The market value of Microsoft in 1995, with only $6 billion in revenues and $7 billion in assets, was 1.5 times that of General Motors with $168 billion in revenues and $217 billion in assets. While companies' balance sheets may fail to value intangibles, the market does not. When it comes to wealth creation, the value of the traditional factors of production - land, labor, and capital - is increasingly taking a back seat to a company's stock of knowledge. 

Companies are responding in several ways. To speed information dissemination and action, their operations are becoming more high-tech and more aggressive about hiring the best and brightest people. The challenge now is to inspire these people to share their ideas and go the extra mile. But this isn't easy. 

Unlike the traditional factors of production, knowledge is a resource locked in the human mind. Creating and sharing knowledge are intangible activities that can neither be "supervised" nor forced out of people. They happen only when people cooperate. General Motors learned this the hard way. In the 1980s, it invested some $60 billion in high-tech automation and new plants to transform itself into the company of tomorrow. For the investment it could have bought Toyota. But GM saw little change in performance because it chose to impose reams of high-tech automation instead of working with employees to design and implement the changes. 

We set out neatly a decade ago to come to grips with this challenge. How can companies motivate knowledge workers? What will it take to unlock the ideas and cooperation of individuals on whom our organizations depend? 

Whether we were working with senior executives or shop floor employees, one central theme kept re-emerging: Individuals are most likely to share their ideas when they feel recognized for their intellectual and emotional worth. Ideas can be unlocked by building trust through, what we call, a fair process - fairness in the process of making and executing decisions. The bedrock principles of the process include engaging people in decisions that affect them, explaining why final decisions are made as they are, and stating clearly the new rules of the game once a decision is reached - all so obvious and yet so often overlooked by many companies.  But a fair process can produce powerful results. 

Consider Microsoft and SAP, the German software company. By 1996, with the continuing expansion of the Internet, analysts were predicting Microsoft's demise.  Some were also convinced that SAP's flagship product R/3 - built for the client server environment but not Internet friendly - would soon be a dinosaur.  Indeed, for many companies sudden changes have brought varying degrees of collapse.  IBM failed to maneuver properly when mainframes were challenged by PCs. 

Yet, Microsoft rose to the task.  They achieved in six months what most companies take years to accomplish, if ever.  Redirecting their entire organizations, Microsoft produced-Internet Explorer and SAP rewrote R/3 to seamlessly work with the Internet.  They were able to do this by gaining employees' intellectual emotional commitment through constant engagement, explanation and clear expectation-setting -- elements that define the fair process. 

Fair process works with Ph.D.s and factory employees alike. Consider the transformation occurring at Bethlehem Steel's 106-year-old Sparrow's Point division in Maryland. The division has turned a profit over the past three years, which hasn't happened since the late 1970s.  Neither the employees, incentives nor the organization structure of the division have changed.  Nor have the resources allocated unit been dramatically altered.  In fact, some of the equipment employed at the division dates back to the late 1800s. 

Steel workers are turning into powerful knowledge workers through the use of a fair process.  In the words of Joe Rosel, one of the division's five union presidents, "It's all about involvement, justification for decisions and a clear set of expectations" -- a dramatic shift from its command-and-control model of the past. In 1992, for example, the performance of its tin mill unit was among the worst in the industry. But then, as one employee explains,  "People started coming forward sharing their ideas. They started caring about doing great work, not just getting by."  Within three years of this change, the tin mill unit emerged as one of the highest performing tin mills in the industry. 

Take the success the tin mill unit had in light-gauge cable sheathing. It had let this high value-added product slip because the extra time required for production of it held up the other mills in the unit.  But after the managers explained why they needed to speed the process, ideas started to flow.  Workers suggested using two sequential mills instead of one to eliminate the bottleneck.  Did people suddenly get smarter?  "No," replied an employee, "I'd say they started to care."  Now new ideas for more creative and profitable ways of doing things are bubbling up all over the division, and people are happier to work there. Other beneficial suggestions included a plate-mill depot that sells directly to customers, thereby bypassing service centers and increasing profitability, and a workplace redesign of the power plant based on self-directed teams that saves $130,000 per month. 

To put fair process to work in your company, begin by asking the following questions: Do we engage individuals in decisions that affect them by not only asking for their input, but allowing them to refute the merit of one another's ideas and assumptions? Do we provide a sound explanation that allows everyone involved and affected by a decision to understand why final decisions are made and why people's opinions may have been ultimately overridden? Lastly, once a decision is made do we state clearly the new rules of the game even if they are demanding? 

Knowledge workers exist everywhere, not only in "high-tech" companies like Microsoft and SAP but also in "low-tech" companies like Bethlehem Steel.  The challenge is to liberate and capture the knowledge and ideas of all workers.