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Knowledge Workers: Lessons from the IT revolution

Speech to the Brisbane Institute, Queensland, 1999

I have been asked to talk about retaining, about keeping "knowledge workers" in what is an internationally competitive market. Specifically, about how to combat their temptation to move to greener pastures in America.

I've got a couple of suggestions about management within the enterprise; a couple of thoughts about the cultural infrastructure we need to support a knowledge industry; and then I'm going to come back to what I believe is also an enterprise issue: meaning and purpose. That is, that meaning and purpose have to be seen as an enterprise issue.

"Pay well and provide share options"

The first imperative is that you do have to pay well. Anyone who has worked in the IT industry will know that salaries are much higher than other industries at the moment, and particularly in the internet industry. I imagine that is going to be the case, if it is not already the case, in Biotech.

This puts a lot of pressure on available capital. Look for share options as a way of making up for the fact that you can't give people the salaries they are going to get in the US. This is the preferred strategy of cash-starved start-ups in Silicon Valley; it's also an essential strategy for cash starved members of the economic provinces. There is a ton of stuff written on pay and on share option schemes, so I am not going to say any more.

This is the bottom of Maslow's1 hierarchy of need in relation to keeping knowledge workers. But pay is not enough. Famed management guru Peter Drucker recently argued2 that simply "bribing" knowledge workers by trying to satisfy their "greed" is not enough any more. He said that performance in knowledge-based industries "will have to be done by satisfying their values, and by giving them social recognition and social power. It will have to be done by turning them from subordinates into fellow executives, and from employees, however well-paid, into partners".

Workers need support, not control

The second tier is about management of "thinking adults". There was an article by Professor Henry Mintzberg in Harvard Business Review3 last year about being the "orchestra leader". I think that's a good term to use in discussing management in knowledge industries. It's about partnership between workers and management. It is about support, not control.

I've got a friend who is an executive in a very large IT firm. His boss still expects to see him in the office nine to five, and gets upset when he isn't there. It's been a very autocratic company. It's changing now - it's been taken over by a more enlightened US multinational.

On the other hand, former Netscape CEO Jim Barksdale used to talk how he spent half his day managing the egos of the IT specialists on the top floor and how important that was. Not telling them what to do, but supporting them, smoothing over the ruffled feathers, whatever. That is more of an orchestra leader role than traditional management. You choose objectives, you let people loose. You lead, you link (and how often "linking" is neglected). You recognise, you counsel. You do not tell. You need those factors if you want to have a culture where people can flourish and achieve.

So much for within the enterprise.

We need to build cultural infrastructure

The next area I'm interested in talking about today, given the important audience here, is "cultural infrastructure" - factors beyond the enterprise. Core to our thinking here is that developing a vibrant niche economy is about more than making individual companies successful. It's about successful social, political and economic climates for that success. It's about "cluster economies" 4.

That's what we need in Brisbane if we're to have a successful BioFuture. The same issue applies to staffing. We are not going to keep biotech knowledge workers in Brisbane by simply having great companies to work within. The external environment they work, network, live and think in is as important, if not more important.
The stronger our education system is the stronger our industry will be
The first infrastructure need, as said so lucidly by earlier speakers today, is for an effective education system. Our education system forms the nursery for our intellectual property fisheries. There is no substitute for an education system that's healthy and vibrant.

We need a system that delivers young intellectual talent with courage - that is the courage to explore new frontiers, human capital. We need a system with adequate research funding, allowing people to explore new ideas. We need flexible learning. (Twenty percent of our company's staff are doing part-time university courses.) We need movement between education and industry, movement that allows cross-seeding of ideas and energy.

And we need more funds for education.

But it would be foolish just to say we need more funds, as I think we do, for the tertiary sector. We also more funds - and greater status - for primary and secondary levels of education. There has been a large amount of literature in the last few years about the vital nature of primary education in achieving successful economies. The World Bank, for example, used to have a program of trying to support third world development by promoting tertiary education. About 15 years ago they recognised that focusing funding on tertiary infrastructure was by itself not doing the trick. They "discovered" (as aid agencies had been telling them for years) that they needed to fund primary education infrastructure as the highest priority. Funding of tertiary structure was a later issue. They changed their policies during the 80s as a result.

Support for small and medium sized enterprise

The second point about cultural infrastructure is about support for small and medium sized enterprise (or SMEs, a terrible acronym). This is about how to support the development of clusters of small industry. We need a nurturing climate. We need incubators. Wellington City Council in New Zealand has set up a series of incubators for small industry which have been very successful at getting people from an idea into a viable business. IdeaLab in Silicon Valley is a privately run internet company incubator that has spawned, from one or two people, hundreds of internet enterprises.

Some of these are now multi-billion dollar companies, including E-bay and Etoys.
You need low-cost business advice. If you are a small company or a start-up company, especially if you're growing fast, you have zero cash. Yet you need access to management advice, exporting advice, legal advice. You can't afford to pay the lawyers at the top end of town. You have to be a big company to do that. You need long-term planning support. You need business intelligence. You need data. Small and medium sized companies can't do it themselves. Large companies, of course, don't release it; and private research company reports cost thousands and thousands of dollars. Ie. they're for the big end of town. Government can help with that. Australia Bureau of Statistics research should be free, for example. The State Government could fund the tracking and reporting of global bio-tech market data. That could all be part of industry policy.

You need marketing co-operatives. One of the most successful cluster economies in the world is the textile region of Prato in Italy. It's the area that adds more value to Australia's wool produce than we do from the paddock to the export of all those bales of unprocessed wool. It's a hive of small (lots with less than 10 staff) and medium sized companies. Prato has a series of marketing co-ops which support small and medium size enterprise, and which have been vital in allowing small enterprise access to international markets. The co-ops were started by government and are now run co-operatively, locally.

It is critical that any kind of industry policy focuses on keeping the vitality of small and medium sized enterprises. We must avoid the giant sucking noise you get as small companies get taken over by large multinational agri and biotech companies, and their intellectual property, their best people and their profits get swept away to overseas capitals. If you want people, as well as profits, to stay here you need to foster small and medium-sized enterprises that have the local loyalty that multinationals (with US headquarters) do not have. Help them broker distribution and marketing partnerships, rather than having to get taken over to reach their markets.

Thinking adults respond to inspiration

Thirdly, in terms of cultural infrastructure, we need inspiration.
Henry Mintzberg3 argues that knowledge workers need inspiration not supervision. They need it beyond the enterprise as well as within it. We need opportunities to think and talk. We need open flows. We need visiting speakers. We need to fund people here to go overseas (and come back hopefully). We need journals. We need Centres, lots of Centres. (This Institute is great - the more the better.)

We need discourse and ferment. I frightened someone from the Queensland Premier's Department earlier by saying "We really need ferment". We need to support intellectual bomb throwers. Give them money. Make them question what we are doing. It's critical for the development of our ideas. We need a broader inspirational culture as well, a culture of arts, a culture of identity.

I thought the retort earlier - "I'm Australian, mate" - by a speaker when asked why he wasn't in the US earning mega-bucks was a good point. I think a sense of being Australian now is quite different to 20 or 30 years ago if you are a scientist trying to achieve. Governments need to recognise that the excitement of political and cultural issues like identity development, the exhilaration of cultural confidence I believe we are experiencing in Australia, is an important part of supporting cluster economies in knowledge worker areas. They help lead to fresh ways of thinking; the excitement of fresh ways of thinking.

We need arts policy too.

I suggest to you that a vibrant arts culture will lead to better industry. I was sitting at a conference function in Brisbane a month ago and I was listening to a performance artist whose name I can't remember but apparently is very famous in Brisbane. It was very wacky at first but it really grew on me and I got very excited because I found I was thinking. Amazing I know, but it helped me feel there were fresh ways to look at the work I was doing.

Impressionism, cubism, pop art, have all been important influences on social - and economic - change in the past. I read an essay recently which argued that Renaissance art, by altering the way people looked at things with its (at the time) revolutionary, realist way of depicting people, was a critical factor in freeing up people to look afresh at society, politics and science.

Finally, we need meaning.

Discourse will eventually lead to wonder about meaning. This is towards the top of Maslow's1 pyramid. As Peter Drucker suggests in the quote at the beginning of this talk, knowledge workers need more than money and fame. There is quite a lot of literature about this at the moment5. Red Herring magazine6, which is a magazine about venture capital in the US, carries stories about how many young knowledge workers in Silicon Valley are asking to feel like they are creating a better world. They are excited by the internet (as well as the big bucks of course) but they are also sold on the idea of creating a better world. They think the promise of the internet is part of this; but they also want to support good works.

A number of companies are taking this even further, vesting shares in their stock exchange floats to charities as part of trying to achieve that. This is partly altruism on the part of the initial shareholders, and partly a strategy to keep workers loyal to their companies. Even in major corporations in Australia this issue is being addressed. The AMP in its Employer of Choice program has got an AMP Foundation that funds charities. Westpac has got the same thing.

I have to say, though, I think that model misses the point.

I think you in the biotech industry are in an extraordinary position here. You don't need to get anxious about the sort of community concerns we have heard about today about where biofutures will be, what biogenetics is going to be. I believe you should actually embrace those issues and explore them and make them central to your work.

You are working in a field laden with questions of mortality, identity, life and meaning, as our first speaker, Tom Schneider, said so eloquently today. A field which will lead to humanity being, within a 100 years (according to Tom Schneider's report of Stephen Hawkins' prediction), the first species to take control of its own evolution.

You are working in an area where the whole point of your company's existence can be looked at, argued, defined in terms of how it contributes to making a better world. You have the opportunity to pursue your contribution in an ethical grounded manner, with reference to community discourse, and in a way that can be inspirational and highly motivational for your staff.

This could be your Killer App7 for attracting and keeping exceptional staff in your industry. A Killer App to inspire and motivate your knowledge workers. Of course working this one out will mean you need to engage with that community debate; you need to be a respectful part of it.

On the question of meaning, I think it means that people working in the industry need to get involved. They need to be careful not to be arrogant. Professor Stephen Leeder a contributor to "Goodbye Normal Gene"8 , a book we've just published on confronting the social dilemmas of the genetic revolution, talks about the arrogance of the biotech industry as it currently stands. The industry, he believes, needs to better listen and respond to community concerns.

I believe the industry also needs to engage in matters of global policy, such as accepted international (and not just US) regimes for the patenting of genes and about the regulation of bio-genetics. It needs to debate these issues in terms of what will lead to a better world.

A couple of days ago I was talking to a young woman in the IT industry and she said she had been lucky enough to be recently working on projects in the public interest. She had been bitten. She could not go back any more to the crassly commercial opportunities available to her. She would not be lured somewhere else just for money or for glory. She had to stay with meaning.

That is your knowledge worker retention strategy as orchestra leaders.

1 Maslow was famous for developing a stepped pyramid model of human need. It essentially said that until your belly has food (the bottom tier) you won't be able to sort out shelter; you then need to sort out shelter before you will be able address "higher issues" such as a "sense of worth". And so on. See "Towards a Psychology of Being", Abraham H. Maslow, Richard Lowry (Editor). Published by John Wiley and Sons, 1998.
2 "Beyond the Information Revolution" by Peter F Drucker. Atlantic Monthly magazine, October 1999. Drucker is Professor of Social Science at Claremont Graduate School in the US, author of more than 30 books on management, and perhaps the world's best known writer on management issues. His most recent book is "Management Challenges in the 21st Century" (1999).
3 "Covert Leadership: Notes on Managing Professionals", by Henry Mintzberg. Published in Harvard Business Review, November-December 1998. Mintzberg is Professor of Organization at INSEAD (Fontainbleau, Paris) and Professor of Management Studies at McGill University in Montreal, Canada.
4 The most interesting work on developing successful economies looks at the idea of "cluster economies". Michael E Porter is perhaps the most famous exponent of the idea, first explored in his seminal 1990 book on "The Competitive Advantage of Nations1". He has more written on cluster economies (defined as "geographic concentrations of interconnected companies and institutions in a particular field") in the Harvard Business Review.
"The Competitive Advantage of Nations" by Michael E Porter, published by the Harvard Business School Press, 1990. Porter is Professor of Business Administration at the Harvard Business School in Boston, USA.
"Clusters and the New Economics of Competition" by Michael E Porter, published in the Harvard Business Review November-December 1998.
Further discussion on clusters can be found in Michael E Porter's new book called "On Competition", published by the Harvard Business School Press, 1998.
5 Charles Handy's books make useful reading on this topic. See in particular "The Hungry Spirit : Beyond Capitalism : A Quest for Purpose in the Modern World", published by Arrow Books 1998.
6 See and the Wired article on IdeaLab for an interesting angle on this subject.
7 A Killer App is an IT or internet term meaning, essentially, the next big development that will sweep the industry; if you can be part of providing it, you will make your fortune.
8 "Goodbye Normal Gene", edited by O'Sullivan, Sharman and Short, published by Pluto Press Australia October 1999. See Stephen Leeder is the Professor of Public Health and Community Medicine at the University of Sydney and a member of the National Health and Medical Research Council.