Esko Kilpi on Interactive Value Creation

Industrial-era thinking consists of cultural metaphors that have guided the development of firms and societies for the past 100 years. These habitual mindsets act as intellectual and emotional standards for determining what is the right way to think and what are the right things to do.

Lately I have had a series of conversations with a group of leaders of global high-tech companies. It became very clear during my conversations that their vocabulary reflected a new way of thinking about work. The executives emphasized that the key to success in the new digital economy is likely to be a new position for knowledge professionals and a wide social acceptance of more sustainable values.

These people represented a very different set of standards from those the mainstream thinking portrays.

We still think according to a mindset, in which capital is the key resource and the investor is the ultimate boss. Accordingly, the modeling approach we still use in corporate governance is the principal-agent model, in which managers are viewed as agents of the shareholders, the principals. It is a chain of authority that leads to the knowledge worker only at the end of the chain.

But once acquired, knowledge and skills that are specialized to a given enterprise are assets that are at risk in the very same way that financial assets are at risk. If one can’t continue for some reason, the value of context-specific knowledge and competencies may be much lower somewhere else. Human capital then follows very much the same logic as financial capital and should be treated accordingly.

There is, however, one major difference. Human capital is by definition always linked, social and contextual.

The capabilities of the members of a team are worth more together than when applied alone. With context-specific human capital, the productivity of a particular individual depends not just on being part of a community, but on being part of a particular group engaged in a particular task.

The contextual and social aspects of business matter much more than we have understood.

The ten principles of digital work, the new standards, that the leaders acknowledged:

1. informed free choice, rather than compliance, is the basis for decisions
2. active participation, rather than passively accepting instructions, is the basis of growth and development
3. work activities are carried out within a framework of personal responsibility and goals for self-direction rather than direction from outside
4. activities are carried out in a transparent way with the goal of distributing the cognitive load of work rather than work being based on reductionist principles and social isolation
5. one is responsible for one’s own actions rather than being responsible to someone else
6. a worker is engaging in complex, responsive activities with others in contrast with engaging in closed repetitions of the same activity
7. the network, rather than offices or organizational hierarchies, is the main architecture of work
8. productivity is a result of creative learning rather than doing more of the same. Increasing the quality and speed of learning matter more than increasing the quantitative output of work
9. knowledge work can be understood as investments of human capital following the same logic we have used to understand financial investments. Workers should share the responsibilities and possible upsides that used to belong only to the investors of financial capital.
10. knowledge work is about interdependent people in interaction. Intelligence, competence and learning are not any more about the attributes and qualities of individuals but about the attributes and quality of interaction

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The impact of technology on industrial jobs.