The knowledge: Thomas A. Stewart

One of the foremost business writers of his generation, Tom Stewart is widely acknowledged as having pioneered the concept of intellectual capital in a series of groundbreaking articles for Fortune magazine. He talks to Simon Lelic about his career so far, offering his take on the most important issues facing organisations looking to succeed in the economic environment that has emerged since the end of the hi-tech boom.

As this edition of Knowledge Management hits desks, Thomas Stewart will have taken up his position as editor of the Harvard Business Review, one of the most highly respected business publications in the world. His appointment, announced in October, followed the controversy-filled departure of Suzie Wetlaufer.[1] Having left a similarly prestigious post as editorial director at Business 2.0 to take up his new role, Stewart emphasised the HBR’s peerless reputation for academic business journalism as being his chief motivation for accepting the post. “There is nothing like the Harvard Business Review,” he said at the time. “It is the red-hot centre of ideas in the business world.”

Which, after all, is where Stewart is used to being. As his new boss, David Wan, president and CEO of Harvard Business School Publishing, has said, “Tom is an exceptional writer and editor, and a first-rate business thinker. His passion for exploring new management ideas and reputation as a gifted editorial collaborator made him the ideal person to take the HBR to even greater heights.” Stewart has worked as a business writer since 1989, turning his hand to journalism after an 18-year career in book publishing. Since then, he has written on topics as diverse as emerging electronic marketplaces, the state of American competitiveness and gay and lesbian executives. It is for his work in the area of intellectual capital, though, that he is most famed.

Widely credited as having been a pioneer of the field, he came across the concept while researching a feature that was published in Fortune in 1991. The article, entitled ‘Brainpower’, represented, he is almost certain, the first time the business press had written about intellectual capital. “I was talking to a fellow while I was working on that story, who said that it used to be that natural resources were the most important assets, then financial assets became the most important, and now knowledge is,” Stewart recalls. “Intellectual capital is what it is all about.” He also remembers the blank looks that greeted the phrase a decade ago. Yet he was convinced, as he writes in his most recent book, The Wealth of Knowledge[2], that knowledge had become such an important factor of production that a company that didn’t manage it wasn’t minding its business.

Soon after the article was published, Stewart realised that he was not alone in his convictions. As he puts it in The Wealth of Knowledge, an idea whose time has come tends to bloom everywhere at once, and this was certainly the case with intellectual capital. Around the same time that Fortune published Stewart’s article, Karl-Erik Sveiby was conducting his own investigations into the nature of intellectual capital, while Leif Edvinsson, Ikujiro Nonaka and Hirotaka Takeuchi were beginning the work that would establish their own reputations in the field. Stewart’s immediate reaction was to feel a sense both of validation and of excitement. “My feeling had been that this was a really interesting vein of material,” he says. “To discover that there were other miners going into the same mountain made me think that it was probably going to be richer than even I had thought – and I thought it was going to be pretty rich.”

As the community that was forming around the ideas propagated by Stewart and his peers grew, Stewart became aware that the field was expanding so quickly he no longer knew everyone in it. “That was like a second steepening of the learning curve for me,” he says, “the realisation that this was actually growing into a very substantial body of knowledge. It’s like that moment when you discover that your child knows words that you didn’t know they knew. I discovered that the field was beyond my immediate purview at that point; I had to go out and look to see where its margins were.” Which is precisely what Stewart did. His first book, Intellectual Capital[3], published in 1997, was named one of the best business books of the year by the Financial Times and is still regarded as a landmark in its area. The Wealth of Knowledge followed in 2001, building on the central arguments of Stewart’s first book and further cementing his position as one of the foremost business commentators of his generation.

Both Intellectual Capital and The Wealth of Knowledge focus on the centrality of knowledge in an organisational context. As Stewart says, “Knowledge is our most important raw material; knowledge is our most value-adding process; and, knowledge is our most important output.” There are, he continues, a series of ways in which organisations can take advantage of knowledge as a production factor, through what he calls a series of knowledge-intensity strategies. “If we’re selling knowledge, let’s look at it: how do we go to market with knowledge? Closely related to that, what are the assets that are involved? What are the assets I draw upon, and what are the decisions I need to make about that asset base? How do I increase my ability to exploit it?” he says. “A third set of knowledge strategies relates to the things that I can do to manage the knowledge in my organisation more effectively and more efficiently.” Simply stated, these are the three areas Stewart feels organisations should be concentrating on if they are to succeed in the present economic climate. “I think those are fairly good problems to be working on,” he adds. “They should certainly keep people busy.”

Yet Stewart also believes we are collectively in a stronger position than ever before to make progress in this area. “Several years ago somebody asked me if I thought that intellectual capital would generate a fad, and I cheerfully answered that I didn’t think it would, because fads only happen when there’s something to sell,” he recalls. “But I underestimated the ingenuity and fecundity of capitalism, because very soon people did generate something to sell, and it became knowledge management, and then it became the acronym ‘KM’, and out of that it developed into a full-blown business fad. Knowledge management invented its own internet bubble, its own irrational exuberance, in which people ran off and said, ‘Get me some of that’, without stopping to think what knowledge needed to be managed and to what ends.” But Stewart feels we are now emerging from the backwash of that phase, and entering a period of opportunity, where knowledge management has a chance of being used as a means of achieving real change in the way that organisations operate.

The key to realising this goal, as Stewart puts it in his latest book, is that businesses begin to think of themselves in almost biological terms, rather than in mechanical ones. Organisations, as he says, are complex human systems that can adapt, grow and improve just as human beings can. “I think it is extremely important that the knowledge agenda of a company be addressed at the highest strategic levels,” he says. “If it is only housed as a chief knowledge officer reporting to a chief information officer, then no matter how much the CKO wants its otherwise, it is going to be a technology initiative. To a man with a hammer, everything is a nail.” Instead, Stewart argues, the discussion has to be on a high enough level that everyone is able to get involved. “It needs to be looked at from the standpoint of, what is our organisation’s knowledge strategy, and what resources and people do we need to carry it out?”

This is a theme Stewart will be developing at KM Europe 2002, which takes place in London this month. Stewart will focus primarily on the importance of connecting knowledge management to a business model and to a tangible operational strategy, something he believes many firms have overlooked in the past. And as for the event itself, Stewart is enthusiastic about the value it will bring to the knowledge-management field. “Events like this bring the chance to create a community; the chance for people who’ve talked and never met to meet; the chance in general to get an almost inarticulable sense of what’s going on – the state of the industry, the state of the world,” he says. “That’s what these things are for – to get people with some of the same interests in the same room, and then apply alcohol or some other stimulant!” Stewart will be joined by Tom Davenport, Dan Holtshouse, Dave Snowden, Karl-Erik Sveiby and Karl Wiig in the keynote theatre. Alcohol or no alcohol, it will no doubt be a lively affair.

References

1. Stewart’s predecessor resigned in April after the Wall Street Journal published an article claiming the HBR had refused to run her story on General Electric CEO Jack Welch because of allegations that the two had an affair. Wetlaufer subsequently admitted to having had an “improper relationship” with Welch, and stepped down after HBR staff members complained

2. Stewart, T.A., The Wealth of Knowledge: Intellectual Capital and the Twenty-First Century Organization (Nicholas Brealey, 2001)

3. Stewart, T.A., Intellectual Capital: The New Wealth of Organizations (Nicholas Brealey, 1997)