Saturday, April 25, 2009

Boiling frogs, or is the world restructuring around Knowledge

I have been unable to blog this past few weeks, as I have been totally preoccupied with updating my KM 2009 seminar and workshop materials.

During the KM seminar update,I once again considered the annual report from the World Bank Institute 'Measuring Knowledge in the World's Economies'. The report considers, for each country, the application of knowledge, as manifested in entrepreneurship and innovation, research and development, and software and product design, as one of the key sources of growth in the global economy. It also states that many developing countries fail to tap the vast stock of global knowledge and apply it to their needs, but they can build their strengths and can capitalize on the knowledge revolution.

Countries such as Finland, Korea, Ireland, Malaysia, Singapore, Chile and more recently, China and India illustrate the rapid progress that can be made.

Then I started thinking again, more deeply, about the way that work around the world is increasingly being organized far more around the knowledge, as an end in itself, and not just the product or service provided.

For example, General Motors do not employ people any more, directly, to manufacture a single car. They employ people to develop and apply GMs 'knowledge' about design, marketing, manufacturing, distribution, service etc. The manufacturing is outsourced and the profits are to be made in applying their knowledge. Shell International tell the same story. Once they said their core business was oil exploration, oil refining and distribution. Now they tell us that they have the best 'knowledge' of oil exploration, refining and distribution and are organizing themselves around the value that this knowledge provides. Airbus Industries have said that they can make more money licensing their knowledge on aerospace to China, for example, than actually building aircraft.

It didn't take long for Accounting Firms to realize the higher value and profitability in offering financial and management consulting services through effective knowledge management.

Banks are far more interested today in high value added knowledge financial services than making money to keep your money safe (that is - unscrupulous traders and dealing, and lack of applying knowledgeable regulatory best practice, aside).

It seems very clear, and very obvious to me that the world's major industries and institutions have all realized that there is more money to be made from restructuring around the highest knowledge available (the best recipe)and outsourcing the lower value core activities elsewhere.

I am so reminded of 'the boiling frog' syndrome that I learned twenty years ago from Professor Charles Handy, London Business School, and I guess that it is this that has compelled me to write this blog today.

Charles Handy taught me that it is a fact that you can put a frog in a saucepan of cold water and slowly heat it up. The frog will continually adapt to the increasing heat and, eventually, die in the pot of very hot water. On the other hand, if you first heat a pot of water to, say, less than the temperature that will kill the frog, and if you drop a frog in it, the frog will immediately leap out of the water.

We all seem to be boiling frogs around the world. For several years we have had the increasing climate change to boil in. We are boiling in world pollution and so on.

But my point today, is that we are experiencing an unprecedented and exponential increase in information and knowledge around the world, and we are restructuring our businesses and our institutions and our daily work more and more around knowledge. Furthermore, the World Wide Web is fundamentally and radically restructuring our businesses around higher knowledge and better ways to create and apply knowledge.

This major change in redesigning our work around knowledge, major growth, and major disruption, will undoubtedly bring massive new global opportunities for entrepreneurship and innovation, growth and profitability, on the one hand, and certain death to those businesses who sit as boiling frogs and do not see the change taking place.

Too many politicians are boiling frogs too, and are still talking about fixing things, back to the way they were, as opposed to recognizing the global restructuring around knowledge that is taking place day by day.

Let's not be boiling frogs but, instead, let's leap into this new paradigm of one highly interconnected global knowledge economy.

What do you think?

Ron Young

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