TABLE OF CONTENTS The knowledge-based economy (KBE) is a fundamentally different economic environment than anything the world has ever experienced. The KBE reverses the fundamental assumptions on which practically all conventional management systems are based. In the KBE, almost none of the conventional assumptions that previously created value are relevant. Specifically, the old assumptions are replaced by new assumptions that are opposite in understanding and application, as shown in Table 3.1.
| Conventional view | Intangible Management | |
|---|---|---|
| Market change | Slow, predictable | Fast, unpredictable |
| Global competition | Does not affect local markets | Has a significant effect on local markets |
| Global economics | Independent | Interdependent and highly connected |
| Strategic focus | Incremental improvement is sufficient to maintain value | Discontinuous innovation required to maintain value |
| Employee knowledge and relationships owned by firm | Yes | No |
| Value of tangible (physical) assets | Primary source of value creation | Unimportant |
| Value of intangible (nonphysical) assets | Unimportant | Primary source of value creation |
| Specialization and division of labor | Critical to productivity and performance | Multiskilling, despecialization, and aggregation of labor essential |
| Role of cost reduction | The only way to manage value | An irresponsible way to manage value |
| Role of cost quality | Role of organizational champions and visionary leaders who defy common management logic | Only way to manage value |
| Management structures | Top-down, command and control, ownership based | Bottom-up, complex adaptive systems, innovation based |
| Management hierarchies | Steep | Flat |
| Markets | Complicated | Complex |
| Key economic resources | Land, labor, capital | Knowledge, relationships, emotions, and time |
| Focus of management processes | Costs |
