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The old view of knowledge defines it as something that people can own and contain. According to this view, increasing the value of knowledge requires it to be protected and made scarce. This had lead to a static view of expertise that diminishes interaction and cooperation within and outside the organization. In addition, the need to control knowledge has lead to impractical systems for customer-orientation. The view of containable knowledge is in direct opposition to how value can be created in information intensive fields of business. The new view of knowledge highlights openness and continuous development of information in interaction as the source of value and profit.

The broadness of interaction in the creation of information products increases the potential of its value. Successful value creation in information intensive work cannot involve only the people within an organization. As the value of information is defined in learning and interaction, openness in development of information will lead to more interchange and cooperation, leading to more possibilities of learning and interaction and through this, more value. In many organizations, product development is however protected and secret with the fear that the new knowledge being created could be stolen. How then to take the first steps towards more open interaction in development of knowledge?

In striving for value creation through uniqueness, businesses should communicate respect, aiming for mutuality and equality within their ecosystems. If a partnership is valued, it will more likely produce more value. If the people within organization providing services experience that their service is important, they will perceive more meaning in this work, resulting in a better outcome. Calling service-providing companies “vendors” can point out that they are replaceable, subordinate and dependent. In the search for new ideas, connections outside the organization can be a vital source of unlikely discovery.

Respect and trust towards customers can be expressed in how an organization includes them in value creation. Through approaching customer needs through segment-derived decision-making, the company is saying “you do not know what you want, we do”.  By listening and including the customer directly into decision-making, a more fruitful message can be conveyed. If you want to know, just ask. The fear about asking is related to the old view of knowledge  – if you reveal that you do not know, that you do not contain this information, you will be deemed incompetent. However, not-knowing is the very first, most crucial step in learning, which in turn is the very first step in creating more value through information. When the information product is created in a learning interaction with the customer, it will become more valuable and more unique for the customer.

If creating value is viewed as an interactive and creative effort that includes customers and other  organizations, success will be found in the ability to be open and create rewarding interaction for all involved. On the road towards this change, the first step to take is to have a look at what your view of knowledge is and how your communication is defined.

Creating value with information requires inherently different mechanisms than those used for creating value with tangible products: New knowledge is born and becomes relevant in interaction, not through transaction. Knowledge is abundant and develops, rather than depletes, in use. Value in information intensive work grows as a function of learning. And because of this, the people involved in value creation are not a resource, but individually meaningful.

Even though this exceptional nature of information and information intensive work is widely accepted, many companies continue to operate within frameworks that do not support value creation in information intensive work. Because information creates value through learning, the key behind updating organizational processes lies in updating the organization’s perception on the individual, learning and the creative process. The concepts an organization carries can be identified through how it defines the individuals who contribute to value creation – does the organization give roles to individuals? What information do these roles contain? What kind of interaction do these roles promote? What kind of communication resides within the role setting?

The very commonplace roles of the employee and the employer or the superior and subordinate typically contain and promote an outdated view of the human mind. Management carries with it the remnants of a behaviorist view of the individual, stemming from the period of industrial economy. When considering the characteristics of value creation in information intensive work, especially the roles of superior and subordinate are impractical. They contain the notion of the employee as a will-less target of management operations. This interpersonal setting strips the subordinate of self-control, autonomy and self-discovered meaning in work, promoting schemes of dependence and helplessness. Success in value creation requires exactly the opposite.

As creation of new knowledge happens in interaction, the quality of the interaction defines the quality and value of the outcomes. Role settings based on an outdated view of the individual contain communication and statements that do not support quality in interaction. “You are incompetent, untrustworthy and replaceable.” This is something that hopefully no manager wants to communicate to his employees. However, in the superior-subordinate setting, this is exactly what is being conveyed. When decision-making is taken to a level separate from expertise, it says: “you are incompetent”. When an organization assigns someone to oversee another’s work it is saying: “you are untrustworthy”. And when an organization assigns work roles to employees it says: “you are replaceable”.

In order for people to be inspired, creative and able to learn, they need to feel that their unique contribution, opinion and decisions are valued. This value is expressed through the communication and structures of the organization. Experiencing work as meaningful is a vital part of energy and motivation at work. This is not possible if people are not trusted with decision-making about the subjects that are working with. It is also not possible if there is no freedom for organizing how and with whom they work.

So what to do? Instead of communicating mistrust and disrespect, try the opposite. The traditional role of management is to control that subordinates are doing what they are told to do. The new role of management should be to enable and empower learning, interaction, creativity and autonomy. As Forbes magazine states, a paradigm shift in management is taking place, and should we even, as Harvard Business Review suggests, fire all the managers?

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Esko Kilpi on Interactive Value Creation

The art of interaction, the design of digital and the science of social complexity