Knowledge and information exchange places on the value scale

The knowledge monopoly has come to an end but the world is bursting with new ideas in knowledge, which need to be exploited.

By Larry Prusak

Here’s why I got interested in knowledge management.
My grandfather was an officer in the Russian Army in 1904. When I learned about this as a young teenager I was impressed and it ignited my interest in history. I decided to learn more about my grandfather’s story and the results were surprising.
Grandfather was a most unlikely candidate for military life, but he had been drafted and made an officer because he was tall. In those days big people were made officers because followers could easily see them at the head of the column.
He was sent to war against the Japanese and the Russians lost. It was the first time an Asian nation had beaten a Western nation.
I learned about this when I was 12-years old. It wasn’t easy to talk to Grandfather because he spoke two languages, both of which I couldn’t speak. But I was able to talk with him through interpreters. I also had a world map in my room and I looked at the old Russian empire which was huge. Japan, on the other hand, was a small island off the coast of Russia. I also noticed that Russians tended to be big people and Japanese – at least in those days – were usually small.
So I wondered... how could a big country of big people get beaten by little people from a little country?
Well, I’ll tell you how. The Japanese decided they weren’t going to be colonised, threw out their government, searched the world for ideas and concepts and technologies that would allow them to defend themselves. When it came to fighting Russia, Japan was ready. Russia wasn’t.

Knowledge monopoly ends
So why am I telling you this? Because it explains why knowledge is so valuable especially in today’s knowledge-driven economy. The monopoly on useful knowledge was held by Western Europe and its offshoots for the last 400 years or so. Japan joined the club at the beginning of the 20th century. It allowed them to dominate the world economically and politically.
Now that monopoly is gone. It’s over and it’s the biggest event in our lifetimes. There won’t be any more monopolies of useful and technical knowledge. There is already a rapid growth and spread of knowledge throughout the world.
Without the old monopolies the world is going to look different. New products are coming from everywhere. Disciplines are spreading around the globe. More people are writing. South Korea is doing an enormous amount of research.
It is critical for us to understand that knowledge is changing.
At the same time another event has been occurring, not directly connected, but related to it – the absolute plummeting of the cost of information. In the 1920s, if you wanted to know something, you went to the library, searched through the stacks, often spending an entire day. Just in terms of the cost of time, information was expensive.

Info value drops; knowledge rising
Today information is cheap. Much of it is free and instantly available to anyone on the internet. The cost/value of information has plummeted like a stone. At the same time, the value of knowledge is going up. The value of really knowing things, of actually understanding something, is now the most valuable thing in the world – and the most expensive.
Knowledge is now the most valuable and expensive thing in the world. You can’t just download knowledge from the internet. It only exists inside people and it is difficult to transfer without connecting directly to the one who has the knowledge.
I remember when the internet was invented; e-learning became the big thing. People were expected to go online and learn. It was supposed to be cheaper and better, just like information. But it turned out not to be. If you don’t believe that. then why are we here together in this room instead of listening into a webcast? Why are all the planes still full? If knowledge is the same as information, then why is the value of knowledge growing while the value of information plummeting?
Because there are no shortcuts in knowledge exchange. It’s not free.
Two gigantic things are going on. Those who are gaining knowledge, working with knowledge, know that it is expensive and it is consuming 60 to 70 per cent of any organisation’s non-capital budget.
Today, we hire knowledge and then we don’t know how to manage it. Meanwhile, the value of knowledge is only going higher. It’s growing even more valuable and it’s spreading throughout the world.

When in doubt flap your arms
Let’s come down to a lower level.
What is going on in the workplace? How are organisations trying to deal with this phenomenon? It’s the old story, ‘When in trouble, when in doubt, flap your arms and run about’. So what are organisations really trying to do when they are serious about it?
The trends are a little further down the mountain.
First of all, the savvy organisations are reorganising themselves to work with knowledge. Most organisations are still based on 19th century ideas. There was only one management model – command, control and fear.
We were successful at it. In the Western world there were only two classes – the rich and the not-so-rich. But even the not-so-rich prospered. The lower middle class became 18 times more wealthy than their grandparents. Organisations learned to manipulate land, labour and capital very well.
But that had nothing to do with knowledge. In the industrial age you were either at the headquarters or you were in the field. Get it? Headquarters? You weren’t expected to do head work in the field. Unless you were in the headquarters, your value was not in what you knew but what you did.
Now it’s all about the knowledge factor.
However, the way we manage knowledge won’t change just because people now talk to each other. It will change because knowledge now counts. Institutions are developing, selling, exploiting knowledge around the world and all of us are involved in it.
Knowledge is a different economic thing than land, labour and capital. Organisations will have to look different if they are to compete in the new economy.
So, what would an organisation look like if it took knowledge seriously?

Democratisation of knowledge
Operating under the 19th century model everyone thinks they know everything – ‘Why should I give what I know away?’ But this is a time when people are putting ideas out there. So ask yourself, is there a mechanism to allow knowledge to rise to the top?
Until now, we depended on institutions to keep us informed. But how well did they do? The New York Times didn’t print much news about the Holocaust because it feared stirring up anti-semitism. The media didn’t reveal that President Roosevelt was crippled and the American Medical Association thought it was alright to smoke until relatively recently.
So, does that mean we don’t need institutions to stay informed? Now that we have the internet we have access to all that’s worth knowing?
Not at all. We still need institutions. We still need investigative reporters. Unfiltered knowledge is a waste of time. We need some sort of editing and mediation. We need to have reporters in Iraq. And using the knowledge within an organisation in a structured, organised way is a very smart thing to do.
Some tool that simply allows everyone to talk to one another won’t get you what you want. Don’t think all the tools will get you democratisation. It will take a real shift of power and authority for there to be a real change.

Search for new ideas
The only sustainable advantage in the global economy is the global search for new ideas. Process and rewards and incentives to make that happen – of course, do put that in place. But if you close off your organisation or your country to new ideas, you won’t become a knowledge-driven organisation.
For example, the Arab countries barely translate any books. You can’t thrive in the new economy if you don’t do that. Encourage people who think and bring in new ideas. Don’t say knowledge is valuable and then not reward or promote it. Give people the time to search, learn and think.
The whole world is bursting with ideas. We have lost our monopoly, yet we still live as though we are in that other world. Ask people: ‘When do you ever get a chance to read and reflect’. The answers are troubling. Stay that course and the company and its people won’t know what killed them until it’s over. It’s a slow and deceiving process.

Knowledge about knowledge
Where do they get it? HR is out to lunch. IT is too busy.
Incentives count. Symbols and signals count. Novartis found the buildings where knowledge work was supposed to be going on were ugly, inhospitable to creative thinking. The company couldn’t attract pharmacologists to work there. The building didn’t reflect the right message about knowledge. Those 32 buildings are coming down. Novartis hired architects who knew about knowledge and how people interact. The new buildings are being built based on knowledge principles.
So what does all this tell you?
Signal, stop, have some coffee, talk to someone else. Talk about anything. Do the opposite of what most firms do. And eliminate this quote: ‘I’m too busy to think’. If it isn’t about knowledge, it’s about nothing else. It’s the only thing worth knowing.

This article is taken from a presentation by Larry Prusak at the recent APQC KM Conference in Chicago. Larry is a researcher and consultant. He currently co-directs Working Knowledge, a knowledge research program at Babson College, US, where he is a Distinquished Scholar in residence.