The way we do business has changed irrevocably be it in human attitudes and disposition towards work itself, the diminishing business and geographic boundaries, technology – product – market- innovations on customer service and satisfaction, changing patterns of product life cycles, liberalized economies of many a third world countries, abundant capital resources, economy of plenty in many countries, IT, Internet usage and domination and several other macro and micro factors affecting the firm. In this period, we have seen the rise and fall of many organizations, entrepreneurial outfit, visionary leaders, successful task masters, legendary family enterprise with long years of substantive work experience, organizational champions and many more. Refer - Influence of Culture to Digital Thinking Organizations. Since organizations can absorb only a limited amount of change in a given period of time, attempting to develop or seek an altered reality quickly will cause much of the new investments to be wasted. Surveys show that 70 percent of organizations that introduce expensive, comprehensive CRM software packages cannot show results, primarily because the software investments were not linked to change management initiatives. Spending on new information capital applications reflects two underlying phenomena: the replacement of obsolete systems with state-of-the-art technology (such as ERP systems), and the application of totally new technology to new applications (such as e-commerce).
Meaningless Market Cap - Fortune 500 list of every year appears to be undergoing radical changes. Market capitalization of IT firms simply has no holds barred while peaking to hit the circuit barrier on day’s limits. The business enterprise, for what it is worth, is today considered to be a knowledge organization poised competitively to face the new millennium.
The knowledge organization, as currently defined, represents services, value additions, use of data and information, collection, storage, synthesis, assimilation and transmission to relevant sectors of competitive information. The organization encompasses basic sources of data and information origin and converts it into usable knowledge base for effective organizational performance.
At a point, Microsoft and Cisco enjoyed stock market capitalizations that are hundreds of billions of dollars higher than the book value of their tangible assets, largely because their complex software and hardware have become standards for the industry, are difficult for rivals to replicate, and are costly for customers to switch from. Today while Microsoft has retained its value, CISCO’s place has been taken up by Apple, Google and other digital companies.
Digital World Has Changed - Conventional wisdom states that companies in a mature industry try to maintain profitability and deter new entrants in three ways. Product proliferation which involves moving from a narrow to a wide range of products to cater for various market niches; Price-cutting, to maintain and build market share, and the excess production capacity to threaten increased output if new competitors enter the industry. He goes on to say that a company, as well as finding ways of keeping out new entrants, must manage its existing rivals in a number of ways so as to maximize its profitability and Price signaling to inform competitors of pricing intentions, price leadership to attain the lowest delivered cost in the industry and non-price competition, based on product characteristics, are all recommended by Porter.
A key strategic variable in this environment is investment in intellectual – smart capacity as companies that can meet increases in demand have a considerable advantage over their rivals. However, there is risk, as large investments in implementing a generic strategy are required before the environmental change occurs. Amazon has avoided this risk through innovation in supply chain, information processing and logistics design. Hence mere capacity investment and generic business strategies are not adequate tools for managers involved in digital industries.
At a simplistic level software organization, consulting, advisory firms, research, new product development and generic knowledge based value-adding companies (advertising, financial services, communication, entertainment, education) are treated as knowledge firms given their role in development of raw data, creation of unknown into known and the utilization of people as the primary state of creators. These organizations position themselves competitively depending on their availability of quality human resource and their contributions to the business bottom line achieved through their knowledge contribution.
The knowledge is commercialized as a product or service to begin with and thereafter converted into a system for its effective storage, retrieval and application. While organizations treat knowledge as its sustainable competitive advantage and make systemic contributions to make effective its application the corporate intent in managing knowledge makes the role of intellect subservient to the cause and consequent process. Eventually corporations turn knowledge creators into knowledge merchants contributing for a price. To my mind there is a definitive dissonance, when seen in isolation, between the knowledge and Intellectual Corporation.