Knowledge Capital: How Knowledge-Based Enterprises Really Get Built

Knowledge Capital: How Knowledge-Based Enterprises Really Get Built is an integrated, structured set of conversations with thought leaders.
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The differentiating factor is who is doing what?

It is the human activity versus the structured process or system. It is getting work done.


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I look at it more like fuel or energy. Engineers have laid it out and put the equipment, materials and all the rest in place.

Knowledge Capital: How Knowledge-Based Enterprises are Really Built

Then we come to the human capital. That is the person that flips the switch, who turns the plant on, and monitors it. There is always a human element. That is what human capital is. Human capital is the force, the "who" that designs the process and keeps it going, and in many cases is actively engaged in it.

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How can we find the human capital effect on organisational processes? How do you know what difference it makes? In a complex organisation, we cannot prove anything. There are too many variables impacting the organisation at all times. All we can ever do is set up something where we can see some kind of correlation that this and that are working together to achieve "X".


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Then, we can see what happens with our sales. If sales go up, we can say it was a combination of these two things: What are the contributions of technology and human capital to an outcome? In terms of the new economy, what are the catalysts? Is the new economy a different economy based on these different understandings? The economy is certainly different than it was before because of many different things, such as: It is a different market than it was.

In addition, the speed of connectivity has also certainly changed the marketplace. I think that because conditions have changed, people have also changed. We can see it in customer requirements. Customer service demands are now much higher than they have ever been. Customer expectations are higher because customers see that it is possible for a well functioning company to serve them better than it could ten years ago when it did not have the technology behind it.

What are some examples of organisations that manage their human capital with systematic and proven evaluation methods? What difference has it made for them to do that? First, it is a good business fundamental to maintain a basic set of key performance indicators, which are both financial and human. This is not rocket science. You have to make some decision as to what the key performance indicators are for your organisation and the balance cannot be solely financial. The next step is augmenting that with project measurement. Did we get what we wanted? Was it because of human issues?

Knowledge Capital: How Knowledge-Based Enterprises Really Get Built

Was it because of financial issues? Was it because of structural issues?

Was it because of customer issues? If we have a basic set of key performance indicators and augment them periodically with project management measures and learning from both of those, then we can begin to get a payoff from all of this.

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The payoffs are that we can more effectively communicate performance expectations, understand what happened, understand the results of any activity, compare our results with any standards that we set internally or with benchmarks from outside, identify the gaps between what you expected and what you got; equitably and efficiently recognise and reward performance, and do better resource allocation because we know where we are getting our best ROI.

The Next Five to Ten Years Where do you see the field of human capital going over the next five to ten years? People through knowledge are clearly the critical factors of the future. It is not land, capital and equipment any longer. It is all the soft stuff. That is the driver. If we have got that in place, people will pick the right kind of hard assets that they need to manage. The issue to me is whether human capital management and the whole field of intellectual capital, knowledge management, etc.

The Knowledge Business, Jim Botkin 4.


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The Intelligent Organization, Leif Edvinsson 7. Human Capital, Values, and Learning 8. Drivers and Accounting for Intangible Wealth Value Drivers for Intangibles, Jonathan Low Bringing It All Together in Practice Finding "the Hook", Sharon Oriel The Springboard Story, Stephen Denning Jay Chatzkel is Principal of Progressive Practices, a management consulting organization. He assists organizations in transforming themselves into becoming knowledge-based, intelligent enterprises.

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