Study: Prescripts: Creating Competitive Advantage In The Knowledge Economy

Study: Prescripts: Creating Competitive Advantage In The Knowledge Economy

Author(s): Barbro Anell & Timothy Wilson

Date: 2002

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Study Link

Big Ideas

  • Machines are to physical power as to Prescripts are to mental power.
  • Evolution of depersonalized knowledge:
    • Knowledge is code into:
      • Machines
      • Writing (books, content)
      • Software
    • Others are trained to use that knowledge
  • Tacit knowledge and skills are embodied
    • Taylor Production Mode
      • Specialization
      • Routine
      • In the Tayloristic production mode, tasks were fragmented and simplified so that virtually anyone could learn the necessary skills in a very short time.

Abstract

One recurring theme in the discourse on global competition is the major shift in thinking about what constitute resources in the economy. It is assumed that the economists' traditional categorization into land, labor and capital has been superseded by knowledge as the prime resource. As a consequence, this belief has led to an increased interest in human resource management, human capital, and the problem of attracting and keeping good knowledge workers. It is maintained in this paper that attracting and keeping good knowledge workers will be essential for survival in the knowledge economy, but that it will not necessarily lead to a competitive advantage. Instead, the competitive advantage resides in the competence of the firm to depersonalize knowledge and codify it into software "prescripts" that can be used to duplicate markets or marketed worldwide.

Keywords

Highlights

Knowledge Capture In The Firm

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History Of Depersonalized Knowledge

Economic progress seems to be closely connected to the transfer of physical and intellectual work from human beings to machines and instructions to hardware and software, that is, a process of depersonalization.
The Industrial Revolution meant that machine power replaced physical power.
The same kind of revolution might be incipient in the knowledge economy when personal knowledge is transformed into what we prefer to call prescripts.
The adoption of writing was the first great step toward the depersonalization of knowledge. The Gutenberg revolution might be called the second step.

Competitive Advantage

We do not think, however, that a company's competitive advantage in the new knowledge economy will be determined mainly by the combination of superior capital, not even by superior human capital. It will be a necessary, but not a sufficient condition for success. On the other hand, the firms that can extract, codify, package and use or sell their knowledge will enter into a different situation.
It has been argued here that the basis for competitive advantage in the knowledge economy is likely to be associated first with the competence to depersonalize, disembody and codify knowledge which then has to be combined or bundled in an adequate form for distribution, inside or outside the firm.

How To Develop A Prescript

Develop Prescripts With Customers

Developing prescripts together with a special customer, joint learning, is also a solution that has been recommended in the literature on learning organizations (Wikstrom et al., 1998). Not only does the company get paid for part of the development work, it also gets a tested and tried product to present to new customers. The customers' sunk investments in development also favor retention of the company's system. Porter (1980) has suggested such a strategy to diminish competition.

Be First Or Better

The second element in success is the ability to reap rewards from the prescripts. In practice, this success has tended to mean getting widespread adoption as quickly as possible. The firm's prescript has to become the dominant one. Being first in offering a certain prescript, or even offering something better than the existing alternatives, has not always lead to domination. For instance, there is heavy competition among firms about having their particular prescript elevated to industry standard. Examples of this kind of competition can be gleaned from the attempt to introduce digital TV into Europe or from the attempts to launch mobile communication after GSM.

Summary

We do not denigrate the importance of good people, good organizations and good equipment in the knowledge economy. Nevertheless, the central argument of this paper rests on the fact that the industrialization process, so far, has meant a depersonalization and codification of formerly tacit, personal knowledge. This process is expected to continue and thus give a competitive advantage in the knowledge economy. The winning companies in the future will not be "learning" ones. They will be the ones with the ability to extract and codify knowledge into prescripts instead of attempting to store it in people or machines. They must certainly, however, keep abreast of potential imitators, which might be done by constantly improving and enlarging their prescripts.