Page 4: Business organisations and change
The movement towards a knowledge-driven economy has changed the way in which organisations compete, all of which has accelerated the pace of change for stakeholders:
- Managers seek competitive advantages by maintaining or further developing knowledge assets.Employees require skills supported by a culture within the workplace which enables them to be creative.
- Investors witness more risk and uncertainty surrounding investment decisions. This requires flexible financing as product lives shorten and firms develop the potential to grow faster in the market place. For investors to assess the value of a company, they need to know the worth of its intangible assets.
- Policy makers need to recognise that a knowledge business economy enterprise requires a stable financial and economic system, a supportive business environment and a flexible and highly skilled workforce.
- Regulators find that regulation becomes harder when output is knowledge-driven. It involves ensuring policy is economically fair and efficient.
Improving economic performance
The UK has to make the most of the opportunities offered by a knowledge-driven economy as they occur, despite its strong position in many areas such as media, advertising, entertainment, financial services and pharmaceuticals. Improving performance requires developing a variety of attributes.
Capabilities - In a knowledge driven economy, the economy is only as strong as its capabilities in skills such as science base, technology, enterprise, innovation and effective capital markets.
Selling ice-cream on the worldwide web
Arden Supplies and its sister company, Excelquip - which together offer all the equipment and ingredients necessary to create an entire ice-cream parlour – are now selling products as far afield as New Zealand, India and Tanzania as a result of going online with a new website.
What was previously a highly seasonal business, owned and operated by the father and son partnership Phil and Brian Tomkins, has been transformed into a 24 hour a day, 365 days a year global business.
Collaboration - Successful business organisations need to collaborate both within the firms and the ways in which they organise themselves, as well as between firms in the way they interact. This includes developing strong team work with suppliers, customers, joint-venture partners as well as between managers and employees.
The Society of Motor Manufacturers and Traders (SMMT) Industry Forum
The SMMT Industry Forum is an industry-led partnership involving many of the best-known names in the automotive industry. Led by expert engineers from major vehicle manufacturers, it aims to raise the sector’s competitiveness by delivering improvements based upon world-class best practice.
Seats for commercial vehicles are manufactured by Isringhausen GB in Wrexham. A team from the Industry Forum helped it to identify a number of wasteful activities which enabled it to increase output by 20% and productivity by 45%.
Competition - It is argued that this is the sharpest spur to improve productivity - that is the production or increase in company/product value and wealth by fully applying the competencies of the work force. Competitive pressures from more open markets and the growth in foreign direct investment drive innovation and increase consumer choice.
A key feature of the knowledge-driven economy is the increasing importance of intangible assets such as brands, research and development, contacts and know-how, as well as the value of specialists. The problem is that these assets are difficult to value.