Managing IC in the proactive enterprise
Karl Wiig up now. I had lunch with him yesterday. He told me he is 76 years old but my goodness, I’ve never seen such a lively 76 year old. And he skippered a yacht to the Caribbean recently. Lovely man. So his session at the 2010 Knowledge Management conference here in Hong Kong is Managing Intellectual Capital in the Proactive Enterprise. He starts off with a slide about proactive and healthy enterprises:
- manage IC assets deliberately
- pursue vigilance to prosper
- believe in constant preparedness
- create opportunities
- focus on priorities – ignore irrelevancies
- maintain broad and long-term perspectives
- emphasise critical systems thinking
- renew goods and services repeatedly
Proactive enterprises are chaordic he says. He has struggled with over the years – learning about the two aspects of any organisation and he quotes Peter Drucker here:
- societies ARE – subjective world, people interacting, culture, values, opinions
- organisations DO – objectives and goals, artefacts and technology.
(Love Karl: he reminds me very much of Leif Edvinsson). Organisation DOES and Society IS model that he shows, the two must work together. The problem with KM is that it has consistently focused on what the organisation DOES and neglected the subjective world of the organisation. As a result, there is a dismal record of success in KM because we have ignored the most basic part of how an organisation works – that is, how people work to make the products and services that are delivered.
We need to deal with the dual nature of the enterprise in its social and objective dimensions. We do need to be able to blend these two worlds together in our applications and in what we deliver to the organisation and help it. We must match the business structure, operational practices with the people, culture and social needs.
Now talking on intellectual capital (IC) and how it has focused on structural, social and human capital. There are IC resources to PERFORM. We have been labouring under false assumption that world is stationary and that the knowledge we need already exists. But world is in constant change: and values and understandings we had yesterday, will not be applicable tomorrow. We have ignored a whole set of IC drivers: mindset capital (leadership – where is it that IC or people’s mindsets are taking this organisation?).
We need to introduce enterprise culture as part of IC, that is built through people’s intellectual activities as they work together, establish values systems etc. And it can be changed – if the enterprise culture is not conducive to good performance, you might start thinking about how you can modify the enterprise culture.
Is management the solution or the problem Karl asks (ah, let me guess: management!). What model should we choose when dealing with management? Discovery model – informally searching for solutions. Planning model – formalising processes. Quest model – unstructured & goal oriented. Science model – operationally efficient. Karl says that management becomes efficient when it is open, innovative.
Back to IC:
- every IC element affects enterprise performance
- for best performance the entire IC assets portfolio must be balanced and elements must complement each other harmoniously
- different IC elements support different enterprise functions – often we find structural capital supports product leadership in terms of R&D; social capital addresses customer intimacy; human capital addresses expertise, knowledge; mindset capital addresses WHERE the organisation should go and WHY.
- strategy is a contextual vision that should change minute by minute if that is necessary and the mindset of the organisation will direct how well you achieve this.
And here is an issue with KM – KM focus is typically on enterprise IC elements (process capital, practices, IP areas, information capital, R&D programs). Other areas of IC remain untouched by traditional KM – doesn’t address all the things we need to pursue in the organisation.
Managing IC: management of IC touches on every aspect of the organisation; ICM considers strategic, tactical and operational needs; ICM integrates conventional KM and is informed by it.
Chaordic environments: how do we perform better in this environment? 5 different activies that are relevant: innovate, manage change, operate effectively, motivate, facilitate. And which IC elements are being touched on by the need to improve these 5 different areas.
The effective ICM consists of group and individual actions of knowledgeable and motivated people supported by broad capabilities ranging from enterprise culture and management philosophy to infrastructure and technology. Infrastructure is back-bone of behaviour and facilitation within organisations. You need a thoughtful, energetic, proactive, broad-minded management.
Shows diagram of 119 different countries – you will find a cluster of advanced nations that are very successful innovators (eg Nordic countries, NZ, Hong Kong, Germany, Netherlands). These countries have opportunity to lead where societies will head.