Books Read: “The Firm of the Future”, Dunn, Baker   Leave a comment

Whilst this is a book about professional services firms, there are nuggets of truth & thoughts that do apply outside this sphere.

One example of this is the comparison of the old, with their mooted, practice equation:
– old practice equation:
  – revenue = people power x efficiency x hourly rate
– new/mooted practice equation:
  – profitability = intellectual capital x price x effectiveness

So, applying this new equation to the internal IT function can look something like this:
  – impact upon host business = intellectual capital x resource costs x effectiveness

Now while the resource costs (human & fixed, opex & capex) are fixed to a large degree, its effectivess can be improved. As can the third factor: intellectual capital.

And its that last factor that I’ll focus on – intellectual capital. It’s the first book I’ve come across to deconstruct intellectual capital.

It was Benjamin Franklin who coined the saying: “An investment in knowledge pays the best interest”.

There are three types of intellectual capital:
– human capital
– structural capital
– social capital

Thoughts on human capital:
– it needs to be invested in
– people volunteer themselves to their current organisation (be attractive)

Thoughts on structural capital:
– structural capital is the systems, procedures, technology, etc used to get things done
– capturing and using knowledge (knowledge management) is part of this
– thus, structural capital must be optimised and be used efficiently

Thoughts on social capital:
– social capital is:
  -reputations and brands
  -suppliers and vendors
  -shareholders & other external stakeholders
  -joint venture partners & alliances
  -professional associations & formal affiliations
– all these elements of social capital should add value to the economic chaiin

For me, Dunn & Baker open up the discussion of intellectual capital. And by focusing on the appropriate elements of intellectual capital, greater value can be provided back to the host organisation.

Posted February 21, 2013 by terop in Books Read, ICT Strategy, Innovation, Team Management

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