exchange data with its environment at unheard-of speeds.
For more on the digital economy and its impact, check out the research paper “Live Business: The Digitization of Everything” on the Digitalist Magazine online.
Dinesh Sharma is vice president of Marketing for Internet of Things at SAP.