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Tuesday, December 15, 2009

From Knowledge to Strategic Advantage

@jhagel asks Are Your Sources of Strategic Advantage Eroding? and points out how strategic advantage can be eroded if knowledge stocks are allowed to depreciate. Thus maintaining strategic advantage depends on intelligent processing of rich and diverse knowledge flows.

1 The first requirement is access to good knowledge flows. Hagel describes this as a positional advantage, but I think it is more accurate to describe this as a relational advantage - it is about our strategic relationships with sources of knowledge.

2. The second requirement is an ability to make sense of these knowledge flows. On the one hand, this means filtering and ranking, to avoid getting overwhelmed or spreading resources too thinly; but on the other hand, it is important to remain alert to weak signals that might suggest a change in direction.

3. Generating and leveraging knowledge (especially tacit knowledge) depends on trust-based relationships with knowledge-flow participants, both inside our own organizations and across our ecosystems. We need to engage (enable + encourage + empower) people into a learning process that is focused on "challenging performance issues".

4. Communicating and disseminating new capability-based knowledge through the organization (and out into the ecosystem) becomes the critical metacapability.

Hagel claims that "This new form of strategic advantage benefits from network effects and increasing returns." Now it may well be true that, under favourable circumstances, the more these knowledge flows and metacapabilities are exercised the more robust they become. However, this is not a classic network effect, and it is by no means certain that the positive feedback loops will outweigh the negative feedback loops. One limiting factor is organizational torque, defined by @liman as "when an organization fosters grass-roots collaboration externally, but has a resistant internal structure/philosophy". In other words, some modes of organizational change twist the organization out of the control of its legacy leadership.

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