Drucker in practice

Knowledge Navigator Productivity:

The Dominant Vehicle For Wealth Creation
In The 21st Century

By Elizabeth Haas Edersheim and Craig Wynett

November 24, 2008

“The greatest challenge of the 21^st century will be managing the productivity of the knowledge worker,” asserted Peter Drucker, the father of modern management.

The knowledge navigator is a worker whose access, connection, and interpretation of knowledge information related decisions affect the well-being and direction of the overall enterprise.  As conventional laborers and, more recently, back-office knowledge workers are increasingly eliminated by technology or outsourcing to low-cost countries, the knowledge navigator becomes central to the value that enterprises create, making his or her productivity the dominant vehicle for wealth creation in the 21^st century.

            Even a modest boost in the average productivity of the world’s knowledge navigators could rapidly make up for the $30 trillion of net worth lost in this fall’s global financial crisis.  An audacious goal perhaps, but in view of the difficulties confronting us, an appropriate one.

With so much to be gained, it stands to reason that we can and should be doing all we can to address the productivity of knowledge capital.  And we should be explicitly focused on productivity improvements both globally (not just within the “industrialized” portions of the world) and multi-dimensionally (within our local and broader communities/societies, within our corporations, and as individual knowledge navigators).

This article is meant to be a thought starter, to help us better understand the five building blocks of knowledge navigator productivity and the kinds of actions that can be taken to maximize their individual and collective value.

CRACKING THE PRODUCTIVITY CODE

Achieving a purposeful increase in knowledge navigator productivity begins with an understanding of each of the building blocks of productivity and how they apply to the 21st century knowledge navigator.  Only then can we identify the levers that individuals, firms, and societies can pull to optimize knowledge navigator productivity in order to replace lost wealth and create new wealth.

The Knowledge Navigator Productivity Code

Theoretical Capacity: Maximizing the Size of the Capable Workforce

Theoretical capacity is a measure of the availability of labor – the maximum possible capacity to accomplish productive work, by human or machine or both.  In the 20th century, theoretical capacity was thought of as the largest volume of output possible with continuous operations at optimum efficiency.  As applied to knowledge navigators in the 21st century, theoretical   capacity is measured as the number of capable people available to work.

In the 20^th century, labor availability grew in the United States as agricultural technology freed people from the farm, more women joined the workforce, improved medical care and nutrition extended life expectancy, and population growth further swelled the labor pool.  

Today these same levers are still relevant and can be applied globally:

• Bringing technology across the world to free up resources from other economic sectors to be trained as knowledge navigators (as in China over the past 8 years, 25 percent of farm workers were eliminated from the fields by new technology without sacrificing agricultural production)
• Enabling gender-indifferent opportunity so as to expand the workforce and scuttle artificial limits on what workers can accomplish
• Sharing scientific and healthcare enhancements to increase life expectancy globally.

Knowledge Factor:  Maximizing Knowledge Capital

The knowledge factor is determined by each worker’s knowledge base, skills/expertise, and judgment.  Education and social policies are the principal levers a society and an enterprise can use to grow its knowledge capital, and the economic impact of such levers cannot be overestimated.  In the 21st century, nations are investing in education to remain globally competitive as the knowledge content of production continues to increase and/or to try to catch up with if not pass the leaders.  Education needs range from the most basic learning and skills for every entrepreneur to the most sophisticated continuous improvement programs.

Efforts to support the growth of knowledge capital within a country or society evidence growing non-governmental involvement:

Capacity Utilization: Maximizing Employment and Effectiveness Levels

In today’s knowledge world, capacity utilization is a function of employment – the percentage of theoretical capacity that is put to work – and effective use of the employee’s time.

Opportunities to employ newly visible populations are vast and are already being explored, the most obvious example being the outsourcing knowledge work to developing countries with significant populations of knowledge navigators.  (While swapping a worker in Indiana for a worker in India doesn’t move the capacity utilization needle, being able to access capacity globally makes it easier to maintain output 24 hours a day, 7 days a week.)  However, there is also a growing number of innovative approaches.  For example, P&G taps into older populations, using the Internet to solicit ideas from retirees, and Jet Blue leverages low-cost, underutilized capacity by offering part-time telephone work to Utah housewives.

Beyond employment levels in existing enterprises, the 21st century levers for positively effecting capacity utilization include encouraging and helping entrepreneurship and the launch of new enterprises – each of which will lead to expanded employment/new jobs.

The second component of capacity utilization, effectiveness, is particularly difficult to measure in the knowledge world.  How many of the hours you worked today were value-added?  As Drucker often noted, to improve individual productivity, knowledge navigators must use time effectively and not confuse efficiency with effectiveness.  For example, it may be much more effective to spend time finding better data, search engines, and combinatorial techniques than to spend less time developing your data.  Moreover, when you have confidence in the data you are working with, you can work much faster than when you question the data. Confidence is speed – a competitive edge in the knowledge world.  

Professional Environment: Reinforcing and Facilitating Trust

Frederick Taylor’s ideas on productivity were published in 1911 and began the 20^th century drive to develop the discipline of professional management.  His ideas are equally applicable today.  According to Taylor, professional management begins with trust and open communications, without which time is lost in game playing and second-guessing.  Today, with people working closely together across the globe and information flowing at unprecedented speeds, trust is speed, as well as the foundation of the knowledge navigator’s ability to self-manage effectively.

Taylor identified five levers that reinforce and facilitate trust:

1. The right people:  According to Taylor and most of the management theorists that followed, “the first step to productivity is picking the right people.”  In the 21^st century, Jim Collins writes, “the first task of management is to get the right people on the bus.”  He says the right people are more important than the right strategy.
2. Focus:  Taylor’s notions of scientific management were built around well-understood, clearly defined worker-specific roles or tasks, because “lack of clarity wastes time and energy.”  Today a knowledge navigator achieves focus not through a roadmap of tasks but through a well-understood objective that enables the worker to define the tasks required.  The effective manager helps knowledge navigators focus through a careful balance of direction and freedom, which fosters autonomy and the entrepreneurial motivation that enables a worker to adopt an owner’s perspective.  In addition, focus is enhanced by well-defined, intelligent values, rules, and standards, and cohorts with whom to think out loud.     
3. Fact-based performance metrics and feedback:  Taylor, Gannt, Galbraith, and others suggest that documentation and codification are powerful levers for improving performance; output and performance must be continuously tracked and fed back to understand the effectiveness of the methods used, refine them, and increase productive output.  Through this mechanism, capabilities are continually evolving and the best knowledge and experience is applied to the task.  This requires constantly accessing, sharing, and translating best practices and experience from around the globe – without letting the input become a burden or distraction.  This demanding, totally individualized learning process requires disciplined systems and exception reporting.
4. Motivation:  Motivation may be the single most important lever for improving productivity in the knowledge world, as Taylor indicated.  He emphasized that the most productive workers should earn a 40 to 60 percent premium to build motivation without fomenting resentment or rewarding greed.  But the greater motivation comes from a person’s image of himself or herself as an owner (in spirit if not in fact) who is responsible for the customer’s satisfaction – a professional with high standards, a sense of obligation to customers and/or peers, and a conviction that the work (whatever the field) has real impact.  Toward the end of his life, Peter Drucker felt that the greatest compliment to him was that everybody who worked with him greater heights.

 Handled well, these levers collectively build mutual trust among knowledge navigators and their employers – and boost productivity.