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 / Second Quarter 2002 / Issue 27(originally published by Booz & Company)


Why Know-Who Trumps Know-How

6. Respect for the Primacy of Customer Needs and Manufacturability in R&D. Companies that commit to a high degree of rotation and transfer of researchers and engineers can be successful not so much because of individual motivation, but because of their commitment to a corporate-wide uniform rotational training program. This helps ensure that all researchers understand the importance of adding value to the company by sharing their R&D achievements openly and by bringing them directly to the manufacturing floor — a place of true value creation that is known and respected by the entire organization. This also helps researchers consider the value chain as a whole.

Weakness arises from a lack of market orientation on the part of R&D. A marketing section leader from a European company tried to bring some market feedback to the work his colleagues in R&D were doing. This R&D section had “developed” a technology that was already available on the market. The response: a total lack of interest. He remembers the reaction of the head of R&D: “We don’t need those market observations! Our new product will have the best technology in the world. You’ll just have to wait and see. In one year when it is ready you will understand. We’ll just have to convince the customers that this is exactly what they need.” The project continued, drawing resources away from more important product development projects — all of which suffered from massive delays. When the “new” technology was finally ready, no business unit wanted it. The CEO resigned.

Such problems are uncommon within know-who based companies. Because researchers and engineers are not allowed into a lab before they have completed an initial sales training — in addition to production training — their research activities are far more attuned to market needs than those of a researcher who does not want to discover these needs. Mutual insight into market needs is a valuable driver of teamwork.

Ultimately, creative K&I management processes are no longer limited to internal know-how, but draw instead on know-who and global sources of invention that continually nurture corporate learning. This is why know-who based companies can drive product innovation through collective cross-functional action that turns tacit knowledge into tangible and market-driven applications.

This article is adapted from the forthcoming edition of Managing Know-Who Based Companies: A Multinetworked Approach to Knowledge and Innovation Management, by Sigvald J. Harryson (Edward Elgar Publishing Inc., 2002).

Reprint No. 02201

Sigvald J. Harryson, [email protected]
Sigvald J. Harryson is a principal in Booz Allen Hamilton’s Zurich office who focuses on growth through innovation and new business creation. He has implemented knowledge networks and extended enterprise models in numerous companies. Prior to becoming a consultant in 1994, Mr. Harryson worked as a development engineer at a leading global packaging company.
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