“For countries in the vanguard of the world economy, the balance between knowledge and resources has shifted so far towards the former that knowledge has become perhaps the most important factor determining the standard of living… Today most technologically advanced economies are knowledge-based.” -World Bank, 1999
There are many kinds of knowledge, and in a knowledge-based economy, the formation of information can occur in a few ways as identified by Lundvall and Johnson in a 1994 paper on The Learning Economy.
Some of these skills can be acquired and learned through studying and reading while others require time, experience, trial and error and specialised societies. (1) However, a combination of all of these types of knowledge is required to become economically competitive. Why have organisations that have learned to extract and use the knowledge from their people become so successful? Have they improved productivity or capitalised on innovation or both? Have they radically altered their structure and flattened the classic organogram? Perhaps it’s a little of all of that. Predominantly those organisations that have learned to maximise the information and knowledge capital of the departments, teams and people within their walls and beyond them have optimised the one currency that unlocks this uncapped asset: relational trust.
Knowledge is only valuable in the mind of the person possessing it unless it can be translated and arranged into a system or order so that it can be shared and understood by others. Many people will opt not to share their knowledge out of self-preservation as it elevates the importance of their role within the organisation. There is a danger that self-preservation may be placed before what is beneficial for the team or the needs of the organisation. (2) Maximising strategy and problem-solving between departments, teams and people are delayed until there are systems in place to share and exchange knowledge, translate or codify it into useful information. These systems are not just technical or automated ones but rather those based on relationships and trust. Taking vaults of knowledge from across pockets of an organisation and translating it into usable information has great economic and innovative potential.
Economic evolution is affected by an organisation’s ability to innovate, adapt and respond to their environment and competitors. Innovation occurs when people can communicate, problem solve and share any knowledge and information relevant to critical thinking. For organisations to evolve, survive and stay relevant, there needs to be a corresponding level of information sharing and the social structure and behaviours that can support this. The structure of an organisation plays a significant role in how information is disseminated and utilised. Structural dimensions of an organisation are looked at from three levels of formal relationship: hierarchical, functional, and the aspect of inclusion and centrality (3). Remote working has significantly changed how workforces are structured in the past few months. Organisations have a distinct social structure too, akin to a biological lattice, here is where the exchanging and sharing of information occurs. These informal structures are predominantly relationship-based.
The currency for knowledge-based organisations is trust. Participants in a knowledge-sharing relationship will weigh up many factors of their own vulnerability before they feel comfortable to share either what they know and what they do not. Trustworthiness is evaluated and the strength of a relationship is assessed before information is exchanged. (4) Is the source of information viable and credible, or will the data benefit the recipients? All questions are balanced in the trust equation while relationships are being built, and vulnerabilities remain high. Within an organisation, few people like to admit to being in an inferior position on the knowledge front, at the same time showing your intellectual hand of cards could share your advantage with colleagues and or competitors. The mental arithmetic of trust is a continuous exercise and in having an internally competitive corporate culture don’t lend themselves to the willing sharing of information.
People will build trust at different paces and in different ways. Psychologists differentiate between two types of trust- cognitive and affective trust. Cognitive trust is based on knowledge and evidence about whom we chose to trust. In contrast, affective trust has an emotional element to it where trust is born out of feelings and interactions. Managers and leaders play a role in facilitating the building of trust within teams and loyalty that traverses hierarchical structures in organisations. This is achieved by creating environments and cultures conducive to building trust and nurturing mutualistic relationships. Managers and leaders will need to exemplify trust in both words and actions, taking time to connect not only with people in their teams individually but also identifying and being the orchestrator of interventions where trust has yet to develop. Trust is a currency, without it not much meaningful information is ever exchanged.
With an ‘economic evolutionary’ mindset, leaders need to embrace the task of trust-building within teams, and the organisation with a connection agenda. Performance and innovation are the goal, knowledge, information sharing and connections are vital components, but trust is the catalyst. The shift from the classical production-based to a knowledge-based economy is here. (5) The rise of the remote workforce, globalisation and the GIG economy make effective communication and utilisation of information from a pool of talent all the more critical. It comes down to relationships. Some of the most successful organisations, albeit technological ones, have learned to harness relationships effectively across generations and cultures.
Trust is the currency for the knowledge-based economy.
Kylie De Klerk
Workplace Culture and Team Dynamics
If you are interested in learning more about Kylie and her Culture and Team Building Training Workshops on Essemy, please visit this link.
1. Foray, D. and B.-ä. Lundvall (1998). “The knowledge-based economy: from the economics of knowledge to the learning economy.” The economic impact of knowledge: 115-121.
2.Năstase, M. (2009). “Importance of trust in the knowledge based leadership.” Revista de Management Comparat Internațional 10(3): 518-526.
3.Thite, M. (2004). “Strategic positioning of HRM in knowledge‐based organizations.” The learning organization.
4.Levin, D. Z., et al. (2002). “Trust and knowledge sharing: A critical combination.” IBM Institute for knowledge-based organizations 19(10): 1-11.
5.Gunay E.N., Kazazoglu G.N. (2016) Defining Knowledge and the Knowledge-Based Economy. In: National Innovation Efficiency During the Global Crisis. Palgrave Macmillan, New York