September 2014 - The wealth of knowledge

The man from the Bank of England was speaking at Hereford Cathedral last week when he said that we must try to improve our productivity in the UK. He said that it is no use employing more people in business if the unit cost of production does not come down as a result.

At question time I advised him that many local businesses are either labour intensive and or materials intensive and that the only way for these operations to be more productive is to reduce the cost of labour or to buy materials more cheaply. And neither option is usually possible.
We agreed that it is 'knowledge intensive' businesses that are best placed to enhance productivity and therefore competitiveness.
But the really good news is that any business, whatever it does, can move towards knowledge. Knowledge based businesses continuously try to improve three things:

  • Structural capital: systems, processes, databases and networks
  • Human capital: the skills, knowledge and attitude of everyone on the payroll
  • Customer capital: relationships with stakeholders and customers

And the trick for all of us is to improve our three knowledge based assets faster than our competitors.




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