Factories Of The 21st Century

by Jay Deragon on 01/31/2013

capital

The difference between the 20th and 21st Century factory is a difference in what they produce.

The 20th Century was about producing and consuming more things. The growth in consumption fueled the growth of factories used to produce more things. Machines, materials, capital and labor fueled the factories output, tangible things.

The 21st Century is about producing and consuming more knowledge.  The growth in information creation and consumption fueled the growth of intangible factories used to produce more knowledge. Relationship, human, structural and strategic capital fueled the factories output, intangible capital.

The 21st Century factories of intangibles represent human and organizational networks. These networks create new economic value unfamiliar to the 20th Century mindsets.

You Can’t See What You Don’t Understand

According to The World Bank’s report, The Changing Wealth of Nations, 80% of the developed world’s wealth resides in human capital. This is what Andrew Carnegie meant when he once stated, in total confidence: “Take away my people but leave my factories, and soon grass will grow on factory floors. Take away my factories but leave my people, and soon we will have a new and better factory.”

Today’s factories are about people, ideas, and co-creation (intangible), not land, labor, and capital (tangible). Yet intangibles are not easily measured or quantifiable, so they are not given the resources they deserve by many organizations. The reasons are many but it boils down to not seeing what you don’t understand.

Ask any business today “What percent of the value you create for the marketplace is intangible?”  Most would simply give you a blank look or say “What?”

The purpose of any business is to create value the marketplace wants and will consume.  Creating value means you have to produce value. Whether said value comes from products or services the production of said value originates from intangible assets. Unless your “factory” knows how to create value from intangible assets then you aren’t likely going to be able to create tangible value.

Today’s factories are not contained in any building or controlled by management. Rather these factories are managed by intangible networks located everywhere and available to everyone. In order for any business to thrive in the Social Era of the 21st Century they need to see and understand how to lead, manage, measure and leverage intangible capital.

It won’t be easy to change how and what you manage but it will be well worth it.

See how smarter companies are doing it.

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