MIT Sloan Management Review

Human Resource Management and Industrial Relations, Leadership and Organizational Studies

The Generative Cycle: Linking Knowledge and Relationships

By Jeanne M. Liedtka, Mark E. Haskins, John W. Rosenblum and Jack Weber

October 15, 1997

Three leading professional service firms have succeeded by creating capabilities for collaboration and learning that leverage individual competency into enhanced problem solving for clients.

“The essence of strategy is the way a company defines its business and links together the only resources that really matter in today’s economy: knowledge and relationships or an organization’s competencies and customers.”
R. Normann and R. Ramirez1

Let us assume that mastering the capabilities to learn and to collaborate — to manage knowledge and relationships — is the foundation for competitive success in the future. Where should we turn for guidance in developing these skills? Which are the benchmarks, the best-practice leaders in the “knowledge” business, the firms whose source of competitive advantage resides in their capacity to tap the collective intelligence of members and to work together to create value for customers?

Those firms, we argue here, are professional service firms (PSFs); they are lawyers, accountants, doctors, consultants, and investment bankers. The best of them have been working for decades, honing exactly the skills that large, mainstream business organizations are increasingly eager to add to their repertoire. While these high-performing PSFs may not represent today’s business, they do represent tomorrow’s. They represent the kinds of “inverted organizations” that have captured managers’ interest.2 With their flat structures, service-oriented workforce, and participative decision processes, PSFs can provide a model toward which larger, more hierarchical organizations can turn for guidance as they become leaner, quicker, and more flexible. PSFs represent a... To read the complete article, login or sign-up using the form below.

From The Magazine

Fall 2009

Special Report: Sustainability

8 Reasons That Sustainability Will Change Management

Michael S. Hopkins

Transparency, accidental innovation, trust, collaboration — as sustainability affects how the world works, so will it affect how business works in the world.

Intelligence: Management

Debunking Management Myths

Martha E. Mangelsdorf

In this interview, Henry Mintzberg questions some of the conventional wisdom about managerial work.