The Knowledge Century

The Knowledge Century
by John Ladley
KI Solutions

While much of the talk about business changes has centered on global competition, rate of change, and Internet impact, addressing these issues requires more than a reaction to multiple environmental changes. It requires re-thinking the business process itself.

Today's business processes are linked to computer processes. This alignment began in the early 1970's. Early on, people discovered they needed access to the data created and manipulated by business transaction systems. First came the report tome – a stack of alternately green and white lined paper loaded with numbers. As delivery technology improved with sophisticated decision support information systems, business processes were distributed. Many more people could make decisions much faster based on readily available information.

There is no question that decision-making speed and information delivery has improved radically. That said, these "solutions" do not address the core business issues in an environment that is greatly more complex not because of global competition, but because of global interdependence and ubiquity and speed of communications. Market environments are vastly more complex than a generation or even a year ago, and react far more quickly. The 21st century will require collection and understanding of 'sub-transaction' layers of information, further increasing the potential data volumes, and reducing latency requirements.

The initial reaction to this increasing complexity has been an ever-increasing demand for more information faster, resulting in what is commonly called "info glut" --- huge volumes of information that are so overwhelming that they cannot be used effectively. We have supplanted stacks of paper with stacks of electronic data that can be widely distributed.

Further, the focus on information has produced a strong bias toward decisions that focus on the short term. A broader view is required for effective long-term decisions. But this need is rarely addressed.

Lastly, in spite of business processes being so dependent on information, rarely is the use of that information considered when examining the business process. A historical wall exists between information use and delivery. Technology and business has converged, but the convergence is not factored into process management or design.

The communications revolution provides the opportunity to move beyond static data and information to the realm of interactive knowledge distribution and collaboration, information in a meaningful context refined by experience and shared interactively. This facilitates better decision-making based on a more complete understanding of the complexities of the marketplace and the competitive landscape.

Context
Understanding complexity requires a contextual view. It is the addition of context that transforms information into useful knowledge. Context is usually composed of experience, knowledge, and information on a variety of external situational factors.

One good example of how context works can be applied to the current fad of "losing your poor customers." That is, a business consultant will collect account information on all customers (often by margin). Then a margin threshold is established. Customers below the profitability threshold are told to find another supplier. This practice produces a quick bottom-line improvement by eliminating low-margin accounts.

Sounds simple enough, but context could radically change the scenario. History may show that many of the former low-margin accounts became very loyal major customers and profit centers after being initially nurtured by low-margin sales. Or perhaps many of these low-profit accounts buy a particular item, allowing your organization to purchase the item in large quantities for maximum discount, and then sell that item in large volumes to high-profit accounts. The bigger picture provided by appropriate context may well show that these low-margin accounts facilitate and are offset by huge profits elsewhere. Would you still want to get rid of these "losers?"

Front-end or Back-end
Today we have all kinds of information delivery mechanisms. Thousands of products can produce information delivered via desktops, laptops, servers, and browsers. Indeed, all the emphasis in the technology marketplace has been on establishing new delivery mechanisms. Certainly these developments have provided some relief for the information access problems. However, if we assume that the issue is context, then what we are doing is simply distributing info glut. This is a huge waste of time, material, and human capital.

Addressing the context issue requires an examination of information distribution as a logistics issue. Enhancing information with context involves both delivery (front-end), and logistics (back-end). Some key questions must be answered:

• Where is the required experience and information acquired?
• When must the information arrive at its consumer, and at what level of quality?
• How and where can it be stored?
• Who is the custodian?
• How can this be fused with business information to produce knowledge (context-based information)?
• How can the organizational culture and staff best leverage this knowledge?

Interactivity
We now have Internet, intranets, extranets and information. So far, these new communication options have been used for improved delivery of static information. But knowledge isn't static, and context changes while human experience grows. The very static nature of information systems is inadequate for today's business climate. Knowledge and context are very human concepts that can be brought to bear with the use of new communication technologies.

Information is facts. Knowledge is context, experience, and intangibles. Knowledge can be delivered most effectively in an interactive environment. Interactivity animates the exchange of ideas, promotes team development, and enables the growth and ubiquity of knowledge. Interactivity enables the benefits of shared experience to create viable context that can be shared with large numbers of users. The ability to enable such interactivity online reduces geographic barriers, and provides a cross-cultural exchange of ideas that facilitates better global decision-making.

There are many available technologies to enable such interactive communications. The technology options range from simple bulletin boards/discussion forums and interactive chat to high-end videoconferencing. Again, these options need to be examined to choose technologies that will mesh with culture and staff capabilities.

Business Processes
While the communication infrastructure is relatively straightforward, the implications for business decision-making and underlying processes are not straightforward, and require examination. Benefits will be lost in attempting to overlay a context-rich, knowledge-based interactive analysis/decision metaphor on a binary, static, information-based infrastructure. These two environments must be properly aligned to gain the competitive advantage offered by knowledge-based systems.

Such an examination and re-alignment requires experienced practitioners who understand technology, business dynamics, and organizational culture. There simply is no substitute for broad experience in this process.

Benefits
There are enormous tangible benefits of organizing business processes along the lines of interactive knowledge-based systems:

• More effective use of human assets
• Better global decision making
• Business processes tailored for a communication-intensive world
• Support decreasing business latency with faster reaction time and fewer bad decisions, because decisions are based on experience, context, and facts
• Easier business transition into the new staff demographics as baby boomers retire
• Preservation of priceless business experience
• Shorter learning curve as new employees can tap a vast reservoir of stored business experience
• Reduction of geographic/cultural barriers that have plagued many organizations
• Sustainable competitive advantage --- The wealth of business experience and market context simplifies the task of finding and exploiting competitive advantage. The availability of such knowledge makes market successes repeatable and adaptable to new geographies.

The organization that moves to this new information/knowledge metaphor will have huge competitive advantages over those that do not. Indeed, interactive knowledge-based systems developed with a logistics mindset will determine which organizations succeed in the Knowledge Century.