Becoming a Knowledge Firm

Transcription

1 Ron Baker, Founder VeraSage Institute Becoming a Knowledge Firm

2 Peter Drucker We know that the source of wealth is something specifically human: knowledge. If we apply knowledge to tasks that we already know how to do, we call it productivity. If we apply knowledge to tasks that are new and different, we call it innovation. Only knowledge allows us to achieve these two goals.

3 Thomas Sowell, Knowledge and Decisions, 1996 After all, the caveman had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today.

4 The World Bank: 2006 and 2010

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7 Distinction with a Difference Data: Factual info, no judgment, interpretation, context. Knows nothing of own importance. Phone # Information: Data endowed with relevance + purpose. Yellow Pages Knowledge: Info + comparison; consequences; connections, conversation Wisdom: Experience, synthesis, judgment

8 Rival vs. Nonrival Rival Asset: Exclusive, only one can use at a time, subject to diminishing returns and depletion Nonrival asset: Nonexclusive, no limit to use, grows as it spreads

9 Expanding Knowledge Intellectual Capital: Knowledge that can be converted into profits. It s not a process (KM), it s an entity.

10 Three Types of Intellectual Capital Human Capital: Resides in people; volunteers; cannot be owned by firm; 80% of firm s wealth-creating capacity. Structural Capital: Everything left in firm once HC goes home databases, customer lists, procedures, technology, strategy, IP, etc. It s owned by the firm. Social Capital: Customers, suppliers, vendors, networks, referral sources, alumni, reputation, associations, social media, etc. Not owned by the firm.

11 It s the interdependence and Interplay of all three that creates wealth There s also Negative IC, including obsolete or outdated knowledge: Thiefs, Marxism, etc.

12 If HP knew what HP knows, we would be three times as profitable. Lew Platt, Former CEO, HP

13 We Know More Than We Can Tell Explicit Knowledge: Static--books, whitepapers, manual, video, picture, forms, low bandwidth, etc. Tacit Knowledge: Latin, silent or secret. Sticky, high bandwidth, not easily articulated, map vs. journey, playing golf with Tiger rather than reading his (explicit) book.

14 Four Modes of Knowledge Conversion From tacit knowledge to tacit knowledge, socialization From tacit to explicit, externalization From explicit to explicit, combination From explicit to tacit, or internalization

15 Four Practices of Knowledge Conversion Storytelling Mentoring, Coaching, Shadowing Communities of practice After Action Review: See AAR Agenda

16 Human Capital, Not Cattle

17 How Knowledge Workers are Unique They own the means of production Firms need them more than they need firms balance has shifted KWs have unique value, not jobs Office is their servant, not their master Effectiveness is far more important than efficiency Judgments are more important than measurements Ultimately, they are volunteers

18 3 ways to allocate our time 1. Nonmarket time 2. Investment time 3. Labor market time Gary S. Becker, Nobel-Prize winning economist, Human Capital

19 Knowledge-Worker Effectiveness Peter Drucker What is the task? (Definition, delegation, deadline) Autonomy (Greek for self-governance ) Continuing innovation Continuous learning and teaching Quality more important as quantity Treated as Human Capital Investors (volunteers)

20 Henry Ford, My Life and Work, 1923 Factory organization is not a device to prevent the expansion of ability, but a device to reduce the waste and losses due to mediocrity. It is not a device to hinder the ambitious, clear-headed man from doing his best, but a device to prevent the don t-care sort of individual from doing his worst.

21 Peter Drucker What made the traditional workforce productive was the system Henry Ford s assembly line, etc. The system embodies the knowledge. The system is productive because it enables individual workers to perform without much knowledge or skill In a knowledge-based organization it is the individual worker s productivity that makes the system productive.

22 Steve Jobs Apple It doesn t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.

23 Knowledge Worker KPIs Marginal Contribution to Firm Revenue/Value Customer Feedback Interpersonal skills Effective Listening Skills Effective Communication Skills

24 Knowledge Worker KPIs Continuous Learning & Coaching Skills Effective Delegator Ability to Deal with Change

25 Knowledge Worker KPIs Number of Customer Contacts/Week Pride/Professionalism Passion HSDs

26 Peter Drucker s Orchestra What critical things should the firm start doing? Why do you work here? Commitment to excellence and what I do makes a difference Does the firm deserve your loyalty?

27 Leveraging Social Capital

28 The Value Curve The real voyage of discovery consists not in seeing new landscapes but in having new eyes - Marcel Proust 10 High Unique Services Price- Insensitive Experiential Services Relative Value Added Brand Name Services Price- Sensitive Low Commodity Services Volume of Work Available William C. Cobb SOURCE: Adapted from William C. Cobb, "The Value Curve and the Folly of the Billing-Rate Pricing," in Beyond the Billable Hour: An Anthology of Alternative Billing Methods Richard C. Reed, ed. Chicago: American Bar Association, 1989, p 18.

29 The Relationship Curve High Understanding Pricing High Customer Loyalty Relative Knowledge Concierge Ability Awareness Low Familiarity Low Volume of Relationships

30 Power of a Network Personal Firm Customers Referral/ Social

31 Concierge Curve High Concierge Probability of Customer Loyalty Advisor Hired Gun Low Technician Low 99% Analysis Level of Personal and Professional Satisfaction Level of Analysis vs. Synthesis Provided High 99% Synthesis

32 Consulting Probability Customer s Willingness Low High Low CPA s Selfesteem High Technician Advisor Hired Gun Concierge

33 From PSF to PKF

34 The Firm of the Past Revenue = People x Efficiency x Hours Hourly Rate We sell time

35 Can You Risk a Business Model Developed in 1919?? Reginald Heber Smith, father of the billable hour and timesheet, 1919

36 The Firm of the Future Profit = Intellectual x Effectiveness x Capital Value Price Our customers buy intellectual capital

37 If you just copy, you will always be behind. At least 84% of us are copying, not innovating.

38 Don t solve problems; pursue opportunities. Peter Drucker

39 Thank You! VeraSage website/blog (707)

40 The Five Most Important Questions 1. What is our purpose ( Why )? 2. Who is our customer? 3. What does the customer value? (Most important and least asked) 4. What are our results? 5. What is our plan?