Episode 4 : Recognizing a Firm's Intellectual Assets

In the knowledge economy , Wealth is increasingly created by effective management of knowledge workers instead of by the efficient control of physical and financial assets.

The gap between a firm's market value and book value is far greater for knowledge-intensive corporations than for firms with strategies based primarily on tangible assets.

Attracting Human Capital :

First step in the process of building superior human capital is input control - attracting and selecting the right person.

Developing Human Capital :

It is not enough to hire top level talent and expect that the skills and capabilities of those employees remain current throughout the duration of their employment. Rather training and development must take place at all levels of the organisation.

Retaining Human Capital :

Talented employees are like " frogs in a wheelbarrow".

Enhancing Human Capital :

Effective management of diversity can enhance the social responsibility goals of an organisation.

Six areas where sound management of diverse workforces can improve an organisation's effectiveness and competitive advantages are :

1. Cost argument
2. Resource acquisition argument
3. Marketing argument
4. Creativity argument
5. Problem solving argument
6. Organizational flexibility argument

Vital Role of Social Capital :

In the knowledge economy , it is not the stock of human capital that is important but the extent to which it is combined and leveraged. The development of socio capital gains importance.

What is social network analysis ?

It depicts the pattern of interactions among individuals and helps to diagnose effective and ineffective patterns.

It helps identify groups or clusters of individuals that comprise the network, individuals who link the clusters and other network members.

It helps diagnose communication patterns and consequently , communication effectiveness.

Using technology to leverage human capital and knowledge :

• Using network to share information
• Using technology to enhance collaboration

Codifying knowledge for competitive Advantage :

There are 2 different kinds of knowledge :

1. Tacit Knowledge
2. Explicit Knowledge

?? Tacit knowledge is embedded in personal experience and shared only with the consent and participation of the individual.

?? Explicit knowledge can be documented , widely distributed and easily replicated.

Once the knowledge asset is developed and paid for , it can be reused many times at very low cost assuming that it doesn't have to be substantially modified each time.

Intellectual Property Rights :

• More difficult to define and protect than property rights for physical assets.
• If intellectual property rights are not reliably protected by the tate m there will be no incentive to develop new products and services.
• Protection of intellectual rights raises unique issues when compared to physical property rights

Dynamic Capabilities :

• Entail the capacity to build and protect a competitive advantage
• Rests on knowledge,assets , competencies and complementary assets and technologies
• Example - product development,strategic decision making,alliances and acquisitions