The Road AheadIntellectual capital [Archives:2003/638/Business & Economy]

June 2 2003

Raidan Al-Saqqaf
They say, money is the lifeblood of any business, and by money, they mean capital, liquid cash, and anything that can be transformed into money. However, as times change, money is no longer the biggest problem businesses face, in fact, people are.
It is generally acknowledged that good people are the prime source of any sustainable advantage in any company, especially in this increasingly knowledge intensive and fast-changing business world, yet organizations continue to struggle with how to retain key people and best utilize their expertise, innovativeness and strategic agility, because they know how much they really need this kind of people.
In turn, as an effort to enhance the intellectual capital in today's business organization, a new concept has emerged in order to increase collective knowledge, the organization is called Communities of practice (CoP). This concept is considered one of the most recent knowledge management initiatives; (Brown and Duguid, 1991 and Wenger and Snyder; 2000), Cops are often a less structured means of creating and sharing knowledge, because CoPs crosses levels, functional distinctions and even the whole organizational structure. In short, CoPs are groups formed around a shared interest, in which discussions builds on the motivations of the group members, and hence information may flow freely in many directions. It is a dynamic process of collecting and sharing information that can be leveraged into an economic or social value.
Such free flow of information in an organization would facilitate employee empowerment and hence the creation of intellectual capital through CoPs can be the competitive advantage that other companies cannot easily imitate, because with an organization that looks like spaghetti to outsiders, every employees would know a great deal about how other employees work and how the whole organization functions, and hence the organization can utilize his experience, abilities and even suggestions in a better manner.
However, this spaghetti-like sidestepping of traditional hierarchical control and lack of specified outcomes from the group makes managers uncomfortable in a business environment based on performance matrices, deliverables and more familiar evidenced of doing real work, because even though we all would like to keep on chatting and chatting about a shared interest in a new idea, this wouldn't be the best way to contribute to the organization's prosperity, and hence value should be kept in mind.
Value is non substitutable, in fact, value should be created as a result of sharing information and creating intellectual capital. This value might come from new information exchanged between different layers of knowledge in all departments and between all departments, and also with customers, suppliers and stockholders, because not any information is of big value.
Endnote: Intellectual capital can be your competitive advantage, but to make use of it you have to adopt a good information flow systems with least restrictions, like CoPs for example.