Tougher Than EverThe information age makes management more complex, not simplerby Don Tapscott If you think it's harder to get the job done today than it was five or 10 years ago, you're right. I spend most of my time helping executives and companies forge business strategies to compete and succeed. However, many management teams have increasing difficulty translating their solid thinking into solid action among all employees. Despite powerful new information and communication technologies, in the digital era it's actually tougher for businesses to make things happen. There are a number of reasons. Under industrial capitalism, key corporate assets were physical resources: physical plant and financial capital. No longer. Today, the only meaningful assets are knowledge assets, and the most meaningful form of capital is human capital. Human capital comprises the skills, knowledge, intellect, creativity, and know-how of individuals in the organization — that is, the ability to create value for customers. Successful companies attract and nurture knowledge workers and provide the environment for extraordinary thinking — for problem solving, execution of complex business functions, and innovation. This is a bigger executive challenge than running yesterday's factory. It's easier to speed up a mechanical assembly line than it is to speed up creativity and problem solving. The former involves issuing an edict. The latter requires creating a climate that motivates and nourishes the human mind — which includes sharing an unprecedented amount of information with employees, so that knowledge workers are empowered to innovate and respond effectively to customer needs. Today's knowledge workers function within a corporate structure that itself is more difficult to manage. In yesterday's hierarchical organization, with its multiple layers of management, accountability, and bureaucracy, information flow was vertical. Today information flows in all directions. Companies today are fluid and supple, based on interdisciplinary teams. Interdisciplinary teams enable faster responses to changes in the business environment and customer demands. This structure is dramatically more effective, but it also means that yesterday's simple yes or no decisions have become complicated multiple choices. Add to this equation the Internet. Because the Internet slashes the cost of sharing knowledge, collaborating, and meshing business processes among corporations, smart companies focus on their core competencies and partner or outsource to do the rest. In industry after industry, teams of specialized firms working together — I call them business webs — prove more supple, innovative, cost-efficient, and profitable than their traditional, vertically integrated competitors. Today, executives need new tools — including strategic concepts and analytic methods — to comprehend and exploit the unprecedented array of business architectures suddenly available. This was almost a nonissue when the superiority of the industrial corporation was taken for granted. It was just assumed, for example, that most resources would be internal to the company. Thus, the nature of business relationships has dramatically changed. Historically, such relationships were mostly internal to the corporation — an individual had a relationship with a boss, secretary, employees, project team, dotted line relationships, and so on. Today relationships extend beyond the boundaries of the firm to customers, business partners, and others. Managing a soaring number of relationships is a skill required of most employees, not just senior managers. A firm's ability to engage employees, customers, suppliers, and other partners in mutually beneficial value exchanges determines its success. All the while, the pace of business quickens. Product development times are collapsing. Managers must make increasingly complex decisions in ever-decreasing periods of time. Before the Internet became popular, the typical automaker took at least five years to bring a new car to market. Now some strive to do it in less than half the time. And rather than stockpiling cars on dealer lots, the goal is to build cars within a week to buyers' specifications and deliver them to their driveways. Carmakers have also discovered that if a model has been on the market for two or three years, they must create special editions to keep the model from looking stale. Producers of virtually all consumer goods and services face this twin threat of compressed development time and shorter shelf life. Firms today also operate in a much more transparent environment. As information and communication technologies advance, companies can expect to hide nothing from employees and outside organizations. All decisions, from boardroom deliberations through to day-to-day purchases of supplies, now occur with somebody, somewhere (or more likely, many people in many places) looking over the company's "shoulder." Previously mundane products such as running shoes, lumber, chocolate bars, and cellular phones have become politically charged. The "out of sight, out of mind" approach to low-cost offshore production is dead. If a company uses inputs that can be traced back to children in sweatshops, everyone will know about it. Operational transparency makes execution more challenging and means that managers also need political and social smarts and a global perspective. Companies today operate with unprecedented speed and efficiency. But no one said it would be easy. Don Tapscott [dtapscott@digital4sight.com] cofounded Digital 4Sight (www.digital4sight.com) and is coauthor of Digital Capital (Harvard Business School Press, 2000). |
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