The Knowledge Quotient (KQ) (1) of an enterprise reflects the amount of effort put into developing enterprise relevant knowledge and IP. A high KQ is shown to be associated with greater competitiveness.
Enhancing competitiveness: What can leaders do?
I’ve had a big response to my last newsletter in which we focused on raising the Knowledge Quotient (KQ) as a means of enhancing enterprise competitiveness. “How can we do this?” was the common question and point of discussion.
If we examine Porter’s renowned work on the factors that drive competitiveness (2), we see that three of these might be considered as “external” to the enterprise, but one remains firmly within the scope of enterprise leadership. Not surprisingly, this factor relates to the enterprise’s strategy and structure.
Local research (3) has shown that leaders can drive competitiveness by creating an enterprise that focuses on knowledge creation and innovation.
How can this be done? It seems that the answer is to address the basic economic equation related to knowledge creation. In other words, enterprise KQ can be lifted by enhancing the economics of the knowledge creation process.
Like most economic issues, this is tackled by addressing the three key components of:
- The supply and creation of enterprise relevant knowledge
- The demand and use of the this enterprise knowledge
- The efficiency of the market that promotes the creation and exchange of the enterprise knowledge.
Each of these three issues are dealt with on the following page.
The supply of enterprise knowledge
- The propensity of potential enterprise Thought Leaders to capture, package and deliver their enterprise-relevant IP
- The freedom that these enterprise Thought Leaders have to connect and interact with others, both within the enterprise and outside with other Thought Leaders.
Leaders can facilitate the development of enterprise Thought Leaders by providing training and mentoring that assists them in the capture, packaging and delivery of enterprise-relevant IP. We deal with the development of an enterprise Knowledge Market below.
The demand for enterprise knowledge
The demand and use of enterprise knowledge depends on:
- A culture of learning and continuous improvement
- Evidence-based management and decision making.
These are both factors that leaders can influence through their own behaviour. While continuous improvement initiatives and processes are important, more important is the leader’s focus on continually trying new approaches to find ways to move the organisation ahead. Constant prototyping is a style that fosters learning and improvement. In addition, leaders can demonstrate that they are not captive to a particular dogma or philosophy in their decision making by carefully considering the evidence before deciding. Instead of showing consistency by making the same decision every time, they can consistently weigh up the alternatives by examining the new information.
The efficiency of the knowledge market
As with most markets, the efficiency of an enterprise knowledge market has two key drivers:
- The unfettered flow of information between suppliers and users
- A proper price being established to balance supply and demand
Leaders have a key role in greasing the wheels of the market by eliminating political and ego barriers to the creation, sharing and use of knowledge across the enterprise. This is about celebrating the creation and use of knowledge, and also signaling strongly that the competitiveness of the enterprise depends on this taking place.
But leaders also need to ensure that a proper price is placed on the supply and demand of the knowledge. In part, this means that the enterprise Thought Leaders should be encouraged and rewarded for creating relevant knowledge and IP. This includes recognition both inside and outside the enterprise – and allowing the Thought Leaders to build their personal reputation. Astute leaders know that this recognition has a strong payoff for the enterprise brand and is invaluable for the retention of key talent within the organisation.
It is better to consistently consider the new evidence and make different decisions, than to make consistent decisions every time. In these cases, inconsistent leadership demonstrates that learning is taking place.
- “Knowledge quotient” refers to the proportion of economic value created by innovation and knowledge based enterprise.
- The competitive advantage of nations, Michael Porter, 1990
- Leading Australia to more innovative, productive and fulfilling workplaces, Society of Knowledge Economics, 2009