THE PRODUCTION FACTORS IN THE KNOWLEDGE ERA

Posted by Marconi Rocha
at Monday August 1st, 2016.

What’s the average time a client waits in an ATM machine line? What is the ideal age to slaughter a chicken? What is the average lifespan of an automobile in the USA vs. Brazil? The answers for these every-day life questions can be found in milliseconds through a Google search. We live in a world that is flooded with all kinds of information. No longer do we need to go to the newsstand to buy a newspaper to get updated about the events of the day.  

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Real time news shows up in our smart-phone’s screens. In today`s “Knowledge Society” we are becoming, in many aspects, passive apprentices.  We instantaneously acquire new knowledge without having to chase effective learning – it comes to us.

Post Capitalist SocietyIn his famous book entitled “Post-Capitalist Society” (1993) the greatest management guru of all times, Peter Drucker, describes perfectly the emerging scenario: “The international economic theory is outdated. The traditional production factors – land, labor and capital – are becoming restrictive more than driving forces. Knowledge in its turn is becoming the critical production factor.”

When we talk about management, we are concerned with the knowledge used to improve our business results. In this context, the learning we acquire daily will hardly be enough if our objective is to elevate the result to the next level of success. We will need to go deeply into the vast existing ocean of information and, with proper methodology, to transform knowledge into something useful for the  problem we need to solve.

In the same way, google can hardly reveal how I could produce my product or execute my service at a lower cost, or improve efficiency or quality. This is the sense of Drucker’s view. Those who hold this knowledge will possess a differentiating factor indeed!  They will continually solve problems and always search for results that are more challenging

But the fundamental question that afflicts us in our digital world is: how do we retain deep knowledge if we are continually bombarded with so much new information?   So many sensors, so many sites, so many youtube channels and discussion groups on facebook.  With the advent of the Internet of Things (IoT’s) and big data analysis, the amount of information available will gain a scale never seen before!

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Further complicating our age is the effect of combined and often disconnected information that generally ends up being central to solving complex problems and great discoveries. Alexander Fleming exemplifies this.

Two basic points are suggested :

  • The application of analytic tools that can transform big data masses into information. We have a diversity of these tools ranging from currently traditional pivot tables in Excel to the powerful tools of Business Analytics, which are capable of easily manipulating peta-bytes of data. We find some of these tools sold as a service (SaaS) where we pay an accessible fee for use, without the need to acquire the tools. They allow the data to be “mined”. In other words, they process the large data and complex information allowing us to have the essential information needed to solve the specific problem. The skill to operate the tools, therefore, is a decisive factor of its value.

  • Learning structured methods to address the problems. There are several methods commonly available with different names: PDCA, DMAIC, A3 report, 8D form, design thinking, etc. All of these offer the same core: an iterative process in which we study the problem in depth with its causes, propose actions directed to address these causes, observe the effects of the actions and in view of the result, we initiate a new cycle (deeper this time, because we now bring the learning experience from the first cycle) or consider the problem solved and address new challenges. These methodologies are extremely powerful in two ways: they allow approaching the problem in a systematized and focused manner (isolating only the essential data to solve our problems) and they are also iterative – in each new cycle the knowledge grows deeper. The domain of a structured methodology of problem solution becomes, therefore, another decisive factor.

Just three years after the publication of Drucker’s book an eccentric doctor of the Washington Hospital Center’s Emergency Department, Dr. Craig F..Feied, was able to understand the essence of the two items above.  He was able to synthesize all of the possible and existing information about a specific patient,that effectively doubled the patient flow in the emergency unit with only a 20% increase in medical staff. The result of his work – a disruptive software known as Amalga, that was acquired by Microsoft in 2006 and is currently used in most of the large hospitals in North America.

Peter Drucker’s comments still related to today`s environment, but the term “knowledge” has gained an amplitude that maybe not even the guru himself could imagine back then.

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