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:
  -customers
  -reputations and brands
  -suppliers and vendors
  -shareholders & other external stakeholders
  -joint venture partners & alliances
  -professional associations & formal affiliations
  -alumni
– 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.

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

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