To improve business, take a look at weak ties

Posted Feb. 03, 2012, at 1:16 p.m.

There is a lively debate going on about the best way to stimulate Maine’s economy. This article suggests that innovation, enabled by knowledge management, represents a good way to do so. One example is Maine’s tourism industry.

Tourism is an important industry in our state. According to the University of Maine Office of Cooperative Extension :

• Tourism is Maine’s largest industry with $10 billion in sales attributed to tourism.

• $271.6 million in sales tax revenue is attributed directly and indirectly to tourism in Maine (28 percent of total sales tax revenue).

• Adding employment and fuel tax, Maine received $429 million in tourism-related sales tax revenue (45 percent of total sales tax revenue).

Given the huge impact tourism has on Maine’s economy, how can we improve and grow this industry?

Innovation is often defined as the introduction of new products, services, processes or ideas. Innovation is usually about someone who has come up with a better way to do something or provide a better product or service, giving his or her organization a competitive advantage.

Why do companies not do this on a regular basis?

This is where knowledge management comes in. When we are within a group or an organization, we tend to associate with the same people over periods of time. We thus tend to become accustomed to doing things in the same way, thinking the same way, and feeling comfortable in our methods and ideas. The danger in this comfort zone is that we often do not know what we do not know, which inhibits new ideas and innovation.

In knowledge management, there are several areas that often lead to innovative activities including knowledge sharing and knowledge creation.

According to the theory of weak ties, we tend to associate with people who are similar to us (with whom we are connected through strong ties). However, if we develop networks of people who are different from us (and with whom we are connected through weak ties), then we gain valuable new perspectives and ideas from them.

When we connect with those with whom we are weakly tied, we communicate with people who come from different backgrounds, have different educational, cultural, societal backgrounds and see the world from a different perspective. Their knowledge base is often very different, which allows them to suggest new methods and ideas that we would never have thought of.

A study of tourism conducted by the Australian Department of Tourism showed that by creating a network of weak ties, or developing knowledge transfer mechanisms with outside knowledge sources, the rate of innovation and sales increases dramatically. Specifically, what some of the tourism businesses did in that study was create networks with tourism trade associations, regional, national and international, with the purpose to share ideas. They also created information networks with government organizations such as offices of tourism and cooperative extension, among others, and developed information networks of other tourism businesses. This led to an exchange of tacit knowledge that led to new ideas, new knowledge creation and innovation to improve their businesses.

Furthermore, with the explosion of social media, the ability to develop these social networks has become easier and more productive.

The Australian study also examined the information technology and mining sectors and found similar results.

The implications for Maine are clear:By developing networks of individuals outside our inner circles, our companies can discover knowledge that they did not know, expand their perspectives, create new knowledge and thus increase their innovative capacity and competitive advantage.

Dr. Nory B. Jones is associate professor of management information systems at the University of Maine Business School and is director of the school’s MBA program.