The Key To Competitive Advantage
I am taking the title from Peter Drucker’s 2002 book “Managing In the Next Society“. Why would I be reading a 2002 book now? Well, I am probably only starting to understand Peter Drucker’s predictions now. His foresight into the Next Society is only now starting to hit home with me. The Next Society is almost here and I start to recognise the signs. So what is it all about and how does it apply to business process and performance management?
The book is divided into four sections and covers his views on:
- The Information Society;
- Business Opportunities;
- The Changing World Economy; and
- The Next Society.
Drucker sees the Next Society different to the New Economy. (More on that in a later post) To him the Next Society is a knowledge society. “Knowledge will be its key resource, and knowledge workers will be the dominant group in its workforce”. The main characteristics of this Next Society will be :
- Borderlessness, because knowledge travels even more effortlessly than money. (I think the information freedom that the Internet brought accelerated this trend);
- Upward mobility, available to everyone through easily acquired formal education (I think that informal education through the Internet may have surpassed the formal mediums); and
- The potential for failure as well as success. The fact that you can acquire the knowledge doesn’t automatically leads to successful outcomes, according to Drucker.
He also states that IT is an enabler that helps information spread near instantly and makes it accessible to anyone. This now results in organisations that need to be globally competitive while still operating in local markets. Just think of the local bookstore that needs to compete with the prices on Amazon.
So how does this Next Society impact our organisation’s competitive advantage? What has it got to do with my business processes and how they work in my organisation? According to Drucker the success and survival of every business will depend on the performance of its knowledge workforce. He makes an observation that it is impossible, according to the law of statistics, for any but the “smallest” organisation to have “better people” and the only way an organisation can excel in this knowledge economy is to manage its knowledge workers for greater productivity. So how is that different to the “old economy”?
Well, what made the traditional workforce productive was the system. The factory style, assembly-line “system” was popularised by Taylor and followed by Henry Ford and Demming. The system embodied the knowledge, or the knowledge was “built into the system”. It is the reason why McDonalds can run a fast-food restaurant with a bunch of fifteen year olds. Drucker’s view is that the system is productive because it enables individual workers to perform without much knowledge and skill. According to him, greater skill on the side of an individual worker is a threat to co-workers and the entire system. It is also the way that we design and implement business processes today. We automate “the system” and leave little or no room for workers to deviate from this. It enforces repeatable, consistent and measureable output. But we leave no room for individual contribution.
In knowledge-based organisations it is the individual worker’s productivity that makes the system productive. In a traditional workforce the worker serves the system and in a knowledge workforce the system must serve the worker, according to Drucker. This means that we have to change the productivity tools that we use for the Next Society. It means that the way we designed, implemented, automated and measured organisational processes must change. Processes can’t be as prescriptive and restrictive as what we’ve done in the past. It needs to support the productivity objectives of a knowledge worker and it needs to be dynamic and flexible while providing the necessary organisational control.
Drucker remarks that it would be difficult to overstate the importance of focussing on knowledge workers’ productivity. “For the critical feature of a knowledge workforce is that knowledge workers are not ‘labour,’ they are capital”. There is a shift from labour as a cost to a view of ROI on “labour capital”. Drucker calls it the Productivity of Capital.
The move to the Next Society is here. We have seen the borderlessness of information, the upward mobility of knowledge workers and the way process work changed. Knowledge workers need Next Society tools to support their productiveness. They are not bound to the constraints of an assembly line, either physically or in their contribution to the processes. They require IT enabled productivity support tools that allow them to work anytime, anyplace. The key to Competitive Advantage lies in enabling the Next Society to work in a way that will give a positive ROI on our knowledge capital.