Does A New Economy Require A New Business Management Approach?
Are the new features of the knowledge economy sufficient for us to claim that there is a "new" economy that is subject to "new" rules, and which requires different business management approaches and procedures? Many have argued that the knowledge economy is subject to new rules.
According to Brian Arthur of the Santa Fe Institute, it is an economy of increasing rather than diminishing returns. Once a product is adopted as the market standard, the cost of reproduction and production of new versions becomes minimal while the profits multiply. Is that a phenomenon that is limited to the high-tech industry, and thus may be an accurate description of the wealth of companies like Microsoft, IBM, Apple, and Netscape but not companies in other industries?
Granstrand argues that it is not, and that in the knowledge economy a new form of capitalism emerged intellectual capitalism. When intellectual resources are increasingly the source of economic wealth, they become the main driver of the knowledge economy, while the tangible and financial resources become of a lesser importance for success. Whether or not we agree with Granstrand that the knowledge economy is subject to a new form of capitalism, it is evident that there has been a change, at least in the way that the most successful organizations now describe and envision themselves.
DuPont describes its work as "delivering the miracle of science" while Dow Chemical sees its mission as "driving value from our intellectual assets." Ford advertises, "We have a passion for better ideas," while General Motors professes, "Technology is a significant enabler for us to meet our vision." And British Petroleum proclaims, "Our business is about discovery." How is it that organizations now see themselves differently?
Regardless of the view taken and the degree of importance attributed to the role of IC for competitive performance, it is undeniable that business now is subjected to disruptive and turbulent waves brought about by an innovation and knowledge intensive economy. It is an economy that is different because the production processes are different, the customers are different, and the workers are different. All these differences require a business management approach that accommodates the peculiar nature of IC and differentiates between its various forms.
In fact, business management in the knowledge economy has undergone a number of substantial changes reflected in how organizations now structure themselves and reorganize their business. These changes are not based on a specific methodology or a theoretical framework, but to a great extent stem from organizations need to better manage their IC. That being said, there is one common thread that permeates all these changes namely, that they are all based on and driven by the dynamics of intellectual capital (IC-enabled dynamics). Following is an outline of these dynamics and how they influenced organizational design, management and leadership styles, and business strategy and growth.
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