We are in the midst of a revolution at least as important as the industrial one. But companies are proving slow to respond in terms of restructuring themselves to use, rather than abuse, knowledge. Here is one way to get it right.
The balance sheet is probably the only 500 year-old super-model still capable of arousing a few people. But despite its long-lasting allure, even after recent corrections in the stock market it often captures only some 20 per cent to 25 per cent of the real value of many modern companies. Research by the economist Jonathan Kendrick shows that the overall ratio of tangible to intangible resources has shifted from 30/ 70 in 1929 to a current 63/37. No longer can the most critical resources of a firm be touched (at least not without risking a lawsuit for sexual harassment).
Competition used to be a question of brawn. Now it boils down to brains.
Though there is growing recognition and awareness of the power of knowledge, actually managing things differently and imaginatively has proved beyond many managers and organisations. “Just Do It” remains a neat slogan rather than a persuasive reality. Most organisations are still running on autopilot. They are using measurement systems that were originally meant for shareholders and tax authorities. Instead of preemptive medicine, they are practising business autopsy. Cashing in on corporate competencies Jonas Ridderstråle Organisational solutions still favour the exploitation of givens rather than the creation of novelty.
The true irony is perhaps that as intelligence and intangibles replace raw materials and capital as the true sources of competitive advantage, many executives start asking for the advice of lawyers instead of accountants. They replace one breed not exactly world famous for its creative abilities with another.