Common factors that successful business firm possesses for the sustainment of their advantage is, that they rely not on technology, patents or strategic position, but on how they manage their workforce.

People and how we manage them are becoming more important because many other sources of competitive successes are less powerful than once they are. Recognizing that basis for competitive advantage has changed is essential to develop a different frame of reference for considering issues of management and strategy. Traditional sources of success - product and process technology, protected or regulated markets, access to financial resources and economic of scale - can still provide competitive leverage , but to a lesser degree now than in the past, leaving organizational culture and capabilities, derived from how people are managed, as comparatively more vital. The following arguments give us clear indications:

It is obvious that as other sources of competitive success have become less important, what remains as a crucial, differentiating factor is the organization, its employees and how they work.

Achieving competitive success through people involves fundamentally altering how we think about the work force and the employment relationship.

There are two fundamental reasons how the success that come from managing people can be sustained and can not readily be imitated by competitors.

As intellect resides in people managing people means managing intellect. With rare exceptions, the economic and producing power of a modern corporation lies more in its intellectual and service capabilities than in its hard assets - land, plant, and equipment.

Virtually, all public and private enterprises - including most successful corporations - are becoming dominantly repositories and coordinators of intellect, i.e., "knowledge-based" or "intelligent enterprises". Intellect and services absorbs value-added and return the output worth more than otherwise.

There is little question that the "intangibles" - databases, personal know-how, technological understanding, communications networks, market knowledge, brand acceptance, distribution capabilities, organization flexibility, and effective motivation are the true assets of most companies today and the primary sources of their future income streams. Yet, as with nations, the asset value of these intellectual and service infrastructures is nowhere to be seen on a corporation’s balance sheet, often disguise by accounting convention. These convention, designed in the past, assume that capital - not talent or intellect - is the resource in short supply.

May be the first is to regard and to manage people, and knowledge systems as the critical assets of the enterprise.

Most companies are aware of their patents, copyright, and trademarks as assets and may even carry them that way in their capital accounts, but at cost rather than at market value. However most of the companies’ knowledge lie elsewhere in the mind of researches, engineers, production workers, marketing people, functional specialists, and managers. Others are embedded in the myriad software packages, databases, and information systems that codify and store the company’s knowledge. Still others reside in the personal relationship, commitments, and shared knowledge patterns that cement supplier or customer continuity. The basis for almost all lies in the company’s service capabilities and relationships or performance.

Knowledge systems have certain peculiar properties that can be exploited to advantage, where a large portion although not all of an organization’s knowledge resides in three human reservoirs i.e. cognitive understanding, the learned skill, and the deeply held beliefs of individuals.

The first is apparent, that one know how to do something but do not have the skills to do it successfully in competition. Or one may have both the know-how and the skills for success, but lack self-belief, will, or motivation. Bringing the three together has been the success formula for most outstanding teachers, entrepreneurs, or general business.

Another unique characteristic of knowledge is that it is one of the few assets that grows most - usually exponential - when shared. When shared, it not only gains information - linear growth - but usually feedback questions, amplifications, and modifications which instantly add value for the sender. As each receiving group learns and creates from its new knowledge base, the base itself grows, opening totally new exponential growth possibilities. Since learning feeds knowledge back to the base, the next step will spring from a higher base and be a larger absolute increment. The process itself is exponential - a principle embedded in all experience curve or learning curve theories. The exponential shape that mathematically represented on the behavior of the network relation of any individual within the network is famously called " the network externalities". Network sharing thus creates exponential value-added growth through "network benefits" up to the point where individuals encounter information overload.

Other unique feature of knowledge characteristic is that intellectual process’ capacity need continuous change. Alternative for such is the boredom and mental atrophy. Nonintellectual or mechanical systems run best when least disturbed. Intellect grows most when it is challenged. To blossom it needs the fertilizer of challenge.

In its practical implementation, intellectuality will always lead toward innovation, where innovation is the important driver of reaching competitive advantage.

Innovation is the first reduction to practice of an idea in a culture. High risk is basically inherent in the very nature of the innovative process. The process itself tend to be unique and chaotic, not orderly or easily planned. The innovative environment is always dynamic, opportunistic, and unpredictable.- calling for a very flexible, responsive, decentralized organization structure. Yet problems also tend to be very complex, calling for high specialization and hence centralization of skills. Innovative organizations tend to be ad hoc, fluid, cross-disciplinary, and cooperative. Tasks tend to define relationships more than formal authority or control systems do. Process tend to be chaotic rather than orderly in the professions, more cooperative than political, and more subject to challenge, vision, and interaction with users than in the professions. One should expect the randomness, chaos, and disorderliness that are inherent in the innovation process. Those who accept the process for what it is and try to manage in the chaos are likely to be far more successful than those who try to pretend, that it can be made orderly if only one can introduce more structure into the process. Adhocracies fit the innovative process well. Network organization or network relation, with the modulated logically flat organization and the spider web form relation to a certain extend meet the expectation.

Network relation which emerged as the signature form of organization in the Information age - just as bureaucracy stamped the industrial age, hierarchy controlled the Agricultural Era, and the small group roamed in the Nomadic Era - is a very important approach to entertain motivation and innovation to flourish toward optimal performance.

Organizational structure stemmed from the agricultural and the industrial era are relatively rigid and hierarchical.. Conventional Science of Management taught us

that span of control has its effective limit,. The number of subordinate a manager or supervisor could handle effectively is between five to seven, ten at the most in some rare cases. This condition creates linear relation among the individuals of the organization with bureaucracy as the dominant pattern. Bureaucracy itself is not wrong; it’s just limited, and indeed, it should be limited to those functions for which it is most appropriate. The development pattern as depicted in exhibit-3 shows the rearrangement adjusted to the required progress of the interrelationship within the organization

When performance of people is of concern, self-motivation and self-respect should get prime attention. Self-respect and self-trust will blossom in accordance with the building up of intellectual knowledge. Initiatives and innovations are just the direct consequences of a literate knowledge individual. Derive from Tenet # 4 and Tenet # 5, organizational arrangement should entertain atmosphere that support its tenants’ expectation. Linear relation among people in a bureaucratic environment hinders the blossom of creativity and innovation. Information Technology introduces a new pattern. Data and information requires direct interrelationship leading physically toward a spide-rweb-like configuration as shown in exhibit-2. The convergence of Computing, Communication and Information content has made this dream come true. Sharing of data and information among individuals in the organization gave birth to a new process of team learning. And as depicted in Tenet # 4 and Tenet # 5 , knowledge will grow exponentially. However, it requires self-respect through a more human-valued relation. Information Technology which drives the new pattern, also enlarge the landscape and scope of team-learning in the real sense. Global communication with internet as the prime driver offers ample opportunity to be utilized for this purpose. Information Technology has logically narrowed the vertical range of management along the hierarchical line. Information system that traditionally served different levels of management and resided relatively rigid within every hierarchical domain, becomes open, thanks to the reach and range of information technology. On the contrary, information needs at the operational level usually detailed in character is now afforded to be accessed and handled by top executives due to the capability of information technology methodology and progress. This creates an absolute new pattern of relation in the landscape of the organization. Apart from any physical structure an organization implements, a new logical relation is superimposed. And that is the direct communication among all individuals in the organization, leading to an exponential growth of knowledge.

People are now treated as human being with its own pride and value. As everybody in the organization can be reach (by information),the top executive.

Flat organization, although only logical may seem rather strange to some. In such case, cross-segment network relation or other combination might be useful to be introduced. Exhibit-4 depicts a segmented network pattern of an organizational model implemented by a Chemical Company. This organization tries to keep the positive aspects of bureaucracy although loosely configured. Core Competency Teams comprise a loose network of specialty clusters. What makes this company chart so uniquely indicative of an Information Age networked organization, is its periphery.

This heavy outer circle attaches directly to all the major components and represents the direct connections among departments. In the white space they do not have writing that’s where collaboration and work gets done. In the circle no one is on top. The thicker outer line is intentional. The circle around the whole is the superhighway that provides connection to the whole members in the organization. This circle symbolizes how the whole coheres through links.