Esko Kilpi photo

To be competitive is to be cooperative

The terms “Knowledge Worker” and “Knowledge Society” are around sixty years old. Peter Drucker and Fritz Machlup, a less known Princeton economist, coined them at roughly the same time around 1960.

Although the concepts have now been around for a long time, it seems that the implications for individuals, corporations and societies are not clear yet. What is quite evident is that the emerging society is different in many ways from the industrial society. We just don’t really know in what way. But there are some things we do know about knowledge work:

knowledge work is creative work we do in interaction.

Effective skills are always somewhat specialized, as regards both, successful companies and effective people. This means that highly knowledge-based companies are always, by definition, only a partial answer to the opportunities available and to the problems they want to solve. Michael Porter made us to think that the players in the game of business were (1) companies, (2) customers and (3) suppliers together with old and new (4) competitors coming with alternative (5) offerings. This was called the five forces model. The company was seen as an independent, self-contained unit of competition.

Bill Gates had a pet project of his many, many years ago. It was going to change computing for millions of people. It was the touch screen tablet PC. The device never raised a fraction of the interest that the iPads have generated. Was it because at the time, Microsoft did the project alone?

Because of specialized, narrow skill sets, a new role with a new role definition is needed in knowledge work. Nobody can be successful without supporting contributions from network partners. The new role is a “complementor”.

A complementor is not the same as a supplier. The connection is based on a non-hierarchic network relation, not the value chain.

Complementary contributions may be the most important explanation of business success in network environments today. What would our smart devices be without the applications made by “third parties”. What would Steve have been without Woz?

The most classic example of complements is hardware and software. The greatest hardware engineers are in dire straits without software programmers, as Nokia found out. Though the idea of complements is most apparent in ICT, the principle is universal: you can never have in-house all the specialized skills you need.

Barry Nalebuff explains that a complement to an offering is another offering that makes it more attractive. People value hot dogs more when they have mustard. Because knowledge work is specialized, it never pays to try to make both. The new strategic imperative and one of the very first entrepreneurial tasks is to identify complementors and to be inviting to them.

The Internet first enabled more efficient communication and commerce. It now makes coordination and network effects possible in ways that we have never seen before.

Complementarity is not about recombining skills but redefining work and learning. To be competitive in the new post-industrial, post-fossil landscape is to be cooperative.