McKinsey on Preparing for a New Era of Knowledge Work

McKinsey continues to offer useful reports on the value of the connected enterprise (aka social business, enterprise 2.0). See for example our post – McKinsey Projects Business Value of Social Business at a Trillion Annually. One of their latest reports is: Preparing for a new era of knowledge work. They conclude that “Global competition, emerging skill shortages, and changing demographics will soon force companies to use their most highly paid talent more effectively.”

McKinsey notes that the trend for technology investments went from production floors to offices, where a wide range of transaction-based jobs could be standardized or scripted. Then these jobs could be either automated or shifted to workers in low-wage countries, or both. However, as they noted in 2006, much of the value in organizations lies in these transactions but in the interactions of knowledge workers, the “skilled professionals who together serve as the engine of the knowledge economy.”

This interaction work is the fastest-growing job category in developed countries, where it already accounts for a large proportion of jobs. For example, in the US interaction jobs account from 41%, transaction jobs account for 44% and production jobs account for 15%. In Germany it is: 37% interactions, 38% transactions and 25% production. While in China is: 25% interactions, 31% transactions, and 44% production.

The rapid growth in interaction-based jobs will soon lead to a global shortage of skilled workers for these slots. The US is predicted to be 1.5 million short by 2020 and China over 20 million short. These shortfalls will require companies to use their highly skilled interaction workers more effectively. This necessitates better technology support and increased technology investments, as ell as new management moves.

However, McKinsey notes that technology has tended to complement, not replace, labor in interaction work. So until recently, many of these jobs have been performed in the same way for decades. This cannot continue. To address this need there is an increasing array of tools to support these interactions under the category of social business. However, I would add that for these interactions to be incorporated into workflow and provide real value, there needs to be application integration between the technology that supports the transactions with the new tools that support interactions (for more on this see – The Business Value of Application Connectors and Integrating the Interactions with the Transactions).

McKinsey offers a number of suggestions to deal with this changing market and job requirements. First, they say to break down the job tasks of interaction workers and to find those that can be passed off to lower level people. The rise of nurse practioners to support overworked doctors is a good example that I have seen in action. McKinsey also noted paralegals, a similar move. They believe the trend to disaggregate jobs in all fields will pick up speed as skill shortages take hold and this makes sense.

Next, they suggest to “go viral” and, at the same time, make jobs more flexible. This is where technology can play a stronger role. They note that “thanks to broadband, cloud computing, and a burgeoning market for online collaboration tools, many more jobs that once required in-person interactions can be performed anywhere.”  McKinsey adds as many as 25% of all US jobs could be performed remotely. In their 2011 survey of 2,000 US businesses, one-quarter of them said they had future plans to use more remote workers.

They mention that many younger workers like the flexibility this type of work brings. I would add that this preference is not limited to the young. I have been working remotely for some time now and would not want to go back to an office. To emphasize what I wrote before, this arrangement will not work unless the “connected” enterprise is actually connected. This requires significant application integration.  This is why we at AppFusions are dedicated to making these integrations easier to achieve.

McKinsey concludes with some good advice for senior execs. You need to communicate and over communicate to make sure your wide spread workforce is on the same page. You need increased coordination of the many multiple project efforts that workers engage in. Senior execs also need to become better listeners to better understand the needs of workers, as well as harvest and share their ideas. Technology can help with these last two tasks. Finally, execs need to give up control and let their highly skilled workers use their skills effectively. Two-way trust is essential here. It can also pay off (see for example: Doing Well by Doing Good: Humanizing the Enterprise). 

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