At a time when technology and data are so prominent, it is important to recognize the value of knowledge in business success. Granted, external circumstances, such as the pandemic, can sometimes make it difficult to tap knowledge due to an unprecedented situation about which little is known. But, more often, knowledge can have a major impact on business success.
Business knowledge can come from various sources. For example, prior experience can be a source of knowledge, as can collecting and analyzing data, as can educational resources such as seminars, courses or books. Yet, even today, at a time when many companies are considering technology transformations, the role of knowledge can still be misunderstood.
An example appeared in the April 20, 2022 Wall Street Journal article “Big Blue Looks to Big Changes” by Steven Rosenbush. According to IBM’s CEO, as reported in the article, “technology has gone from a cost of doing business to one of the fundamental sources of competitive advantage.” In the article, the IBM CEO offers a historically based explanation. He says, “If I look at sources of competitive advantage 2000 years ago, it was physical resources. Then it was trading…the things you got from the land, gold, wheat, grain. Then it went to money. You then go to knowledge. Through the last century we talked about knowledge workers. Today, I think it’s technology. I think tech is the fundamental source of competitive advantage today.”
As someone who has been researching business success and failure patterns for more than 25 years, yes, I agree with IBM’s CEO that technology is really important these days and adopting today’s more sophisticated technology can become an excellent source of competitive advantage. And, yes, even before today’s technology transformation era, there was a huge increase in the number of knowledge workers, as IBM’s CEO points out.
However, my in-depth study of business history reveals something a bit different from what IBM’s CEO describes. According to my research, knowledge was a crucial element driving business success for a long time, even in the past eras where IBM’s CEO describes trading or money as more important. Again, it must be remembered that knowledge comes not just from the kind of data collection associated with today’s modern technology. Knowledge also comes from experience. And, that experience could be a competitive advantage, even for the trading that took place many years ago.
Furthermore, experience based knowledge still has great value in today’s technology oriented world. Human experience has turned out to be ever so important when using modern artificial intelligence (AI) technology. That’s why AI algorithms have gone troublingly wrong when input based on human experiences was not included. Those human experiences bring valuable knowledge that must be captured to successfully tap the benefits of the AI technology.
Even many years ago, successful businesses thrived because of expertise that came from human experience. That experience gave those businesses knowledge about their industries and enabled those companies to succeed and thrive. Thus, knowledge drove business success back then, just as it does now. Today, however, much more of the available knowledge occurs in the form of data stored with modern technology. But, regardless of the form that knowledge takes, whether stored in modern technology or whether coming from human experience, knowledge has long been and still is an important component of business success.
Knowledge is why industry experience is so valuable for business start-ups. It is also why industry experience is so valuable for company management, for corporate boards of directors, as well as for company staff. Yet, in a bit of an oxymoron, knowledge can also be why industry experience can sometimes be detrimental to new innovative business models. This can occur when the incumbents are too attached to existing methods and lack the knowledge to see how innovative new ways can work.
Furthermore, knowledge will still be an important element of competitive advantage even if there are fewer knowledge workers, as some of them are eventually replaced by technology. As that happens, technology will be the source of considerable knowledge. Yet, technology’s benefits for competitive advantage are not limited to knowledge. Technology also offers other benefits, such as reduced costs and improved productivity.
Of course, knowledge is not the only factor that drives business success. For example, other things such as relationships with people, or such as visibility, can play an important role. Nonetheless, knowledge of how to effectively use these other factors can be a valuable component in business success.
So, yes, modern technology will play an important role in driving business success. Technology can bring about a valuable competitive advantage. And, technology will enable greater use of far more knowledge. But, we shouldn’t forget that knowledge has historically been an important component of business success. That was the case even many years ago. And, that is still true today in an era when technology can make so much more knowledge available. For a long time, knowledge has been an important driver of business success. And, it still is. That is the case whether the knowledge comes via technology or via old fashioned means such as human experience.
La Grange Park, IL