of Innovation Capital
The dawn of the new millennium has been met with great enthusiasm and an equivalent commitment to change or as we prefer to call it - innovation. Of course, knowledge has always been an essential element in the advancement of civilisation, but today's emerging economy proposes that knowledge be managed explicitly. Today, we know that the knowledge agenda is worldwide, pervades every function and every industry, and has implications for industrialised and developing nations alike. Indeed, it has become an agenda of international collaboration. There is no such thing as a non-knowledge worker, nor is there such a thing as a non-knowledge-intensive industry. The knowledge of all individuals is important. Knowledge is what makes companies unique even within the same industry. And, we have more to gain by building upon the competencies of one another as nations. The focus on knowledge strategy is nothing less than a platform for world peace.
We are just beginning to discover how to value knowledge in our organisations and the fact that knowledge has no value until it is put to use. Leaders in technological innovation and knowledge management are beginning to converge in their concepts and in their practices. University research initiatives are beginning to proliferate. Nations are launching initiatives for 21st century positioning, and societal organisations, such as The World Bank, UN, EU and OECD, have placed knowledge and learning as centre stage for future sustainable economic development. It is only the beginning.
Knowledge Value Proposition
Much progress has been made in our quest for harnessing intellectual capital. Over the last decade, we have learned that there is a difference between tacit and explicit knowledge; and there are ways to make our insights visible and even convert them to structural and/or financial capital. We also know that those companies able to explicitly manage their innovation infrastructure within which ideas are created and commercialised are considered market leaders.
To be more specific, today's companies measure success based upon cost, quality and time. However, as the marketplace becomes hyper-competitive, the performance metrics become more complex and intangible, the organisation becomes more networked, people become more empowered and energised, processes become boundary-less and the enterprise will become increasingly reliant upon technology. And as enterprises become more reliant on technology and its attendant complexity, they will become more dependent upon the knowledge and behaviour of employees as well as other stakeholders both inside and external to the firm. Simultaneously, performance metrics will become more hidden, intangible related to what leading management philosophers have defined as intellectual capital.
Therefore, the traditional value proposition of cost, quality and time although still very important is just not enough.
Modern value propositions, then, must balance these complex, interdependent factors: performance, behaviour and technology. A focus on one aspect will have an automatic effect on the other elements. Only a balance among the three in an innovation process enables an enterprise to be centred and capable of managing forward toward sustained prosperity. What follows are some of the items to consider under each management factor. The actual elements will differ between organisations, industries and countries:
o Performance Economics (intellectual capital). Metrics for investments and profitability; asset identification (financial, technological and intellectual); qualitative/quantitative success measures; budget level; resource mix; rewards/incentives; tax structure and creative financing mechanisms.
o Behaviour (social capital) Learning networks of expertise; system dynamics; reporting relationships; staffing patterns; cultural and cross-cultural aspects; liaison relationships; collaborative strategies; sense of purpose; work imperatives; individual/organisational balance; development plans; learning philosophy; role responsibilities; work design; simultaneous parallel activities; cross-fertilisation of ideas; cross-functional teaming; global souring; benchmarking best practices; periodic review and evaluation; and communication strategies.
o Technology (technological capital) Electronic communication infrastructure, intelligence system, service delivery techniques; technology advancements; transformation; shared technology resources; collaborative groupware; workflow documentation, intranets, corporate portals, decision support, computer memory and network management tools.
In a time when both the rate of change and the growth of knowledge keep accelerating, the more people you have who can learn more in a shorter period of time, the more competitive you will be. The real formula for success is less mechanistic: it requires the creative energies of everyone associated with an organisation, as well as careful stewardship of an organisation's shared purpose and practices. Many have described the fact that learning may be our only competitive weapon. Few have created mathematical formulas to describe the phenomenon. Imagine the power of the model when applied to building collaborative, not competitive advantage.
It embraces the inevitability and strength of change in ways that catapult learning forward, stretch imaginations and define common ground for contributions from diverse paradigms. Such a strategy recognises the value of the whole and its interrelated parts, operating as an evolving ecological system in which streams and cross-currents of activity are opportunities to harness the value of knowledge.
Creating the innovation culture where knowledge is valued and shared effectively is one of the most difficult challenges faced in practice. One of the primed influences may actually be the competitive environment that has been developed over time and begins with a child's birth. Competition is healthy when describing sports, and it was appropriate for an economic climate where resources were plentiful. Once global competition became a reality, available resources shrank rapidly overnight. However, the knowledge economy promises an abundance of resources if the metrics and measurement systems can be properly defined.
Innovation must be in the head, heart and hands of every participant in the system. It does not mean that everyone is an expert technician and expert marketer at the same time. What it does mean is that everyone has knowledge of the entire innovation system and his/her particular role in that process. It does mean that there is some common language and shared purpose, and that the boundaries fade between functions, sectors, industries and cultures of the world. It means that there is a basic trust, mutual respect and collegial competencies. In addition, it is likely that a thirst for learning pervades the culture.
That being the case, players at all enterprise levels (from microeconomic to macroeconomic) can share these modern management philosophies, an in so doing overcome the barriers and obstacles to progress.
Editor's Note - This are excerpts from an article that first appeared in Business Excellence, No. 1, World Trade Group (Summer 2000). The publication designed for the intellectual capital investor, included a variety of articles for other IC leaders in the field.
For further information, contact Victor Lewis (publisher) +44.20.7613.7500.
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