Wednesday, December 25, 2013

Recognizing a Firm’s Intellectual Assets

Gregory G. Dess
G. T. Lumpkin
Marilyn L. Taylor



The Central Role of Knowledge in Today’s Economy
Creation of wealth in a knowledge economy
•         Effective management of knowledge workers
•         Intellectual capital
•         Assets such as
n  Reputation
n  Employee loyalty and commitment
n  Customer relationships
n  Company values
n  Brand names
n  Experience and skills of employees
The Central Role of Knowledge in Today’s Economy
Intellectual capital = Market value of the firm – Book value of the firm
How do companies create value in the knowledge-intensive economy?
•         Human capital (individual capabilities, knowledge, skills, and experience of the company’s employees and managers)
•         Social capital (the network of relationships that individuals have throughout the organization)
•         Knowledge
•         Explicit knowledge
•         Tacit knowledge
Attracting Human Capital
•         Hire for attitude, train for skill
•         Emphasis on
•         General knowledge and experience
•         Social skills
•         Values
•         Beliefs
•         Attitudes
Developing Human Capital
•         Train and develop at all levels
•         Training is not the sole responsibility of the human resource department
•         Rapid changes in technology
•         Employee skills become obsolete
•         Training is cost effective
•         Monitor progress and track development
•         Evaluate human capital
•         Employees must share knowledge and work together, collectively, to reach organizational goals
•         Firms often use 360-degree evaluation and feedback systems
•         Managers’ success cannot compromise the organization’s core values
360-Degree Leadership Assessment
•         Has developed and communicated a clear, simple, customer-focused vision/direction for the organization.
•         Forward-thinking, stretches horizons, challenges imaginations.
•         Inspires and energizes others to commit to Vision. Captures minds. Leads by example.
•         As appropriate, updates Vision to reflect constant and accelerating change affecting the business
Ten Characteristics of Leadership
Vision
Customer/Quality Focus
Integrity
Accountability/Commitment
Communication/Influence
Shared Ownership/Boundary-less
Team Builder/Empowerment
Knowledge/Expertise/Intellect
Initiative/Speed
Global Mind-Set
Retaining Human Capital
•         Provide mechanisms that prevent the transfer of valuable and sensitive information outside the organization
•         Identify with organization’s mission and values
•         Strong alliance to organization (strategic intents)
•         Challenging work and stimulating environment
•         Financial and Nonfinancial Rewards and Incentives
•         Rewards are a vital organizational control mechanism
•         However, money may not be the most important reason why people take or leave jobs
•         Exodus of employees can erode a firm’s competitive advantage
The Vital Role of Social Capital
•         Attraction, development and retention of talent is a necessary but not sufficient condition for creating competitive advantage
•         Knowledge workers often are more loyal to their colleagues and profession than to their employer
How Social Capital Helps Attract and Retain Talent
•         Hiring via personal (social) networks
•         Some job candidates may bring other talent with them
•         Emigration of talent from an organization to form start-up ventures
•         Can provide mechanism for obtaining resources and information from outside the organization
The Potential Downside of Social Capital
•         Groupthink
•         Cost of financial resources
•         Managerial commitment
Using Technology to Leverage Human Capital and Knowledge
•         Sharing knowledge and information
•         Conserves resources
•         Develops products and services
•         Creates new opportunities
•         Technology can leverage human capital and knowledge
•         Within the organization
•         With customers
•         With suppliers
Using Technology to Leverage Human Capital and Knowledge
Using networks to share information and develop products and services
•         E-mail
•         Virtual teams
n  Enhance speed and effectiveness with which products are developed
n  Can be applied to new business ventures
Using Technology to Leverage Human Capital and Knowledge
Retaining knowledge when employees leave
•         Information technology can save some tacit knowledge
•         Need to create motivation for people to contribute their knowledge to the system
Creating Value Through Human Capital, Social Capital, and Technology
•         Does the organization assess attitude and “general make-up” instead of focusing primarily on skills and background in selecting employees at all levels?
•         How important is creativity and problem solving ability? Are they properly considered in hiring decisions?
•         Do people throughout the organization engage in effective networking activities to obtain a broad pool of worthy potential employees? Is the organization creative in such endeavors?
Creating Value Through Human Capital, Social Capital, and Technology
•         Does the development and training process inculcate an “organizationwide” perspective?
•         Is there widespread involvement—including top executives—in the preparation and delivery of training and development programs?
•         Is the development of human capital effectively tracked and monitored?
•         Are there effective programs for succession at all levels of the organization—especially the top-most levels?
•         Does the firm effectively evaluate its human capital? Is a 360-degree evaluation used? Why? Why not?
•         Are mechanisms in place to assure that a manager’s success does not come at the cost of compromising the organization’s core values?
Creating Value Through Human Capital, Social Capital, and Technology
•         Are there appropriate financial rewards to motivate employees at all levels?
•         Do people throughout the organization strongly identify with the organization’s mission?
•         Are employees provided a stimulating and challenging work environment that fosters professional growth?
•         Are valued amenities provided (e.g., flextime, child-care facilities, telecommuting) that are appropriate given the organization’s mission, strategy, and how work is accomplished?
•         Is the organization continually devising strategies and mechanisms to retain top performers?
Creating Value Through Human Capital, Social Capital, and Technology
•         Are there positive personal and professional relationships among employees?
•         Is the organization benefiting  (or being penalized) by hiring (or by voluntary turnover) en masse?
•         Does an environment of caring and encouragement rather than competition enhance team performance?
•         Does the organization minimize the adverse effects of excessive social capital—such as excessive costs and “groupthink”?
Creating Value Through Human Capital, Social Capital, and Technology
•         Does the organization effectively use technology to transfer best practices across the organization?
•         Does the organization use technology to leverage both human capital and knowledge both within the boundaries of the organization as well as among its suppliers and customers?
•         Has the organization used technologies such as e-mail and networks to develop products and services?
•         Has the organization effectively used technology to codify knowledge for competitive advantage?
•         Does the organization try to retain some of the knowledge of employees when they decide to leave the firm?
The Central Role of Leveraging Human Capital in Strategy Formulation
•         Leveraging human capital and business-level strategy (Chapter 5)
•         Sustainable over time
n  Integrate primary and support activities in the firm’s value chain
•         Leveraging human capital and corporate-level strategy (Chapter 6)
•         Manage businesses to create synergy
•         Create more value by working together across business units
The Central Role of Leveraging Human Capital in Strategy Formulation
•         Leveraging human capital and international-level strategy (Chapter 7)
•         Achieve economies of scale
•         Adapt to local market needs
•         Facilitate the flow of information and knowledge between business units in different countries
The Central Role of Leveraging Human Capital in Strategy Formulation
•         Leveraging human capital and internet strategies (Chapter 8)
•         Create competitive advantages through digital and Internet-based technologies
•         Lower costs
•         Enhance customer service
•         Improve performance

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