“Industrial age companies created sharp distinctions between two groups of employees. The intellectual elite—managers and engineers—used their analytical skills to design products and processes, select and manage customers, and supervise day-to-day operations. The second group was composed of the people who actually produced the products and delivered the services. This direct labor work force was a principal factor of production for industrial age companies, but used only their physical capabilities, not their minds. They performed tasks and processes under direct supervision of white-collar engineers and managers. At the end of the twentieth century, automation and productivity have reduced the percentage of people in the organization who perform traditional work functions, while competitive demands have increased the number of people performing analytic functions: engineering, marketing, management, and administration. Even individuals still involved in direct production and service delivery are valued for their suggestions on how to improve quality, reduce costs, and decrease cycle times…
Now all employees must contribute value by what they know and by the information they can provide. Investing in, managing, and exploiting the knowledge of every employee have become critical to the success of information age companies”

—  Robert S. Kaplan

Source: The Balanced Scorecard, 1996, p. 5-6

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Robert S. Kaplan6
American accounting academic 1940

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“Industrial age companies created sharp distinctions between two groups of employees. The intellectual elite—managers and engineers—used their analytical skills to design products and processes, select and manage customers, and supervise day-to-day operations. The second group was composed of the people who actually produced the products and delivered the services. This direct labor work force was a principal factor of production for industrial age companies, but used only their physical capabilities, not their minds. They performed tasks and processes under direct supervision of white-collar engineers and managers. At the end of the twentieth century, automation and productivity have reduced the percentage of people in the organization who perform traditional work functions, while competitive demands have increased the number of people performing analytic functions: engineering, marketing, management, and administration. Even individuals still involved in direct production and service delivery are valued for their suggestions on how to improve quality, reduce costs, and decrease cycle times…
Now all employees must contribute value by what they know and by the information they can provide. Investing in, managing, and exploiting the knowledge of every employee have become critical to the success of information age companies”

David P. Norton (1941) American business theorist, business executive and management consultant

Source: The Balanced Scorecard, 1996, p. 5-6

“Companies are in the midst of a revolutionary transformation. Industrial age competition is shifting to information age competition. During the industrial age, from 1850 to about 1975, companies succeeded by how well they could capture the benefits from economies of scale and scope. Technology mattered, but, ultimately, success accrued to companies that could embed the new technology into physical assets that offered efficient, mass production of standard products.
During the industrial age, financial control systems were developed in companies, such as General Motors, DuPont, Matsushita, and General Electric, to facilitate and monitor efficient allocations of financial and physical capital. A summary financial measure such as return-on-capital employed (ROCE) could both direct a company’s internal capital to its most productive use and monitor the efficiency by which operating divisions used financial and physical capital to create value for shareholders.
The emergence of the information era, however, in the last decades of the twentieth century, made obsolete many of the fundamental assumptions of industrial age competition. No longer could companies gain sustainable competitive advantage by merely deploying new technology into physical assets rapidly, and by excellent management of financial assets and liabilities.”

David P. Norton (1941) American business theorist, business executive and management consultant

Source: The Balanced Scorecard, 1996, p. 2-3

Robert S. Kaplan photo

“Companies are in the midst of a revolutionary transformation. Industrial age competition is shifting to information age competition. During the industrial age, from 1850 to about 1975, companies succeeded by how well they could capture the benefits from economies of scale and scope. Technology mattered, but, ultimately, success accrued to companies that could embed the new technology into physical assets that offered efficient, mass production of standard products.
During the industrial age, financial control systems were developed in companies, such as General Motors, DuPont, Matsushita, and General Electric, to facilitate and monitor efficient allocations of financial and physical capital. A summary financial measure such as return-on-capital employed (ROCE) could both direct a company’s internal capital to its most productive use and monitor the efficiency by which operating divisions used financial and physical capital to create value for shareholders.
The emergence of the information era, however, in the last decades of the twentieth century, made obsolete many of the fundamental assumptions of industrial age competition. No longer could companies gain sustainable competitive advantage by merely deploying new technology into physical assets rapidly, and by excellent management of financial assets and liabilities.”

Robert S. Kaplan (1940) American accounting academic

Source: The Balanced Scorecard, 1996, p. 2-3

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“Loss of market begets unemployment. Emphasis has been on short-term profit, to the undernourishment of plans that might generate new product and service that would keep the company alive and provide jobs and more jobs. It is no longer socially acceptable performance to lose market and to dump hourly workers on to the heap of unemployed.
The basic sickness of American industry and resulting unemployment is failure of top management to manage. Loss of market, and unemployment, are not foreordained. They are not inevitable. They are not acceptable. The day is past when people in management need not know anything about management by which I mean to include problems of production, supervision, training.”

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“Part of America's industrial problems is the aim of its corporate managers. Most American executives think they are in the business to make money, rather than products or service…The Japanese corporate credo, on the other hand, is that a company should become the world's most efficient provider of whatever product and service it offers. Once it becomes the world leader and continues to offer good products, profits follow.”

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Armand V. Feigenbaum (1922–2014) American businessman

Variant: Product quality can then be defined as: The composite product characteristics of engineering and manufacturing that determine the degree to which the product, in use, will meet the expectations of the customer.
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“The socio-technical concept arose in conjunction with the first of several field projects undertaken by the Tavistock Institute in the coal-mining industry in Britain. The time (1949) was that of the postwar reconstruction of industry in relation to which the Institute had two action research projects.(2) One project was concerned with group relations in depth at all levels (including the management/labor interface) in a single organization - an engineering company in the private sector. The other project focused on the diffusion of innovative work practices and organizational arrangements that did not require major capital expenditure but which gave promise of raising productivity. The former project represented the first comprehensive application in an industrial setting of the socio-clinical ideas concerning groups being developed at the Tavistock.”

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Source: The evolution of socio-technical systems, (1981), p. 7

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“Like it or not, giant, vertically integrated corporate enterprises were the most efficient means of organizing the production and distribution of mass produced goods and services. Bringing together supply chains, production processes, and distribution channels in vertically integrated companies under centralized management dramatically reduced transaction costs, increased efficiencies and productivity, lowered the marginal cost of production and distribution, and, for the most part, lowered the price of goods and services to consumers, allowing the economy to flourish. While those at the top of the corporate pyramid disproportionately benefited from the increasing returns on investment, it’s only fair to acknowledge that the lives of millions of consumers also improved appreciably in industrialized nations.”

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The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism (2014)

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