Competitive Advantage from Better Interactions

Tacit interactions are becoming central to economic activity. Making those who undertake them more effective isn’t like tweaking a production line.

Scott C. Beardsley, Bradford C. Johnson, and James M. Manyika

Managing for effectiveness in what economists call tacit interactions—the searching, coordinating, and monitoring activities required to exchange goods, services, and information—is about fostering change, learning, collaboration, shared values, and innovation. Workers engage in a larger number of higher-quality tacit interactions when organizational barriers (such as hierarchies and silos) don’t get in the way, when people trust each other and have the confidence to organize themselves, … [ Read more ]

Scott C. Beardsley, Bradford C. Johnson, and James M. Manyika

We found that the performance of companies in relatively tacit-interactive sectors varied far more than that of other companies. The level of performance variability (defined as the standard deviation of performance divided by the mean level of performance) was 0.9 for companies in sectors with a low level of tacit interactions. Among companies in sectors with a middling number of tacit interactions it was 5.5, … [ Read more ]

The next revolution in interactions

For improving performance and gaining competitive advantage, offshoring and the latest advances in technology seem to grab all the headlines. Yet building a sustainable advantage requires much more. Employees whose jobs can’t be automated-any company’s high-value decision makers-hold the key to boosting productivity, so making them more effective can create an edge that competitors won’t replicate easily.