McDermott Consulting

     Today, knowledge is the heart of business. In the knowledge economy, many companies are discovering that:

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  • they need to change their business model as third world countries begin to compete in knowledge work, such as software development and engineering;
  • economies of knowledge (a company’s ability to concentrate knowledge) are as important as economies of scale;
  • the ability to compete depends on developing and disseminating knowledge across teams, geography and business units; and
  • information technology increases connectivity, but human networks, common processes and global organizational structures are key to competitiveness.

Designing organizations around the development, concentration, distribution and flow of knowledge has become critically important.

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Designing Knowledge Companies

Designing knowledge companies in today’s highly competitive knowledge economy is very different from traditional organizational design. Technology, increased competition in knowledge resource markets, and increased customer demands on knowledge and professional service companies have put enormous pressure on organizations to dramatically improve the productivity of knowledge workers. As a result, traditional processes and structures - and the assumptions about the nature of expertise that underlie them - are no longer appropriate. Today, companies trying to increase their effectiveness in using knowledge need to pay attention to five elements.

Knowledge work processes
Designing knowledge work processes needs to do much more than simply streamline process steps. It needs to enable professionals to quickly access standard data and processes, connect with others to think through knotty problems, identify best practices, and move knowledge rapidly from expert to commodity so customers can have more information, choice and control over the delivery of knowledge. This is a very different kind of work process than we are used to. See Services.

Economies of knowledge
Many companies today reorganize regularly to adapt cost pressures and market shifts. These reorganization often break the social networks through which expert knowledge is developed and sustained. By building organizational elements that support expert networks, such as communities of practice, innovation networks and centers of expertise, companies can balance front-end market needs with the need to deepen, sustain and preserve distinctive expertise. See: Articles. Services

Communities of practice
One of the most exciting developments in business today is the emergence of communities of practice as a core element of the business. Our understanding of communities of practice has evolved considerably since we noticed their importance a decade ago. We now recognize that there are different types of communities and common elements of healthy communities. See: Communities of practice. See Articles. Services.

Knowledge sharing culture
Getting people to share knowledge is often much more subtle than it first appears. A recent study of successful knowledge sharing initiatives found that culture plays a key role. Rather than trying to create a new culture or change an existing one, successful initiatives were built on core values of the organization and matched the style of change that was successful in the company. See Articles. Services.

Organizational change
As always managing change is key to implementing any new organizational structures. Most knowledge management and process redesign efforts fail, primarily because they fail to understand what’s really involved in change. But we know a great deal about effective change. Implementing improvements in knowledge organizations need to be grounded in that body of knowledge. See Articles. Services.

Effective organizational design in today’s knowledge economy is very different from organizational design in the past. It needs to incorporate a deep understanding of the nature of knowledge, how it is resourced and transformed into product and services, and how people who use it think and connect.

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