Intellectual Capital - The Knowledge Management Paradigm
INTELLECTUAL CAPITAL (Page 1 of 7)
THE
KNOWLEDGE MANAGEMENT PARADIGM
By TORI WYSZYNSKI, PH.D.
INTRODUCTION
Why the new interest?
Why the paradigm shift and why now? It might be interesting to take a quick look at the forces driving some of these paradigm shifts. Needless to say, the information age put a lot of pressure on organizations to organize and manage their knowledge bases in different ways, as well as influence the way people communicate and share information. Specifically, the internet, the intranet, and the extranet have encouraged organizations to capture, organize, measure, and share information more efficiently then ever before. People all over the world in business or on their own have begun to view, value, and quantify knowledge and information in new ways. With this social change, as with all social changes, the economy changes. And, when the economy changes then business must change in order to keep in step with the changes occurring in the environment. If they want to stay in business that is. When taking all of these factors into account you really have to appreciate the ability of large organizations to be able to respond to these changes, almost gracefully it seems. The term for the ability of an individual or an organization to respond and adapt to a rapidly changing environment is “adaptive expertise”, and those organizations who become experts in this competency will be the survivors in a knowledge economy.
What exactly is Intellectual Capital?
Intellectual Capital is best expressed in one word “KNOWLEDGE”, and, more importantly, knowledge that is valued. This knowledge can be formal or informal, explicit or implicit, organized or unorganized, belong to an individual or an entire organization. However, as time goes on, the implication is that the more organized and efficient you become in your ability to manage intellectual capital, the more valuable your organization will become.
Examples, expressions, and uses of intellectual capital include: The loss a company experiences after massive downsizing or after the retirement of say a “Jack Welch” type CEO, and the response of the stock market to these losses; or intellectual capital can be newly thought of on a competitive basis as the competitive advantage of a firm.
In all honesty, the terms and the meaning of intellectual capital is not new, there is just a new interest in it. Intellectual Capital measures have been included in annual reports since the beginning of annual reporting. CPA’s developed traditional measures that were expressed using intangible asset formulas such as human competence measures. These include but are not limited to: (a) years in the profession, (b) seniority, (c) average education level, (d) proportion of professionals in the company (the number of professionals divided by the number of employees), (e) general efficiency indicators, (f) personnel efficiency indicators, just to name a few (Kennedy, 1997; Stewart, 1997; Sveiby, 1997; and Strassman, 1996).
Metaphorically speaking, intellectual capital has been described as the vastly large part of the iceberg that remains unseen, while the tip of the iceberg is referred to as the more tangible assets and capital investments of an organization, such as facilitates and equipment (Stewart, 1994). I reused