Sustainable competitive advantage comes from proprietary knowledge

A low barrier to entry does not prevent existing and prospective competitors from entering the race for the same profitable business. Similarly, in order for the knowledge-based competitive advantage to be sustainable, it must be difficult for anybody else to import or create the knowledge. In an era in which knowledge quickly gets obsolete, the only way an organization can stay at the top of competition all the time is to constantly renew and expand its knowledge base. A steel manufacturing company called Nucor Corp. (www.nucor.com ) and the most envied Google pop up in my mind on this point.

Nobody can afford basking on its past or current success for too long a time and still expect to be a model business. Just like the earth never stops revolving aroung the sun, a business must constanly move along the right direction and do so in the right way. This is just how the reality work. Calling it challenge or calling it fun doesn't change the basic nature of competition. Asking why doesn;t help. It's easier to deal with you own perspective.

The only way to sustain competitive advantage is to constantly recreate competitive advantage. This is equally applicable to a society, a firm, a department, and an individual.

Experience: Pros and Cons

Wikipedia defines experience as a general concept that comprises "knowledge of or skill in or observation of some thing or some event gained through involvement in or exposure to that thing or event." One with a lot of experience in a certain field knows a lot about that field and can be called an expert. An expert solves problems both effectively and efficiently. Experience therefore is a big part of expertise. It lies in the core of maturity.

Firsthand experience is good becuase of the opportunity to see how things actually work in a real circumstance. Some experience can even change one's perspective and thinking at a fundamental level, triggering a chain effect in his/her life. However, firsthand experience may be biased by personal interpretation. Besides, given the limited amount of time that can be devoted to experiencing, we can't simply rely on firsthand experience to grow our knowledge base. Although second-hand experience is not as intimate as firsthand experience, there can be more available to promote learning.

For the most part, experience is good. Obtaining firsthand business or work experience adds value to one's employability and can mean something positive in the eyes of the prospective employer. From the perspective of IR (increasing return) effect, it's advisable for a full time student to take the first step in accumulating work experience as soon as possible. On some occasions, however, we want to be careful not to be misguided by our past experience. Things, both internal and external, may have changed and require revision of your knowledge base. It's a good mental exerciese to develop of habit of reflecting on your exprience regarding something and evaluate with a fresh mind how valid those experiences really are. Thinking outside the box often is critical in innovation.

Abundance is the key

Is knowledge management about management of knowledge or management of the knower. I think it's both. Knowledge as hardware, software, design, patent, paper, or other forms of representation can and ought to be managed. However, a lot of valuable knowledge only resides in people's head. Tacit knowledge can be created and shared primarily through the networking and interaction between the knower and the learner. What needs to be remembered is that effective management of valuable knowledge requries systematic measures, not ad hoc actions.

Often the use of knowledge as a logical assets creates increasing return due to the network effect. The network effect results when two entities interact to produce the result that is greater than the sum. Knowledge sharing, wehn done in the way way, produces network effect, which in turn propels increasing return. This, coupling with the fact that knowledge is only used and not consumed (used up), explains why knowledge economy is an economy of abundance, not scarcity. From both individual and management's point of view, this is a great example of "is give is to get."

Some thoughts about knowledge economy

Knowledge economy either denotes the economy of knowledge as products/services or knowledge-based economy. The latter refers to activities or processes directed by knowledge as strategic assets. Two most striking contrasts of knowledge economy with physical economy lie in (1) the difference between abundance and scarcity and (2) the phenomenon of increasing return. Ideas don't necessarily get used up. Instead, ideas can breed even more ideas. The dynamics of the idea economy is meta-scientific, beyond physics and chemistry.

Knowledge economy is driven by globalization, information/knowledge intensity, and ubiquitous connectivity. The first two constitute demand factors while the third driving force represents a supply factor with regard to knowledge production and use. Wherever there are supply and demand, there is a market. The knowledge market can be internal or external. The internal market of knowledge results in improved innovation, which in turn is reflected in the external market. The basic outcome of knowledge exercised in the external market is economic benefit.

When viewed from the knowledge perspective, business management and business operations can take on a very different, and often deeper, meaning. Just as with e-everything, there'd be k-everything. Call it knowledge literacy or knowledge sensitivity if you want.

Data, Information, Knowledge, and Wisdom

Data represent certain aspects of entities, logical and physical. Information adds relationship into the description. Knowledge links information and data to problems-solving, decision-making, and/or actions. Data is objective. Information is objective and subjective. Knowledge can be even more subjective in addition to being objective. Wisdom guides thinking and action toward problem-solving by adding perspective to the scenario. From data to information to knowledge and then to wisdom, the distinction can be depicted as one circle enclosed by another with feebback arrows pointing from any outside circle back to inner ones. The point is they are all related to each other, mutually reinforcing and mutually regulating. It's a double arrow-headed link bewteen cause and effect. This shouldn't be surprising because the main actors are human beings. Human beings can be extremely non-linear in their thinking and actions,

Knowledge Economy and Increasing Return

Inreasing return is driven by the virtuous cycle. Virtuous cycle is started somewhere sometime by somebody. What I have yet to determine is the source of this first "push". Is it internal? or external? How are they different? Perhaps it's either one, or both. Once a virtuous cycle gets started, it's vital to keep the steam going. Or better yet, create an accelerating force to turn addition into multiplication, linear growth to exponential explosion! What's the most important factor to jump-start the cycle and to keep the cycle? Leadership matters, for sure. What about middle managers? First-line people? Technology is probably not as significant as many people would like it to be. Technology is at best an equalizer, enabling small players to on the equal footing in competing with their larger counterparts. Wait a minute. What about innovative use of technology? That can be signigicant, especially when the technology is used to change the way people work, communicate and live.

Blogs can be a cool tool for keeping track of thoughts

I did this last semester. This semester I am going to do it again. I will continue to experiment with blogging to help keep track of my wonderful thoughts about knowledge-based decision support. This is done partly out of trust in Google to manage their systems the way their are supposed to: privacy will be respected. Content will not get lost. Convenience and useful features are the real incentives, of course.

Recording and storing thoughts with help of great technology are a sure way to organize and accumulate ideas. This is actually practicing what you preach about management of tacit knowledge. Everything existing only in the head is tacit by its very nature. The content of the brain can not be seen in any reasonable way. To make the implicit explicit, you must describe it in some way. This is not always an easy task. It's especially hard in the beginning. But you get better and better with practice and experience.

Another obstacle is reluctance to open yourself up to the whole world. Actually this is mainly a matter of perception. Some online activities may be risky, but certainly not blogging. There is no private information to leak out. You have total control over what to disclose. It's alright to share your thoughts, understanding, or even your emotion with others. It's a good habit actually. Only those who are really interested in your content will take time to read it. No instrusion to worry about. No apology to make. In summary, the benefit well exceeds the cost.

Make this a good new habit to pick up for this year. Happy blogging to you all!