The intangible in a very basic industry

Our normal habit (or should I say bias) when thinking about intangibles is to divide the world into intangible and tangible producing industries. Services and manufacturing is the crudest form of this breakdown. However, we forget that intangibles are a fundamental input in all industries, even the most basic of them such as mining.

The IBM Institute for Business Value has released a report reminding us of this --
Unlocking the DNA of the Adaptable Workforce: The Global Human Capital Study 2008/Metals and Mining Edition:

Today, the metals and mining industries are rapidly changing. As business becomes more global and competitive, companies are being challenged to reassess where and how products are made and marketed. A less understood challenge, however, is how to make the best use of the enterprise's most important asset: the workforce.

The key factor is effectively utilizing the knowledge of the workforce:

Our findings suggest that three key capabilities influence the workforce's ability to adapt to change.

First, workers must be able to collaborate across their organizations, connecting individuals and groups that are separated by organizational boundaries and different physical locations. Only 7 percent of the metals and mining survey respondents say they are very effective at collaboration – the ability to bring together workers to solve problems and to innovate, either formally or informally. To address this, a number of leading metals and mining companies are actively using technology enablers today for collaboration, knowledge sharing and learning. However, our evidence indicates that the real hurdles to collaboration are not technology, but issues of the company culture.

Workers also need to effectively identify and locate experts. Only a small number of metals and mining respondents (14 percent) believe their companies are very capable of identifying individuals with specific expertise.

And last, organizations must be capable of predicting their future skill requirements to keep ahead of changing conditions. Only 13 percent of metals and mining respondents said that their organizations have a very clear understanding of the key workforce skills required in the next three to five years.

By the way, this report is a part of a larger series/study with the same title: Unlocking the DNA of the Adaptable Workforce.

The full report opens with this wonderful quote:

“The only sustainable competitive advantage is the type of people you have and the way they work together.”
– Klaus Kleinfeld, President and Chief Operating Officer, Alcoa

(The quote is from an interview conducted by Patrick Foster in The Times -- “In a world that technology has made flat, where do firms find a competitive edge?”.)

The study and this quote reinforces what I have been saying for sometime: there is no separate "intangible" or "knowledge-intensive" sector of the economy. All industries and sectors need to embrace intangibles, innovation and information in order to compete. The distinctions we make between old and new industries , between high-tech and basic, between services and manufacturing are out of date. They may tell us about certain characteristics of the sector. But they tell us little about what companies and individuals are doing to add value and foster competitiveness. In my mind, it’s not old versus new; its companies who understand the I-Cubed Economy and those who don’t. Those who do will be able to make (and remake) themselves into prosperous institutions. Those who don’t will fail, even if they are in so-called “new” sectors.