Friday, January 13, 2006

Knowledge:The new asset for firm profits

In the traditional firms, the so called “Taylor style firm”, it is usual to focus on productivity level based on the physical capacities of its employees, which means how much it is produced per hour of work. According to this view, it is necessary to have a structure which rely heavily on the ability to control each task, with close supervision on it.(The “X” and “Y” Theory ,following Mc Gregor `s works) ).The expected result of higher productivity, depends on each worker doing what he is paid for. So, no new ideas on his own, no innovation unless it is required by executives levels, no need for communication skills to coordinate process in a better way. In other words, just do it approach, with no questions in between. The result for firms ? : To loose an important share of the productive potential of its human resources ,as much as it does not consider those abilities related to knowledge.. Fortunately, this model of business is moving out. This does not means that there is no more Taylor management style , but it means the trend is orientated to a more inclusive firms, with flatter structures related to the market (consumers) needs . If we take a look to what has happened since the eighties in the automobile industry, it is clearly a phenomenon related to this new paradigm: marketing, quality and innovation are on the front line for management decisions.
A lot of firms still orientated to production, are facing tough times because the markets is moving in a different directions and that implies new management models.. In a recent report, The New York Times (http://www.nytimes.com/ ,Is There a Future in Ford's Future?, January 8,2006), said :“Just five years ago, the talk in Detroit was about whether Ford could eventually outsell G.M. Now the talk is about which of these two companies is worse off . In the same line of argument, a famous story in the management books is the one of IBM. This multinational thought for some time, that the key element in markets decisions ,was to focus on the problems rather than its solutions. The result was an over crowed structure, slow to adapt to markets changes and away of consumers needs..
From the internal point of view, the new information technology allows different way of organizing resources, information gets every levels inside firms throughout computers, avoiding the traditional misconception problem , (the low percentage of the original text, arriving to destiny),so it is possible to count with more sources for innovations, as long as knowledge is an asset which is spread out all over firms throughout different means such as e; mails, fax, video conferences, and increasing searching data capabilities.
The point is how to cope with this new asset, and how to take advantage of it .One thing is clear in this scenario based on information and knowledge :Productivity depend not just on physical strength but both, on communications skills, and the ability to coordinate all productive process. In Chile ,there are studies which shows some flaw in the business decisions models, when it comes to use the new information technology, and that is because of following the wrong strategy concerning the practice of management models.(http://www.obarros.cl/ )
On the external front, resources have higher mobility than what it is stated in most of the conventional macroeconomics texts ,consumers needs are changing continuously and the challenge becomes to identify a niche ,”the client profit strategy”. But above all , markets appears to give higher commercial value ,only to those firms which also work with higher level of knowledge .

1 comment:

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