Key Concepts in Managing Intangible Organizations
Governments, businesses and other institutions recognize the increasing importance of intangibles in the economy. The tangible economy (raw materials, machines and goods that are visible), is shifting towards an intangible one in which success depends on managing knowledge, ideas and services that are not directly visible. What is sometimes overlooked is that approaches and tools to successfully manage the tangible part are quite different from approaches needed to successfully manage the intangible part of organizations.
Adams (2008) describes four key concepts in successful management of intangible organizations
1. INNOVATION AS STRATEGY: while strategies in tangible organizations can be implemented and executed within a defined market space, the intangible market is characterized by its dynamics, its quick changes within the market. As a result, it is not useful to determine a strategy from the beginning (a so called "deliberate strategy
"), since this strategy will probably be outdated as time passes by. Rather, there should be a so-called innovation strategy (compare also: emergent strategy
). Such a strategy constantly seeks for new ways to utilize knowledge to create value for both consumers and the organization themselves. This can be stimulated by establishing an ecosystem where new ideas can be generated, developed and executed.
2. ORCHESTRATION APPROACH: in the tangible economy, mechanization and mass production are instruments to increase productivity levels. By strictly controlling those systems, efficiencies could be created. In the intangible economy, the productivity of workers -dependent on of employees’ knowledge and the usage of their knowledge- cannot be strictly defined or determined. It is often the case that leaders of knowledge organizations do not understand the work of their employees. Therefore, orchestration is a better management approach in this case. See Mintzberg's covert leadership
. Such a strategy sees the modern leader as the conductor of an orchestra. Even though the conductor is not able to know the details about each individual’s instrument and play. He or she only selects the music and makes sure that the musicians play well together. In an organization, the leader can only put problems in context and help his/her employees in their way of thinking. However, the leader lets the employees do the rest of the work.
3. NETWORK MAPS INSTEAD OF ORGANIZATIONAL CHARTS: while the tangible economy relies on organizational charts
to control and monitor the organization, such a chart often fails to fully explain the situation in a knowledge economy. This is because of the existence of cross-functional teams
, external partnerships and co-creation
with customers. An approach that better fits in a knowledge organization is to map both the organization and its interactions, for example by social network mapping. This enables and facilities interactions between knowledge workers and external partners, consumers and others.
4. FOCUS ON REPUTATION: the tangible economy measures performance in terms of cash and profits created. Although profits remain important in the knowledge economy, it is also important to look at other effects. Increased interdependencies between organizations, external partners and consumers make organizations to be part of a bigger community. This makes social and environmental issues of more concern than before. Therefore, maintaining a good corporate reputation
is critical for sustaining competitiveness for knowledge organizations, although tangible organizations also gain from a good reputation.
Source: Adams, M. (2008) "Management 2.0: Managing the Growing Intangible Side of your Business" Business Strategy Series Vol. 9 Iss. 4 pp. 190 - 200