Business Success: Evolution at the Edge

Evolution at the Edge

It is important to acknowledge that the discomfort created by chaos is necessary for change to occur. It is equally important to safeguard against getting lost or frozen in the midst of the chaos. Leaders need to balance on the edge of chaos, dipping in and being comfortable there in order to move themselves and the organization to higher levels of evolution. This delicate balance includes inviting members of the organization to feel the need for change while not feeling overwhelmed by it. According to Coveney and Highfield in Frontiers of Complexity, “ Complex systems that can evolve will always be near the edge of chaos, poised for that creative step into emergent novelty that is the essence of the evolutionary process.”
The edge of chaos is the best place to observe the patterns of order available, patterns that then may be applied to the current situation. Getting stuck in one particular state of order is not effective because, sooner or later, that state will become obsolete. It is crucial for leaders to remain open to new experiences that the environment contains and show a willingness to adapt and change based on the information received from the environment.

Emotional Distance

The ability to move gracefully in and out of change and the resulting chaos requires an ability to observe what is happening. Doing so involves being able to psychologically step back and assess what is occurring on multiple levels with detachment. If participants become emotionally involved, it becomes difficult for them to be objective.

Emotional distance allows participants to observe with an open mind, thereby enhancing the likelihood that they will hear other points of view and see what is occurring in a group. This is the reason why it is often suggested that facilitators not participate in the content of a discussion. They are then more able to see what is going on and make helpful interventions, dipping in when necessary to keep the group on course or help members deal with something they are avoiding.fractals

What to Observe at the Edge

It is helpful to observe specific aspects of the group while maintaining emotional distance by asking:

• Are the goals clear?
• Are people listening to one another and communicating well?
• Are individuals involved and included?
• How are people feeling (what are their nonverbal expressions, what they are doing, how are they interacting)?

All of this information will help to identify clues regarding the health of the group, its relationships, and its interactions in the organization. If ineffective interactions are apparent, an intervention will help move the group to greater effectiveness. For example, if people are not listening, the facilitator can ask others to repeat what was just said. If goals are not clear, the facilitator can ask the group to clarify them. If the group is moving off task, the facilitator can ask if this is what the group should be doing. If someone looks angry or confused, the facilitator can ask him or her how they are doing. Another way of observing group effectiveness is to look for patterns in the organization, which is discussed in the next section.

Fractals

Discovered by Benoit Mandelbrot in the 1970s, fractals provide a guide for examining complexity and patterns. They are characterized by patterns that replicate to create the whole. In a fractal, each part is autonomous. However, the pattern of each part is embedded in every part of the whole. Some common examples of fractals are the lungs, circulatory systems, leaves, and feathers. Fractals contain a certain order that allows them to be decoded with a few rules. Complexity is the result of a given structure being repeated many times.

Fractals can be seen within the social life of an organization. Each member is autonomous while it is part of the greater whole. The organization is healthiest when members’ patterns are replicated throughout the whole through effective communication.

Leaders are fractals of others in the organization. Their behavior is often mirrored throughout the organization. If the leader is collaborative, communicates openly, and attempts to learn from past mistakes, this behavior will carry through to the members.

Norms as Fractals

Norms for behaving are patterns that can be observed in the organization. Much like a fractal, an organization is seen as connected if certain norms exist throughout it. Norms are the implicit or explicit rules that guide and determine what behaviors are acceptable within a group. Although often not explicit, these are the rules by which people work on a daily basis. They determine how a group handles conflict and stress, makes decisions, listens, generates ideas, and allows certain language to prevail. In any group, norms may be effective or ineffective.
An example of an organizational norm is the way a group deals with conflict.

For example, some organizations suppress tension by pretending it is not there. Nonverbal cues, such as frowns, crossed arms, and downward glances, are ignored while the group goes on to the next agenda item. This norm keeps the group from examining what is occurring, from sharing thoughts, feelings, and disagreements. These unresolved feelings and disagreements then go underground and sabotage the group later because they have not been resolved. Avoiding conflict cuts off important sources of information that could possibly improve the team, the product, and the way things are done.

Healthy norms are patterns in the organization that can:

• Encourage continuous open feedback, both negative and positive
• Encourage people to share thoughts and feelings
• Encourage individuals and groups to deal with conflict
• Allow learning from mistakes, without blame or judgment
• Create a flow of information throughout the organization
• Encourage participation and involvement in decisions

Each of these norms facilitates the emergence of a truly adaptable organization. All of these norms must be aligned with and support the desired values to ensure that those values permeate the organization. These values are in harmony with the principles that support living systems. As they become institutionalized, healthy norms will come to characterize the organization.

Business Success: Tips from the Field

All my successes have been built on my failures.—Benjamin Disraeli, British statesman and literary figure

Cherry Woodburn, a business innovation consultant, attributes her passion for innovation to her first manager who encouraged her to try new ideas without fear of recrimination. “If an idea didn’t work,” Woodburn states. “We would analyze the process and learn from the experience.” Here she shares advice on creating a culture of innovation.
INNOVATION IN ACTION

Most companies fail to encourage innovation. Large companies in particular tend to be risk adverse and have a mind-set geared toward exploiting ways to control their processes through standardization. Process improvement is beneficial. But a company’s emphasis on reducing variation in its present systems can result in a lack of innovation over the long term. It is a paradox. While companies are increasing the quality of their product, they may be decreasing their ability to innovate.

Businesses need to cultivate innovation in order to compete in today’s fast-paced, innovation-driven economy. Since innovation is now recognized as necessary to keep a business viable and competitive, why doesn’t a culture of innovation spring up organically? Why does it need to be fostered? What keeps employees from naturally bubbling with creativity?

Obviously there are many variables, one of which is a cultural belief that there is one right answer. The natural outcome of this simplistic thinking is a reduction in the dialogue, thereby blocking the exploration of various alternate viewpoints and ideas. Meetings are held to find “the one right answer.” No one really listens to anyone else. Everyone is too busy preparing an opposing response. Underlying assumptions go unquestioned and unexamined. And too often, the person who speaks up or disagrees with the majority opinion is labeled as “not a team player.” Add in today’s hectic pace and a general disdain for meetings, and it is understandable that people look for closure rather than exposure to new ideas.light

However, innovation and expansive thinking emerge from nurturing different points of view. Doing so requires the pioneering spirit of exploring new territory. Innovation by its very nature requires experimentation and failure. Thomas Edison is the classic example. After more than 1,000 attempts to invent the first long-lasting electric light bulb, he was successful inventing bulbs that stayed lit for only a few minutes. One of his colleagues asked, “Mr. Edison, don’t you feel you are a failure?” Without reservation, he answered, “Not at all. Now I definitely know more than a thousand ways not to make a light bulb.”

Sadly, the culture in many organizations dictates that mistakes are bad and should be avoided at all costs. Employees are criticized or even ridiculed for mistakes. This stems from early learning in institutions where mistakes meant a lower grade and even possible consequences at home. Often this attitude continues into the workplace, where the aversion to mistakes is continued. Consider how these stultifying lessons continue to pile on: Sue gets reprimanded in front of peers for making errors and feels humiliated. Consequence: In the future, she will be prone to hide her mistakes and not deviate from business as usual. In the same company, Tom is written up for insubordination because he experimented with a new way of doing things, thereby not adhering to long-held company practices. As a result of these and similar incidents, people play it safe. Yet the greatest innovations can come from workers’ own initiatives, not just from an initiative pushed down from the top.

The need for innovation is nothing new, but the recognition that it needs to be a core competency—permeating all departments and all levels of the organization—is relatively recent. Much as leaders once believed that quality was primarily the responsibility of the quality department, so has innovation been primarily confined within the borders of research and development. Frans Johansson, author of the successful book The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts & Cultures , advocates that companies also be willing to take their efforts at innovation beyond the borders of their business to include other industries and disciplines. He called this cross-fertilization of ideas the Medici effect, after the fifteenth-century banking family that broke down traditional barriers separating disciplines and cultures to ignite the Renaissance.

A culture of innovation needs to be nurtured until it is deeply rooted into the psyche of every employee. However, this cannot be done successfully with announcements, slogans, or playing on people’s fear of competition. Ironically, innovative thinking also is needed to maintain traditional practices that still add value and to cultivate a daily crop of new ideas. The culture is about recognizing individual mind-sets and accepting perceived borders and limitations in order to question them. These mind-sets typically come from each employee’s individual experiences and culture. They are empowered by past experiences that have become hardwired into the brain. Couple that with the fact that brains are structured to simplify and categorize massive amounts of daily stimuli, and it is no wonder people get caught in a duality of right and wrong. The pattern becomes “Success is good; failure is bad.” When new information is compatible with what is known, it is accepted as the truth; when it does not mesh with preconceived ideas or past experiences, it receives little consideration. As a result, opportunities to innovate and change the status quo are missed. Research shows that the act of recognizing and surfacing unconscious beliefs offers the highest leverage for change.

Understanding and acknowledging the current situation in comparison to the desired state is the first step in any change initiative. It is impossible to change something that is not acknowledged or understood, which makes it difficult to grow into a future culture steeped in innovative thinking.

Begin with asking tough questions of everyone in the organization. Dig up deeply embedded beliefs and assumptions that are, more than likely, not in sync with the stated company vision and values. Here are some questions for starters.

• What are your own and your organization’s assumptions and beliefs related to innovation, particularly innovation that deals with new practices and methods? New product ideas tend to fare better, but, again are they encouraged and tested? Begin a dialogue with employees at all levels and in all departments to learn how steeped the company is in “Business as usual” and “That won’t work here.”

• Has an emphasis on process improvement, standardization, and reducing variation created a myopic focus on improving what you are already doing to the virtual exclusion of creativity and innovation? Think of the demise of the fully integrated steel mills versus today’s mini-mills; think of Kodak improving in film and print while virtually ignoring digital photography for years.

• What are your own and your organization’s assumptions and beliefs about risk taking, mistakes, and lack of immediate positive outcomes? Ask yourself if you stick with a new idea long enough to see results. Tally the number of initiatives that started over the past 5 to 10 years. Then honestly evaluate the number remaining—in other words, those that maintained their initial momentum. Study the gap between the organization’s actual behavior and the values it espouses about vision, growth, and innovation.

• Do you encourage experimentation, testing hypotheses, or do new ideas get quashed in meetings or die a slow death as they are analyzed, dissected, and debated?
Think of the ensuing dialogue as preparatory work for growing the innovative capabilities that have been lying fallow due to traditional business practices. When transforming a garden, it is not enough to plant verbal seeds. If the ground has been depleted of creative nutrients due to years of leaching the soil with criticism, tight control, and fear, announcing a new gardening program will not be successful.

By taking time to listen carefully and allow fears to emerge, the organization can begin to prepare the soil. Fertilizing with acceptance and courage allows an innovative culture to emerge. As leaders cultivate the vision, innovation will flourish and generate new ideas for years to come.

Business Success: Activities by Brain Function

Considering the complexity of today’s volatile global economy, the role of the right brain is increasingly vital. With computers becoming more and more adept at handling the linear processes, the competitive advantage for humans is in the ability to access the power of the right hemisphere. And the skills needed to participate in an adaptive organization are also dominantly right-brained. In fact, research suggests that our right hemisphere is the only area that deals effectively with change.

Brain

In general, the two halves of the brain work together to orchestrate every human activity. However, neuroscientists suggest that the two hemispheres approach every situation slightly differently. Understanding and enhancing the use of one side or the other can enhance creative endeavors.

The differences in the hemispheres can be characterized in four major ways:

1. The left hemisphere controls the right side of the body; the right hemisphere controls the left side of the body. This fact is well known. But it is interesting to note that the written word goes from left to right, a movement controlled by the left hemisphere. Therefore, reading and writing are controlled by the linear, logical, sequential part of the brain. Until recently, this was the source of almost all knowledge. Only since the twentieth century has information been conveyed in pictures, encouraging right hemisphere or even whole-brain synthesis.

2. The left hemisphere is sequential; the right hemisphere is simultaneous. As described, reading is sequential. The left hemisphere also manages other sequential processes, such as talking and interpreting speech. By contrast, the right hemisphere has the ability to interpret information simultaneously. This enables people to make sense of very complex situations. To illustrate, consider a comparison to computer software. SAS software can perform statistical calculations faster than humans can. But the most powerful software cannot recognize a human face as fast as the average person. “Think of the sequential/simultaneous difference like this: the right hemisphere is the picture; the left hemisphere is the thousand words.” As the flow of complex information accelerates, frequent and proficient use of the right hemisphere becomes increasingly important.

3. The left hemisphere specializes in text; the right hemisphere specializes in context. In most people, both left- and right-handed, the left hemisphere is the source of language. However, the ability to comprehend language is a bit more nuanced and requires both hemispheres. Chapter 3 described the mechanics of both verbal and nonverbal communication. Within the brain, the left hemisphere interprets the words. The right hemisphere processes all of the nonverbal parts of the communication, such as tone, pace, facial expressions, and body language. In addition, the right hemisphere’s ability to consider context gives it responsibility for filling in blanks, translating nuance, and interpreting metaphor.

4. The left hemisphere analyzes the details; the right hemisphere synthesizes the big picture. Basically, the left brain analyzes information in a linear fashion. The right brain synthesizes information to create a whole. The left brain can find problems, identify parts, and grasp details. The right brain focuses on interactions and relationships. And “only the right brain can see the big picture.”

Ned Herrmann, a well-known brain researcher, created a list of common business functions and mapped them to the quadrant of the brain that primarily handles each one.

Left Cerebral Cortex
• Gather facts.
• Analyze issues.
• Solve problems logically.
• Argue rationally.
• Measure precisely.
• Understand technical elements.
• Consider financial aspects.

Right Cerebral Cortex
• Read signs of coming change.
• See the “big picture.”
• Recognize new possibilities.
• Tolerate ambiguity.
• Integrate ideas and concepts.
• Bend or challenge established policies.
• Synthesize unlike elements into a new whole.
• Problem solve in intuitive ways.

Left Limbic System
• Find overlooked flaws.
• Approach problems practically.
• Stand firm on issues.
• Maintain a standard of consistency.
• Provide stable leadership and supervision.
• Read fine print in documents and/or contracts.
• Organize and keep track of essential data.
• Develop detailed plans and procedures.
• Implement projects in a timely manner.
• Articulate plans in an orderly way.
• Keep financial records straight.

Right Limbic System
• Recognize interpersonal difficulties.
• Anticipate how others will feel.
• Intuitively understand how others feel.
• Pick up nonverbal cues of interpersonal stress.
• Relate to others in empathetic ways.
• Engender enthusiasm.
• Persuade.
• Teach.
• Conciliate.
• Understand emotional elements.
• Consider values.

Come back next week for an article about fostering creativing.  We welcome your comments and feedback and love it when you share our blog with your co-workers and friends.

Leadership Skills: Four Phases of Appreciative Inquiry

By asking positive questions, members of the organization begin to build a collective vision of what is possible. The future is designed through a self-organizing process that solicits the best from every member of the organization. The process generally consists of four phases.

appreciative inquiry
Discovery Phase

The discovery phase is based on the theory that “human systems are drawn towards their deepest and most frequent explorations.” This phase is characterized by interviews that are designed to determine the optimal capacity of the organization. In contrast to many discovery interviews that bring in outside consultants to uncover problems, the discovery phase is usually done in house with most members of the organization participating. It really becomes a “system-wide analysis of the positive core by its members.” As members of the organization are exposed to the possibilities expressed by other members, their level of appreciation and hope increases. The result is the discovery of themes and patterns.

Dream Phase

The dream phase guides participants into a transformational state by asking them to imagine what is possible for the organization. By tapping into the creative energy of the group, an imaginary future emerges for the organization. The dream usually contains “three elements: a vision of a better world, a powerful purpose, and a compelling statement of strategic intent.” As a result, participants feel a deeper connection and sense of shared purpose for their organization.

Design Phase

The power of the dream fuels the design phase. In a typical change process, the directive is top down and often met with great resistance. The design and strategy necessary to bring the dream into reality emerges out of the new system of cooperation, mutual respect, and shared vision. In most cases, participants enter the design phase with a desire to change.

Destiny Phase

Initially, the fourth phase was known as delivery because it was considered a more traditional stage of planning and implementation. However, after several years of working with the process, practitioners discovered that it felt more like a major transformation. Participants were realizing that their interpretation of the world has an effect on the process. As discussed in Chapter 2, their intention was creating their reality. So rather than focusing on planning and implementation, practitioners just let the participants guide the process. They completely gave up control. What seemed like a recipe for chaos turned into a perfect container for dynamic transformation and organization. Cooperrider and Whitney describe the Destiny Phase as follows:
Appreciative Inquiry accelerates the nonlinear interaction of organization breakthroughs, putting them together with historic, positive traditions and strengths to create a “convergence zone” facilitating the collective re-patterning of human systems. At some point, apparently minor positive discoveries connect in accelerating manner and quantum change, a jump from one state to the next that cannot be achieved through incremental change alone, becomes possible. What is needed, as the “Destiny Phase” of AI (Appreciated Inquiry) suggests, are the network-like structures that liberate not only the daily search into qualities and elements of an organization’s positive core but the establishment of a convergence zone for people to empower one another, to connect, cooperate, and co-create. Changes never thought possible are suddenly and democratically mobilized when people constructively appropriate the power of the positive core and…let go of accounts of the negative.
Appreciative Inquiry is successful because every member of the organization has an equal voice. This has the effect of breaking down common communication barriers and inspiring full participation. It does not require any exceptional knowledge. Each member is asked to share his or her view of past and present organizational competencies. “The focus is on achievements, assets, potentials, innovations, strengths, elevated thoughts, opportunities, benchmarks, high-point moments, lived values, traditions, strategic competencies, memorable stories, and expressions of wisdom.” The sharing of positive aspects brings the members into a sense of wholeness from which the insights, visions, and future dreams can emerge. Appreciative inquiry is based on the concept that every member has value in the process.

Business Success: Instilling a Culture of Collaboration

Many organizations spend large amounts of money on state-of-the-art collaboration software. However, success is elusive if the culture does not support collaboration. Here are some approaches for instilling a culture of collaboration.

• Establish a mentoring system. A natural complement to collaboration, mentoring helps support team effort by providing assistance to members in learning and development. A formal structure with top-level commitment and participation goes a long way to support system-wide collaboration.

• Invite constructive confrontation. Disagreement and conflict in a safe and trusting environment infuse the system with energy, leading to innovation within and evolution of the system.

• Integrate collaborative tools into work styles. Technology that facilitates collaboration is transforming the workplace. System-wide support and advocacy that consider individual styles as well as organizational goals ensure high adoption rates and benefits.team collaboration

• Facilitate cross-functional brainstorming. Bringing diverse individuals together in a safe, informal environment to share ideas and concerns taps into the wisdom of the organization, leading to expansive thinking and breakthrough solutions.

• Reward people for collaborative behavior. Effective collaboration leads to efficiencies across the organization. Discouraging internal competition by rewarding individuals who collaborate helps to ingrain the behavior. The goal is create a new norm where collaboration is the natural tendency.

• Reward people for gaining broad input. Evaluate and reward individuals for seeking input and advice from others.

• Reward people for sharing information. Evaluate and reward individuals who share their knowledge and resources freely.

• Reward people who use collaboration to innovate. Evaluate and reward those who initiate and inspire cross-functional teams that innovate.

• Promote collaborators. Promote individuals who demonstrate their understanding of that concept that considering multiple perspectives leads to better decisions.

• Practice collaborative leadership. Modeling behaviors such as engaging people, asking questions, listening, and building consensus sends a powerful message that encourages similar behavior at all levels. Using positive nonverbal communication such as an accepting tone and curious tone elicits trust, sharing, and consensus.

I would love to hear your comments about ways you are implementing and encouraging collaboration in your organization.  If you like what you are reading, please share it with your network!

Business Success Skills: High Quality Relationships

High-quality relationships are the lifeblood of an organization that seeks to leverage complexity and emergent knowledge. Once a set of solid communication practices are in place, relationships begin to form. To use these relationships effectively, however, the dissemination of crucial information, such as the goals of the business and the knowledge needed to attain those goals, is essential. As relationships form through effective communication practices, a culture of mutual respect will emerge.business_relationship

Shared Goals

Traditionally, goals are shared within functional teams. The overall goals of the organization, however, are less well known. In an organization with a highly interdependent framework, each member of the organization must focus on the overall goal. Since the framework is designed to allow structure and process to emerge, the shared goal of the organization is the unifying force that empowers that emergence.

Shared Knowledge

Sharing knowledge goes hand in hand with shared goals for any organization using a highly interdependent framework. Knowledge shared between teams from different functional backgrounds creates connections that foster cross-functional support while reducing competition and conflict.

Mutual Respect

Highly interdependent organizations thrive on mutual respect. Effective communication practices as well as shared knowledge and goals go a long way to create a culture of mutual respect. Within a respectful dialogue, differences in opinions unleash energy and creativity. Problems are minimized when the involved parties feel respected. This behavior is best learned by watching those in positions of power.

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Seven Realities that Jeopardize Business Survival: Part II

In Information Revolution, Jim Davis, Gloria J. Miller, and Allan Russell discuss the

message-in-a-bottle “Seven Realities that Jeopardize Business Survival.” Each reality illuminates the need for new business models as well as styles of leadership. Here is Part II.

Business Reality 4: The Only Constant Is Permanent Volatility

This is a common theme but bears repeating: The company that is most agile and adaptable will gain and maintain a competitive advantage. Instead of just relying on past results to predict the future, companies need to tap into current trends through social networking, Web analysis, and employee feedback.

Business Reality 5: Globalization Helps and Hurts

Globalization presents many advantages, especially to small companies seeking a worldwide presence. Any company that is connected to the Web can strategically partner, outsource, or insource with relative ease. The downside is increased complexity when dealing with international languages, standards, and cultures. Strong communication skills are essential for navigating this terrain.

Business Reality 6: The Penalties of Not Knowing Are Harsher than Ever

In the new era of billion-dollar corporate scandals, personal accountability at the highest levels is not only prudent, it is now legally mandated. The Sarbanes-Oxley Act was designed to systematize ethical behavior. In addition to the need for strong, honest leadership, information systems to handle this complex business data are essential.

Business Reality 7: Information Is Not a By-Product of Business; It Is the Lifeblood of Business

The seventh business reality is a direct result of the first six. Due to shrinking business cycles, level playing fields, changing rules, volatility, globalization, and the cost of ignorance, information has become the lifeblood of many businesses. Today, accurate, accessible, actionable information is necessary to compete in the global economy. There are strong pressures to achieve more results while spending less time and money. Companies need up-to-the-minute information about their customers, suppliers, competitors, and markets.

These realities also point to the need for new business models as well as for visionary leadership. With the complexity of business today, decisioning throughout the entire organization has to operate like a well-oiled machine. The sections to come expand on optimal organizational structures as well as the core competencies, or success factors, necessary to operate at this level.

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Seven Realities that Jeopardize Business Survival: Part I

In Information Revolution, Jim Davis, Gloria J. Miller, and Allan Russell discuss the “Seven Realities that Jeopardize Business Survival.”[i] Each reality illuminates the need for new business models as well as styles of leadership. business_survival_life_ring

Business Reality 1: Business Cycles Are Shrinking

In today’s Web-enabled economy, speed within all parts of the business model is the great differentiator. To accommodate changing markets and consumer preferences, product development and testing that used to take years has been shrunk to months or even weeks. Today, the first to market often enjoys the competitive edge.

This shortened cycle challenges managers to make decisions with less time for consideration or analysis. As a result, they must depend on a combination of accurate, actionable information and intuition. And their decision must be in alignment with the overall strategy of the company.

Business Reality 2: You Can Only Squeeze So Much Juice Out of an Orange

The goal of improving operational efficiency drove a majority of the investment in the last decade. Initially the returns were high and provided a competitive advantage. However, now that enterprise resource planning (ERP) software is available, the field has been leveled. The next step is greater innovation and agility.

Business Reality 3: The Rules Have Changed; There Is No More “Business as Usual”

The days of following a typical path to business success are over. The same factors apply: profitability, customer satisfaction, stakeholder value, and competition. However, the path to success is very different and is fraught with new challenges:

  • Mergers and acquisitions have hindered agility and cohesiveness.
  • Productivity advancements have increased expectations from both customers and management.
  • Advancements in IT have overwhelmed the abilities of some companies to manage and leverage the knowledge.
  • The technologies that were introduced as the key to success often failed because the human issues were overlooked.

Stay Tuned for Part II and come back for more business intelligence and change management focused blogs by The OLIVIAGroup! Feel free to comment with questions, insights, or additions to this post. To receive alerts when the next blog is published, click on the RSS feed at the right of the page to subscribe.

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[i]             Jim Davis, Gloria J. Miller, Allan Russell, Information Revolution (Hoboken, NJ: John Wiley & Sons, 2006), xv.

Discovering New Businesses Opportunities

Several years ago, Lester Thurow made this observation and posed several timely questions: “The old foundations of success are gone. For all of human history the source of success has been controlling natural resources — land, gold, oil. Suddenly the answer is “knowledge.” The king of the knowledge economy, Bill Gates owns no land, no gold or oil, no industrial process. How does one use knowledge to build wealth? How do societies have to be reorganized to generate a wealth-enhancing knowledge environment? How do they incubate the entrepreneurs necessary to bring about change and create wealth? What skills are needed? The knowledge-based economy is asking new questions, giving new answers, and developing new rules for success.”[i]business_opportunities

This statement highlights several important characteristics of the information economy. The assets themselves are often intangible. This inherent instability makes the market even more volatile. Early movers such as America Online were able to gain a strong foothold by giving away their software and charging a monthly fee for their service. But within a few years, market pressures forced them to change their model. Luckily, they have been able to adapt and maintain their value. Other companies, such as Bloomberg, Dow-Jones, Reuters, and Quote.com, provide real-time, aggregated data for the financial services industry. News is delivered from every major news source through the Internet. And blogs have becomes sources of news as well as forums for questioning the veracity of information.

Many back-office and outsourcing businesses have grown out of virtual connectivity. Services such as bookkeeping and answering the phone that were historically performed within the same building are now done in other cities or continents. Today, some are surprised to learn that most taxes are prepared and X rays are read in India.

Given this relentless pressure to adapt our business models, companies are embracing innovative technologies and developing new strategies for capturing value.

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[i]             Lester Thurow, Building Wealth, http://www.theatlantic.com/issues/99jun/9906thurow.htm.