Information technology and its by-product, the virtual organization, are indispensable tools for success in today’s whitewater environment. They provide the means for instant exchange of explicit knowledge around the world. However, these tools are of limited value for the sharing of tacit knowledge which is the wellspring of new ideas. Without the capability to generate high sustained levels of new intellectual assets an organization has little chance of succeeding in the Knowledge Age.
Four important considerations need to be kept in mind in our quest for increased creativity and innovation in our organizations.
1. We must realize that knowledge is classified into two categories: explicit and tacit. Explicit knowledge is any information that has been formally defined and codified. Thus, it is usually gained through sources such as formal education, training, books, and the Internet. Tacit knowledge, instead, encompasses ideas and abstractions at the individual level. It is acquired by first-hand experiences or by interacting with more experienced people. Hence, it is unrelated or unexpressed knowledge which comes to the fore serendipitously as individuals are confronted with certain new or unexpected situations. As stated before, tacit knowledge is the wellspring for all new explicit information. Obviously, there is also a circular cause-and-effect relationship between the two categories of knowledge. Tacit knowledge must be allowed to emerge through voluntary collaboration or self-organization. Therefore, it cannot be forced or managed out of people since they may not know exactly what they possess.
2. This leads us to the second vital consideration for intellectual capital formation–human nature. Without thoroughly understanding who we are there is little hope of developing a well functioning learning organization. We are born with two basic categories of innate drives (less reactive than instincts), a set of self-centered drives (e.g., concern for control, rank, status, territory, possessions) and a set of other-centered drives (e.g., concern for attachments, affiliation, altruism, care-giving, care-receiving). Unknowingly, most of today’s organizations with their prevailing top-down management systems are mainly impacting their people’s self-centered drives. Simultaneously, their leaders are asking these individuals to be good team players and deeply committed to the goals of the enterprise. Clearly, this is not an effective way to run knowledge-intensive businesses where the exchange of tacit knowledge is the key to success and, therefore, the other-centered drives need to have a chance to be expressed.
3. The third critical consideration in developing knowledge-intensive enterprises is size. There is now ample evidence that human beings are physiologically incapable of developing and maintaining mutually beneficial voluntary collaborative behavior within groups much larger than 150 people. In larger collectives, relationships become fragmented, ties of common interest cannot be properly sustained, and hierarchical structures begin to creep in. Consequently, from a human nature perspective, small size is absolutely essential for the generation of high levels of intellectual capital in organizations.
4. Finally, we need to dispel the major myths about the hierarchy. The problem with a hierarchy is that it is founded on two counterproductive assertions that also serve as the foundation for its advocacy. The first premise suggests that hierarchies are a natural phenomenon and, therefore, unavoidable. This premise is true only if we prefer to rely primarily on the most primitive drives of the lowest level of our three-tiered brain–the reptilian complex which evolved approximately half a billion years ago. If we believe that humans are much more intelligent than reptiles, it would make more sense to rely on our characteristically human social side, a part of our nature that evolved much more recently and that is especially pertinent regarding creativity and innovation.
Control or Order?
The second assertion supporting the hierarchical model is grounded in the belief that social organizations should be structured in accordance with a mechanistic or machine metaphor. That is, organizations should be developed and run like well-oiled machines. This philosophy was initiated by engineers and economists during the Industrial Revolution. The problem with this premise is that it confuses control with order. People are not machines by any stretch of the imagination. Machines need to have external control mechanisms. People naturally self-organize around any situation or an opportunity, thus establishing situation-specific order.
So, what are the implications of what we have discussed? The four key considerations suggest that the Knowledge Age demands that we understand what drives us and learn not to waste time and money trying to circumvent human nature. By understanding our inherent genetic predispositions, we can narrow the gap between our unchanging human nature and the organizational context, rather than unknowingly widening it.
Intellectual Assets Principles
I suggest we adhere to the following general principles in the pursuit of intellectual assets.
First, organizations should have no more than l50 members for reasons outlined previously. Firms can be quite large as long as they are composed of small subsystems centered around specific core competencies.
Second, each member of an enterprise should be allowed to become a partner in its endeavors. Employees, or mercenaries, go to the highest bidder and seldom care much about their place of employment. Partners, on the other hand, are concerned about the welfare of their organization 24 hours a day.
Third, as a consequence, considerable time and effort must be devoted to selecting the people who are invited to join the "clan". You’re literally looking for new "family members" with whom you can work closely on and off the job. New members must be capable of working both independently and in teams and willing to take responsibility for the actions of the entire company.
Finally, the free exchange of ideas can best be achieved through what I call "real teams". Such teams have voluntary membership, are well trained both in technical and group dynamics, and are truly free to manage themselves. People should also have an opportunity to be members of multiple teams.
Essentially, we need to develop organizations that continually nurture the collaborative best from all members. Hence, we need to remember that unmanagement or self-organization, rather than management, is the key to success in the Knowledge Age.
Charles Ehin, Ph.D. sets out four important concepts to keep in mind as we look to increase our creativity and innovation in organizations. Then he follows up with some suggested guidelines for the "ideal" intellectual capital organization.