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The most valuable resource in the modern "knowledge economy" is the intellect and experience of an organization's employees. Yet, all too often, the ideas and motivation of highly talented employees are stifled within an outmoded structure that fails to maximize the full value of their knowledge, relationships and skills.

In their recent book, Mobilizing Minds: Creating Wealth From Talent in the 21st-Century Organization, my McKinsey & Co. colleagues Lowell Bryan and Claudia Joyce show how, in an era when global enterprises demand the speedy assertion of their employees' sharpest thinking, companies can create value by realigning their organizations - and shaking up their excessively bureaucratic cultures - to wring the greatest value from their most vital and yet most underutilized asset. The ideas in this book reflect both new thinking and the best practices observed at the world's leading companies, professional services firms and military organizations.

In an information-driven marketplace, they argue, inspiring the creativity of a company's self-directed "knowledge workers" is a more profitable pursuit than many other aspects of corporate strategy, such as designing new products, making long-term strategic plans and pursuing growth-oriented acquisitions. Perhaps better still, unleashing a firm's talent pays off by creating competitive advantages that rivals cannot easily copy.

Mr. Bryan and Ms. Joyce examined the performance of leading companies since the start of the networked digital age. From 1995 to 2005, the 30 companies that achieved the largest market capitalization saw their profit per employee soar, on average, from $35,000 (U.S.) to $83,000. By also doubling their number of employees, this group saw a fivefold increase in profit and market capitalization, from $34-billion to $168-billion, with a total return to shareholders (TRS) of 17 per cent a year. Their return on invested capital (or "book value," for financial institutions) also increased, but only from 17 per cent to 23 per cent. Clearly, mobilizing minds underpinned these impressive results.

In many companies, organizational inertia, corporate politics and interpersonal issues prevent the talent of the work force from being unleashed. Strengthening organizational design is the first step toward maximizing productivity and inspiring creativity. The hierarchical mindset and vertically integrated structures that were well suited to the needs of the industrial age impede performance in modern corporate life where talent, rather than capital, is the scarcest resource. Freeing up talent requires allocating decisions among the employees best able to make them, and learning to expand a firm's capabilities horizontally rather than adding vertical layers. An organization must give managers the freedom to tap the organization's best minds to gain the information they need. The workers closest to the company's business opportunities must collaborate easily to exchange knowledge throughout the enterprise.

Equally, needless complexity and overbearing bureaucracy frustrate employees and distract talented minds from the creative tasks central to their productivity. The critical element in liberating talented people from unproductive complexity is large-scale, enterprise-wide collaboration. A sense of teamwork and interdependence can be created by holding talented, ambitious employees accountable not just for their own work but also for helping others within the organization achieve success: Employees would be evaluated like hockey players and rewarded not just for the goals they score, but for their assists. Digital technology provides the means not just to promote efficient collaboration but also to measure each person's "assists," and thus to motivate employees to collaborate in ways that were not possible in the past.

Market mechanisms can also improve the flow of ideas. For the better part of two decades, companies have invested heavily in "knowledge management" - but with limited results, because real value comes less from managing knowledge than from creating and exchanging it. A "knowledge marketplace" is one device to promote the exchange of ideas.

Another such device is a "talent marketplace," which can create efficiencies in deploying talent. Talent markets allow employees to join a wide-ranging talent pool to explore alternative assignments and enable managers to gain access to the people best-suited to new assignments.

A company's competitive strength resides largely in the heads of its most talented employees. In the new century's knowledge economy, the winning companies will be those that can increase their profit per employee by translating this talent into institutional skills, intellectual property, networks and brands - intangibles that are nearly impossible for their competitors to replicate. By removing barriers that impede knowledge development and by encouraging information sharing, organizations can leverage their most precious asset to ensure lasting competitive advantage in the marketplace.