What you need to know about building a Knowledge Based Organization – The Basics

There has been a lot of talk about the fact that we are now entering the Knowledge Age in American business. Terms like Knowledge Economy, Knowledge Worker and even Knowledge Districts are becoming more common every day. But to date most of those using the terms have been intellectuals, academics and those who deal in emergent industries.

While conversation at that level is important it will have little impact on local or regional economies until it is operationalized. For that to occur those who are currently responsible for growing the economy, i.e. those running existing businesses, must become familiar with, and begin implementing the new concepts, organizational designs and management paradigms this new age is bringing forth.

Until that happens the economic benefits will be few, far between and unsustainable. So, we must do what we can to help one another to embrace the “new normal” and to convert the theoretical into the practical. Otherwise we will all be left behind.

For the past several years I have been working side by side with many forward thinking business people as we work to transform organizational models from those designed for the industrial age into “knowledge based” organizations.

The lessons learned about how to operationalize this predominantly academic conversation into relevant practices in ongoing businesses are becoming clearer, more exciting and more natural every day.

In an effort to shine some light on our discoveries I am listing some of the basic paradigm shifts that I have fond to be fundamental to the conversion of a traditional organization into one that is designed for the 21st century.

Paradigm Shift One – Knowledge Capital Trumps Financial Capital.

Money doesn’t make money anymore than money loses money. It takes people to do both or either.

For instance, if you put a thousand dollars on a table and come back in five years you will still have a thousand dollars. However, if you add intelligent and resourceful humans to the equation when you return those people will have used that money to make more money. But without the actions of the humans and the wise use of their knowledge the money is inert.

And if there was any doubt about the superiority of knowledge capital over financial capital, just think back to the Internet Bubble of 2000. Literally billions of dollars were poured into start ups that were filled with backward hat wearing 20 somethings who were cash rich but knowledge poor. The result of which was the collapse of an industry and one of the largest losses of financial capital in history.

Paradigm Shift Two – Organizations are Knowledge Networks and Org Charts are Liabilities

Org Charts are liabilities to knowledge based organizations because they neither accurately reflect the how the organization operates nor do they allow for the efficient use of the most assets in the organization: communications, work flow and idea flow.

Org charts depict organizations as siloed and linear entities when in actuality every organization is a group of highly active, complex and dynamic “knowledge networks” comprised of people functioning as tribes.

Modern “org charts” look more like tribal network maps and as such the level of increased detail they reveal about the organization can best be described as the difference between an MRI and an X-Ray. One simply shows the skeleton while the other reveals much more relevant information about the subject.

And the more you understand your organization the more you get out of it.

Paradigm Shift Three – Command and Control kills Productivity and Profits

One of the driving forces behind the emergence of the knowledge era, in addition to the rapid proliferation of technology, is the fact that the modern workforce is comprised up of the 3 most independent minded and mobile generations in human history: The Boomers, The X’ers and The Y’ers.

While these generations are very different they do share a few things in common. They do not respond well when overly controlled; they have a lot to offer; they want input on how they do their jobs, they view themselves as equals and they are not afraid to quit if not respected.

Therefore, leadership teams in knowledge based organizations are moving from command and control management to communication and collaboration leadership methods as a way to activate, mine and maximize their knowledge based assets. The difference in productivity this shift creates has a direct impact on bottom line profits. But it has to start at the top to be effective.

Paradigm Shift Four – Everyone is a Teacher, a Learner and a Steward of the Culture

The two most important assets in today’s organization are it’s knowledge capital and its culture. While this may sound a bit “Cumbaya like” for hard core executives the fact is committing to building a learning organization and a healthy culture always drives profits directly to the bottom line.

But being humble enough and disciplined enough to embrace this paradigm shift will be one of the most difficult challenges you and your organization may face. But if you can get it right you will reap generous profits.

You will also gain a powerful competitive advantage that only increases over time as you continuously build, replenish, sustain and master the power of your knowledge networks.

You will then be well on your way to building a highly resilient knowledge based organization that will help you to excel regardless of your industry or field of practice.

The world is a network and so is your organization. Learn it. Feed it. Profit.

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