HR IN THE KNOWLEDGE ECONOMY
An extended version of a paper presented by
Dr Peter Saul to
MGSM Executive HR Forum
12th June, 2003
Sydney
Strategic Consulting Group
Where to Look for Disruptive Organisational Paradigms
 IN VOLUNTEER “ORGANISATIONS” SUCH AS THE OLYMPICS
AND CLEAN-UP AUSTRALIA
 IN “SURPRISING” OR “CRAZY” PLACES OUTSIDE THE
MAINSTREAM OF BUSINESS AND GOVERNMENT
EXAMPLES:

Terrorist organisations such as Al-Qaeda

Multi-agency networks emerging to fight global health threats
such as SARS
 IN THE EMERGING “KNOWLEDGE ECONOMY”
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Many experts forecast the future of HR without
giving any kind of driving logic.
The Knowledge Economy provides a powerful
logic for the emergence of a new kind of people
management function.
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Disruptive Shifts in Human Resources
Competitive
pressures;
market changes
Performance
the HR
“market”
needs, uses
and will pay
for
Adapted from ideas in “The Innovator’s Dilemma” (1997)
by Clayton Christensen
Strategic Consulting Group
Signs the K-economy is Becoming Mainstream
“... we define a knowledge based economy as one that is increasingly dependent for its
growth on the input of knowledge as a value-added input to the economic system. This
is reflected in a change in the basis of ‘competitiveness’ for economies, organisations
and individuals. This is realised in four interrelated ways. First, such economies
experience a changing structure exemplified by new industries, occupations and
organisational arrangements. Second, there is a change in the types of skills required,
with a rise in the importance of generic skills, including the ability to work more
autonomously, monitor their own output and behaviour, work as part of flexible teams,
adapt to change, solve problems and think creatively. Third, the economy requires new
forms of knowledge and places increased importance on the creation and application of
knowledge in networks or clusters of companies/enterprises, and within ‘communities
of practice’ where workers are required to work together in new and more complex
ways. Fourth, innovation becomes more important as a means to increase economic
competitiveness, and knowledge management becomes increasingly the key to
sustainable competitive advantage…”
“The Knowledge Based Economy: A Review of the Literature”
NSW Board of Vocational Education and Training, Oct 2000
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Signs the K-economy is Becoming Mainstream
“Business-webs, value chain integrators, and other new types of interorganizational alliances abound these days. They are called into being by:


Incapacity of classic business models to match the requirements of
generating value in the knowledge economy
Availability of a powerful new medium for fostering local and global
collaboration, shared learning, and coordination of action in dynamic
webs of value creation
...companies that won't be able to redefine themselves, will most likely disappear,
and the human cost of that is unforeseeable.
The fear of the unknown, combined with the impact of the massive and sudden
devaluation of many traditional competences, may trigger resistance to the
waves of evolutionary changes washing our shore.
Now is a time when keeping alive the question of how to reinvent ourselves and
develop working prototypes of the new ways of organizing is a measure of
leadership.”
George Pór, Founder of Community Intelligence Labs
www.co-i-l.com/coil/knowledge-garden/kd/vcmodels.shtml
Strategic Consulting Group
Signs the K-economy is Becoming Mainstream
“…it’s at Singapore’s newest university, Singapore
Management University, where the real groundbreaking
changes are taking place. SMU has dispensed with lectures
entirely in favor of facilitated learning, and soft skills
development is now part of the academic curriculum.
Emphasis is placed upon developing leadership, team skills
as well as creative thinking, and emotional literacy…. The
university’s stated aim is to harmonize academic rigor with
soft skills training. By moving away from a structured
learning model, SMU hopes that their graduates will be
better equipped to contribute to an innovation-driven
economy”.
Paul FitzPatrick, Singapore Human Resources Institute
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The K-economy Paradigm Will Operate
Within Big Organisations Too
“Organisations will soon be managed as shifting clusters of
internal enterprise units and self-managing teams. They
will be connected by interactive information networks in a
web of alliances, including working relationships between
workers, customers, suppliers, rivals and governments to
form a seamless global economy”.
Michael Milgate “Management Today”, June 2003, p. 13
Strategic Consulting Group
In the K-economy, Most Employers Are Small/Medium
(typically with no formal HR function)
“In Australia, the 1000 largest entities account for 51 per
cent of turnover and 33 per cent of employment. If in the
next 15 to 20 years the share of revenue drops to 40 per
cent they’ll only be employing 25 per cent of the workforce.
Medium sized enterprises - those with 20 to 200 employees are likely to be the fastest growing employers followed by
businesses with five to 20 employees. But the classic
centre of the modern working world, the big company, has
reached a level of ‘dysfunctionality’ ”
Phil Ruthven, Weekend Australian Financial Review, 1-2 Feb 2003,
p. 26.
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Knowledge is Personal
“Unlike information, knowledge involves us and our deeper
motivations and dynamics as human beings. We interact with
something or someone in our environment and then use who we
are - our history, our identity, our values, habits, beliefs - to decide
what the information means. In this way, through our construction,
information becomes knowledge. Knowledge is always a reflection
of who we are, in all our uniqueness. It is impossible to
disassociate who is creating the knowledge from the knowledge
itself.
...We must recognize that knowledge is everywhere in the
organization, but we won't have access to it until, and only when,
we create work that is meaningful, leaders that are trustworthy, and
organizations that foster everyone's contribution and support by
giving staff time to think and reflect together.”
Margaret Wheatley (2001) “The Real Work of Knowledge Management”.
IHRIM Journal, April-June, Volume 5, Number 2, pp. 29-33
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Knowledge Organisations
Organisations must capture high value market “spaces” and be
attractive to knowledge workers
Hence knowledge organisations must:
 set objectives that people deeply care about so that they are
motivated to self-organise around them
 foster teamwork, sharing and network building
 foster innovation, curiosity, questioning
 foster continuous learning and reflection
 reward knowledge creation and value-adding
 be tolerant of mistakes - maximise learning
 display openness in communication
 build and maintain knowledge sharing and synergistic
networks with business partners, education and research
institutions and government
 maximise environmental sensitivity and corporate adaptability
 locate where k-workers want to live
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Corporate Culture is Critical to Success in K-economy
"Successful knowledge sharing is 90
percent cultural, 5 percent tools and
5 percent magic."
Mark Koskiniemi, Vice President of Human Resources,
Buckman Laboratories
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K-economy Example: Western Sydney
For a presentation on the k-economy development strategy of the
Office of Western Sydney go to:
http://www.keconference.com/presentations/6-MargaretRyan.ppt
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K-economy Example: The Noosa Economy
The
lifestyle
economy
The knowledge economy
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New Leadership Paradigm: “Complex Leadership”
 Leaders and organisations create each other
 “Catalysts” including leaders, ideas, events, and symbols
trigger, amplify and speed up the effects of leader behaviour on
the organisational system
 Complex Leaders do not control but foster and enable bottomup behaviours and stimulate systems toward emergent
surprises
 Complex Leadership permeates the whole organisation differences between “leader” and “follower” are blurred.
 Complex Leaders impact the fitness of the system by enabling
“distributed intelligence”
Source: Marion and Uhl-Bien (2002) “Complexity Theory and Al-Qaeda: Examining
Complex Leadership”
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Summary of a Possible Future
 Most organisations produce or compete on the basis of
knowledge and services (not things)
 Most “organisations” are networks of SMEs
 People skills are taught at schools and universities (these are
taken for granted in the workplace)
 People management systems become necessary organisational
infrastructure (and are largely invisible and taken for granted)
 Leaders nurture networks and foster emergent order
throughout the system (this is created by bottom-up action)
 Work teams, informal self-help networks and formal
professional associations take over much of the old HR role
(e.g. in finding jobs; sharing knowledge; recognising success)
 Future HR roles could include: leader, mentor, project
manager, broker/linker, consultant, HRIT system manager, team
member/professional
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Details of HR in the K-economy
 Very specific HR scope focused on project organisation
(e.g. talent scouting/selection, pay, health & safety)
 Outsourced
 agents, brokers, specialist providers
 contract staff organisations handle the HR for their talent
as part of their brand and competitive strategy
 Mutual employment obligations spelled out in project
contracts
 or implicit in industry standards
 or assumed from past working experience
 Project Manager’s reputation depends on his/her people
skills and hence there is a reluctance to delegate to HR
specialists
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Details of HR in the K-economy (cont.)
 Selection is via networks, personal references, reputation
 Performance management is via peer pressure and industry/
professional standards
 Rewards are contractual or entrepreneurial (equity based)
 Development is via doing leading edge projects
 where one can acquire explicit and tacit knowledge and build
professional networks
 Innovation is via brokers, deal makers, agents, sponsors,
and team/network conversations
 Individuals rely on professional associations, “guilds”,
managers/agents, self-help networks
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CHANGING “HR” ROLES: A Summary
PAST
FUTURE
(in K-economy)
HR ROLE WAS CLEARLY
DIFFERENTIATED
 mechanistic
(Personnel Admin)
 ritualistic, legalistic (IR)
 CEO’s eyes and ears
with the troops
 provider of specialist
services
 distinct professional
career paths
HR is HR’s responsibility
PEOPLE/LEADERSHIP ROLE IS
DISTRIBUTED AND DIFFUSE
 knowledge management
 network ecologist;
teamwork; leadership
 legal compliance
 change management
 purchaser of specialist
services
 no distinct HR profession new hybrid roles emerge
People/Leadership is
everyone’s responsibility
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NEW CRITERIA FOR RATING “HR”
 Evidence of behaviours aligned with culture of innovation and sharing
 Salary/wages costs compared to industry median (reflecting
value of corporate reputation/intangibles in labour market)
 Number of talented candidates applying for advertised (and
unadvertised) jobs; or partnership roles
 Rate/cost of unplanned turnover among good performers
 Percentage of customers citing “service quality” or “competent, caring
staff” as a competitive edge for the company
 Speed and net cost of implementing organisational changes
 Percentage of stakeholder value coming from products and services
introduced in last 3 years
 Number of patents generated; value of intellectual property
 Share price premium over net tangible assets (compared to industry
peers)
 Value derived from business partnerships
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Some Questions
 How can you nurture knowledge-creating networks?
 How can you catalyse emergent behaviour that adds value?
 How can you eliminate HR policies and practices and unlearn
behaviours that get in the way of successful knowledge
economy dynamics?
 How might you help transform leadership in your organisation
from seeking top-down control to seeking bottom-up emergent
order? OR How can you re-invent yourself and other leaders
as organisational ecologists?
 Are you prepared to risk acting on your answers? Or, are you
prepared to risk NOT acting on your answers?
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