The Public Good at the Boundary

The public good idea maps well into the manufacturer/retailer boundary because each entity has information and knowledge which does not get used up through use. A manufacturer knows more about a product category than does a retailer. Putting this knowledge to use for the benefit of the retailer does not use it up; it can still be applied for the benefit of the manufacturer and/or other retailers. And, the lessons learned in applying existing product category knowledge for one retailer tends to generate new knowledge. Indeed, such use seems to agree with Adler's conjecture that the more it is used, the more there is, since new insights and new knowledge are likely to accumulate.

The same story is probably true for the merchandiser who has detailed knowledge of his/her markets and stores. By sharing and applying this knowledge with a manufacturer, the merchandiser generates new insights and thus increases the knowledge. Rosabeth Moss Kanter points out that retailers will share because they will find that it makes good business sense to develop partnerships:

Partnerships must be developed where you aren't good at something. This will become a way of life. Companies will share even secret information and learn to be "pals" and talk more about what's best for each.

Looked at from this knowledge and information sharing perspective, one sees that both parties could benefit from combining and sharing their information and knowledge so that they can both increase their abilities. The focus shifts from selling and negotiation to learning in the sense that every boundary encounter becomes an opportunity to learn. Adler states that viewing processes from a knowledge vantage point accentuates the ideas of learning by doing, learning by using, learning by failing, and learning across a series of projects.

This approach calls for a sharing of knowledge and information so that it can be utilized for current effects and to increase the store of knowledge. Adler calls this the first rule of knowledge management:

... data should flow to those who are best equipped to synthesize it and to distill effective knowledge from it. This is the underlying novelty of Deming's approach: draw the work force not only into the production of widgets, but also into the production of knowledge about the improvement of widget-making processes.

There are instances in the supermarket industry where Adler's first rule in being heeded. For example, more and more chains are using scanner data and local demography to produce store-specific shelf layouts for individual product categories.