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April 2003    Main Feature
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No. 72
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Managing editor:
David J. Skyrme

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A Bretton Woods of the Knowledge Economy:
ENTOVATION Roundtable in Helsinki

Debra M. Amidon

"Creation of a dynamic world community
in which the peoples of every nation
will be able to realise their potentialities for peace."

- Henry Morganthau, Opening Address
Bretton Woods Conference (July, 1944)

In July 1944, world leaders left behind gold as a currency. Today, it is well recognized that we have entered a new (innovation) frontier in which intellectual capital - properly leveraged through relationship capital - is rapidly becoming the new currency. In June 2002, a subset of the ENTOVATION Network met in New York City to explore the new management horizon we now all can see. The video produced by Inside Cinema and supported with funds from American Express was created to document the story outlining plans for Finland.

It was designed as a unique event - a 'happening' in the knowledge field...an experience where the expertise and aspirations of leaders would be catapulted. Those participating in March 2003 were not disappointed.

The Roundtable brought together 29 from 18 countries to continue the conversation. It opened with Esko Kilpi - described as an international statesman - who chaired the event and remarks from Dr. Paavo Uronen, Rector of the Helsinki University of Technology - sponsor of the open seminar. Dr. Uronen spoke of knowledge around the world - the global economy and how best to operate from your own base. He described the global platforms and new initiatives dedicated to entrepreneurialism and innovation. "Universities are the most important source of new knowledge, so knowledge management and knowledge navigation are essential here".

Leaders Listening to Leaders

Several experts - David Skyrme (England), Leif Edvinsson (Sweden), Mike Kelleher (Wales), Lilly Evans (England), Charles Savage (Germany), Piero Formica (Italy), Edna Pasher (Israel), and Karl Wiig (USA) were challenged to provide their perception of the State-of-the-Art today in knowledge and innovation based management - different approaches in different contexts? What have we learned during the past years - what works, what does not? Below are several of the prevalent themes…most of which are a real advancement beyond the typical KM or even innovation messages:

  • Focus on Future: Although some in the field have been focused on the future for some time, now it is apparent that most practitioners are very interested in 'global sustainability'. (Check the sample chapter on 'The Knowledge Why'. Several experts are now outlining the 'infinite game', exploring the 'possibilities' (more than problem-solving), the importance of 'renewal' and 'Great Expectations', the need for systematic 'renewal', the 'Quisics' (i.e., the art of questioning), and the new field of 'social entrepreneurs'. As Edna Pasher said: "Quick fixes are not the same as big wins!"

  • Focus on Values/Integrity: There is considerable concern over the apparent (lack of) ethics in major firms and the need for 'transparent systems'. (Note the current edition of the Banff Executive Leadership Newsletter). There is a real respect for the value of culture...and values (and valuing) in general. Trust (and a respect for one another) - especially in this evolving virtual world - is the most important value essential for building identity and integrity with others. Charles Savage recounted a story about 'truth', 'story', 'time', 'work', 'courage' and 'value'...and their journey together; and Karl Wiig recounted: "Corporate culture is driven by the knowledge-leveraging mentality".

  • Focus on Learning/Leadership: "The leaders are learners"…so went the summary statement of the Skyrme/Amidon 1997 Research Report. Now, we are gaining a better understanding of what values-based leadership means. Michael Kelleher - in balancing the border between KM and organization Learning - outlines numerous levels from passive learning to learning as sense-making and learning to transfer new processes. Lilly Evans described the 'courage' required - as a baseline - for linking ethics and reality as the way to realize a vision.

  • Focus on the Network (Explosion) Effects: Esko Kilpi described first the effects of networking the multiplier effect - something Charles Savage published in the early 1990s. Some referred to 'synergy'; others called it 'symbiosis'. But now, we have a better sense of the role 'energy' plays in motivation of individuals - and how it might be harnessed collectively for mutual advantage. Knowledge strategy is realized through interaction - building upon the spheres of influence of one another. The good news is that there is far better researched material on knowledge clusters/networks, as well as the value of collaborative (versus competitive) advantage. As Piero Formica suggests: "The invisible market must be met with an invisible handshake".

  • Focus on Customers/Stakeholders: The notion of an 'extended enterprise' is now commonplace. Managers have rediscovered the customer in ways that foster a more 'intimate' relationship. People talk more about 'market-pull' than 'technology push'. David Skyrme outlined the evolution from passive and active customer relationships towards 'client-committed'. However, managers have still yet to discover the real potential of the fact that 72 per cent of new product ideas come from customers (von Hipple) and that Customer Knowledge is more important than knowledge of the customer. Nor has the concept of 'innovating with the customer' yet to be unleashed; but stay tuned!

  • Focus on (New) Capital: There's lots of talk about Intellectual Capital (IC) now and how it relates to social or behavioral capital and how it all can be leveraged through technological capital. Managers are not asking if they should account for intangibles, but how. Leif Edvinsson stretched our thinking to consider the knowledge meeting spaces (e.g., linking architecture, health and IC), the 'brain gym', the 'IC multiplier', 'knowledge tourism' and 'IC ergonomics'.

  • Focus on Innovation Strategy: Leaders have now shifted from the discussion of 'knowledge' (i.e., the content) and spend much more discussion about innovation (the how of KM). David Skyrme described the evolution of pre-dawn realization to the current and emerging state of a new identity. He outlined the ABC’s (Assets, Benefits and Cost-Effectiveness), the shift from benchmarking to 'bench-learning' and the 3Ds - Discovery, Diagnosis and Direction. Edna Pasher released the results of the EU-funded NIMCube Project - again featuring the strategic process renewal. Karl Wiig discussed how our mental models shape the way we view the world and how the degree of complexity demands more knowledge to be effective: "Knowledge Management is crucial when innovation lags behind the competition".

Nokia as a Case Example

Perhaps the most telling moments in the open conference were when presenters converted the theater-style room of a couple of hundred people into a think-tank of why Finland - as a nation - has been so successful. People described - and with examples - the competence, curiosity and unusual culture - straight and open. Others described the sense of community, communications expertise and the connectivity factors - especially of global markets. As the audience explored the roots of the success (and now with the observations of an international audience), individual characteristics appear, such as 'Sisu', courage, pride (personal and civil), conscious drive, flexibility, commitment and innovation. In short, Finland enjoys a strong national identity - known for practicality and inspired leadership.

The centerpiece of Finland's corporate success is Nokia; and Dr. Erkki Ormala, Sr. Vice President and Director of Technology Policy, described how knowledge management is directly embedded throughout their business. Although this large 52K person, 30B Euro firm considers itself global (versus international), Nokia consists of many fast, flexible business areas united with a shared vision. There is a respect for the diversity of cultures while, at the same time, the need to have every employee thinking - regardless of country - 'Nokian'.

Nokia management has carefully evolved the technical enterprise into the 'extended' enterprise with a significant increase in partner interaction. They have analyzed their strategy from global and material flows (e.g., global use of competence of knowledge assets, global web-enabled knowledge flows, global mobility of knowledge, etc). Knowledge, then, becomes the key element in globalization with new business elements such as:

  1. Right-timing, speed and flexibility
  2. Strategic partnerships and networking
  3. Continuous upgrading and innovation
  4. New management principles and organization
  5. Flexible relocation of operations.

Perhaps the most enlightening statement however, was the degree of personnel involved in RandD - 38 per cent! From my own professional experience and anticipating increased kaleidoscopic dynamics of the knowledge economy, enterprises will have to invest significantly more resources to maintain competitive positioning. My estimate is 40 per cent - and Nokia is already performing accordingly!

Dr. Ormala spoke of 'orchestration': "You must become more than an active player, you must become a 'knowledge-shaper'." He described market demand from two perspectives - supply orchestration and innovation orchestration - and the need for balance between the two. With a base of measuring the knowledge stocks and flows, they seem to have managerially developed a dynamic tension: between quality/efficiency and creativity/innovation; between doing and planning with a future scenario; between individuals and team cohesion.

The real challenge for Finland now may be how to replicate the extraordinary entrepreneurial success of a Nokia into the plethora of other industries and services to build the financial base of the country and continued global leadership.

Leveraging the Meso-Economics

We hear a lot about the microeconomics and increasingly more about the macroeconomics. However, effectively operating on the national economy level is still an art - the importance of which may actually increase with the dynamics of a knowledge economy. Thus, another part of the success story of Finland lies in the integral role that the parliament and administrations have played in shaping their economy. In 1998, we reported on the plans and progress of the country, providing a glimpse into the healthy government, industry, and education interaction. This visit affirmed that there is a real strength in the infrastructure developed…and it isn't just technical!

Markku Markkula, Director of Dipoli HUT and a member of Parliament, released his publication "Developing and Implementing Knowledge Management in the Parliament of Finland". This book reviews the role of Parliament as a knowledge organization with 4 pillars:

  1. KM the impacts of technology in work and work culture
  2. Developing KM for Parliamentary work process
  3. KM learning process
  4. Development of KM in the state administration.

In the Foreword:

"Through globalization and complex work processes, innovation has become an increasingly crucial success factor for individuals, businesses, other communities and society. It was 5 years ago that the Parliament of Finland, while analyzing Finland's future prospects, highlighted innovation, with special emphasis on the human aspects, as one of the four all-permeating success factors (Learn to Know, Learn to Do, Learn to Live Together and Learn to Be). The Committee for the Future has comprehensively investigated innovation. Innovation is not an automatic process. It requires change of attitude and a high-quality context for the methods to develop."

Building EN2Polis - An International Knowledge City of the Future

How does a virtual network become a sustainable global enterprise? Members of the E100 met for the next two days identifying possible projects of common interest and developing the foundation for building a knowledge city - a marketspace where collaborative research might be performed, interaction harnessed across national borders and even ways to approach the new virtual knowledge markets with collective expertise. There was considerable discussion on several themes, such as knowledge clusters, knowledge incubation accelerators, knowledge tourism, the role of SMEs, knowledge leadership as it relates to (re)constructing countries and cultures suffering recent trauma, knowledge markets and the role of learning at all educational levels.

With the architectural assistance of Bryan Davis, CEO of the Kaieteur Institute, these citizens of the new city are now busy building the scaffolding for how expertise might meet market need efficiently and effectively. Specific details about how others can participate will be forthcoming; and now we welcome your own creative instincts about how this city will unfold.

The governance thereof was placed in a steering group called the 'Kinectees of Trust'. This is concept-in-process stemming from some of the recent work of Ikujiru Nonaka's 'Ba' linking several concepts in meaningful ways: ki·ne·sics (i.e., the study of bodily movements, facial expressions, as ways of communication or as accompaniments to speech), ki·ne·tic (i.e., of or resulting from motion; 2. energetic or dynamic), kin·e·mat·ics (i.e., motion, to move, the branch of mechanics that deals with motion in the abstract, without reference to the force or mass), con·nect (i.e., to join or fasten (two things together or one thing with or to another), link, couple; to show or think of as related; associate; to provide with a circuit for communicating by telephone; to plug into an electrical circuit; join or be joined, to meet so that passengers can transfer promptly; to be related in some way or in a proper and logical way; to reach the thing aimed at), and trust (i.e., a firm belief or confidence in the honesty, integrity, reliability, justice etc of another person or thing; faith; reliance; confident expectation, anticipation, or hope to have trust in the future).

The Group is now drafting a 'Declaration of Interdependence' to provide for: Mutual Leverage - the capabilities of one another to provide an offer that is better than any member can do individually; Independence and Interdependence (i.e. members are 'semi-autonomous interdependent entities'.); Alternative Relationships - to create win-win situations (vs. one type of partnering agreement fits all) and promote collaborative learning; Sharing of Risks and Rewards - on an agreed contractual basis for each project and set of products; and Agreed Rights and Obligations - ENTOVATION partners must meet certain standards of excellence.

Innovating our Future…Together!

In 15 short years, we have progressed from Taylorism management to fulfilling the words of peter Drucker - the knowledge Worker, the Knowledge Economy and innovation as the core competence. In the academic forum that concluded the 4 day event, the concept of research was (re)defined as pointing to the future versus documenting the past - a real innovation from the history-to-date. Markku Maula proved it best with his factor analysis of citations in the KM literature. All signals point to 'innovation', 'strategy' and the 'firm' (and we would respectfully submit that it is more the enterprise - public or private alike).

Next stop…Monterrey, Mexico in October hosted by Dr. F. Javier Carrillo, ITESM. And all know that it is still only the beginning…


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