Archive for the 'Knowledge Capital Management' topic

Why do we have such a problem relating knowledge to our business needs?

Enterprises have a well-known problem in relating knowledge to business needs.This is because enterprises do not organize and manage the business. Dead-end 20^th century management used today lays organization, business process, administration, and a variety of other structures over the business to manage the enterprise. Knowledge is not related to the business; knowledge is related to contrived structures laid over the business, such as an index of subjects and topics.

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Knowledge is capital consisting of specific solutions of worth utilized to improve the utilization of other solutions for cost and effectiveness of performance to produce value and quality in results. Knowledge is human capital that increases human personnel capital worth by improving their performance in utilizing various capital solutions effectively and producing higher value-quality results. Knowledge is used to develop specific human capability solutions that are utilized to produce specific difficult results to be of high value-quality,

Enterprises need a systematic way to identify specific business results that must be supported by knowledge, identify specific capital solutions that must be utilized properly to produce the result, define the precise knowledge needed, to relate knowledge to the capability of the user applying the knowledge, to link knowledge to where and by whom it is needed, to understand the value created by knowledge that gives worth to the knowledge, and to get feedback and improvement on the knowledge. This can only be done by managing the actual business.

There are many problems inherent in knowledge management today

Many enterprises make large investments in knowledge, but 20^th century methods that we use to manage knowledge limit the value created and the return of the investment:

• Knowledge is labeled as intellectual capital or intangible assets to relieve us of the responsibility to manage knowledge as an asset of worth
• Knowledge is organized by topics or subject matter, which depend on someone referencing the topic to their job or function to put knowledge to use
• Knowledge is human capital to improve human capability, but it is rarely managed as human capital
• Knowledge is delivered through learning, but learning material is often separate from knowledge
• Knowledge is information capital to contribute to the overall business information base, but is usually separated from other information
• Knowledge is not integrated with the business to be utilized as a capital solution to produce value for the enterprise
• Knowledge gains worth by creating value in business results, but results are not managed and only a few results are supported directly by knowledge

Conventional methods hamper the application of knowledge by using structures that are defined through various contrived entities like department, activity, and object, while organizing knowledge by topic, subject, etc. These fundamental problems prevent knowledge from being leveraged to be high-worth capital utilized in a managed business.

Knowledge is human capital that enables other human capital to utilize specific capital solutions to produce specific results

Knowledge is human capital that must be created and managed specifically to increase human capital worth through the value of results produced. Knowledge is also information capital that must be integrated with business data and delivered where needed to produce specific results and to support human capabilities utilized. [more...].

20^th century enterprise management administers human resources

20^th century enterprise management provides the human resource function to administer human resources. Human resources provide administration for recruitment, actions, payroll, and some development functions. While human capital may be called human capital, rarely is there any real effort to develop humans as actual capital solutions to meet the specific business needs and increase individual human worth to the enterprise.

20^th century enterprise management cannot develop and apply human and knowledge capital directly to the business

Some more advanced companies try to develop human capital, but as humans rather than as the specific capital solutions needed by the business. They are at a disadvantage because the business is not organized to define specific business needs, to understand where special capabilities are required in the business, to understand the value created in the business through application of human capabilities, and the added worth of human capabilities through value creation.

Rule No. 8 of 21^st century business management: Manage human personnel, capability, and knowledge capital to increase human worth

21^st century business management organizes the business results produced and human capital as specific solutions to be utilized to produce specific results. Rule No. 8 requires that human capital be identified as specific capital solutions utilized to produce business results, investments be made to develop human capital to increase the value of assigned results, human capital performance be managed against the results produced to increase human worth, and that human reward be a commensurate part of proven human worth to the business. As part of this rule, there are business management principles for strong human capital management:

• Define economic output results that must be produced across the business and those high-value results that require specific human capability solutions
• Analyze the business process to produce difficult high-value results and describe how human capabilities must utilize the process
• Define specific high-worth capabilities to produce high-value results as capital solutions for specific human knowledge and human capability development
• Focus human capital on results, so that they always know the results expected and how to apply their capabilities to produce results
• Develop human capabilities as specific capital solutions to produce specific high-value results
• Support human capital with knowledge capital to utilize specific capital solutions to produce specific results
• Let human capital know the value of their results and how their performance can add value to results
• Let human capital know the relationship between the value added to results produced and their worth to the enterprise as human capital
• Compensate and reward human capital in accordance with their human capital worth

Strategic human capital development develops the capabilities described in the business process and the knowledge required to produce new high-value strategic results. [more...].

Human capital is administered as human resources and their worth in the value added to the business is unknown

In most enterprises, human resources are administered as employees and are assigned to positions in organization units. There is no way to measure the value they produce, evaluate performance costs against the value created, assess their worth as human capital, or to develop them to increase their worth and provide measured increased value to the enterprise. Administered employees do not have a defined stake in the enterprise.

The economic crisis shows that banks and other corporations do not plan, manage, and account for human worth in the value-added to the corporate business, giving rise to perceived unmanaged executive compensation and staff rewards. The only way to eliminate the problems that caused the economic crisis is to manage the business and to manage human capital as part of the business.

20^th century human resource management methods prevent good human capital management

There is a lot of talk about human capital, intellectual capital, knowledge management and other means to improve the capabilities, productivity, and output of human capital. But, each item is treated separately. We try to manage human performance, but have no framework to understand real human performance related to measured value to the business. We try to develop human capabilities, but have no framework to relate human capabilities to specific business needs. We have no way to integrate human capital performance with the value created and the worth of human capital.

We must manage the business to manage the worth of capital in development costs and the future value added to results produced

Before we can manage human capital properly, we must organize the business for 21^st century management. The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. We must identify and organizes the results needed for business success, the human and other capital solutions needed to produce results, and performance in the utilization of each solution to produce each result. We must manage the development and utilization of specific human capital solutions to produce measured result value, to increase capital worth, and justify increased performance costs.

We must improve human performance by managing the results humans produce

The key to making human capital a high-worth asset is to manage the results our enterprise produces related to human and other capital utilized. [more...].

Structures laid over the business produce enormous information complexity

20^th century management does not manage the actual business, but manages the enterprise using a multitude of organization, process, account, performance, system, administration, etc structures laid over the business. The structures are rigid and do not change with actual business change. No structure captures consistent, complete, and accurate business data. The various structures use different names for the same entity and different definitions for the same part of the enterprise. Information systems computerize the various structures producing enormous amounts of incomplete, inconsistent, and inaccurate information. This causes the exploding information complexity and information management problems enterprises are experiencing today.

Information generally is not organized and managed as capital

Information capital management is not well organized. Accounting is responsible for financial records, information technology may perform data management and record retention, there may be a function for knowledge management, record management, or business or management intelligence. Even with this, there is little management of information for application to improve the business. There is no structure to relate information directly to the business and no data is collected on the actual business as a related set.

The explosion in enterprise information problems and investments demands a basic rethink

These problems are aggravated by the proliferation of IT use for email, Internet information storage and downloads, information exchanges, imaged documents, etc. New corporate governance requirements demand a solution to these problems. [more...]s.

20^th century management does not provide a means to directly manage capital development or business change projects. The results enabled by development and the capital developed are mixed together as performance and are not managed properly. There is no way to itemize investment and business change benefits, plan and control actual development costs, plan the return on investment, or measure the actual return. There is no way to integrate the project and capital development with the actual business. There is no way to manage the enterprise properly as a business, or to manage projects properly as a subsidiary business.

These problems are eliminated by Result-performance Management (R-pM), a breakthrough to enable you to manage projects properly. It is all explained in the download “How to Manage Projects in the 21st Century”, available at result-performance-management.com. The download explains how to plan and manage the new performance to be developed and results of value to be produced by the enterprise business. The download also explains how to plan and manage project performance to produce project results, which are the solutions to improve and add value to enterprise results.

R-pM manages one integrated Enterprise Business Structure

R-pM is a significant breakthrough with one simple objective: to organize the enterprise business for 21^st Century Management, in an easy-to-manage Enterprise Business Structure, defined by only two entities:

• Results: Specific economic outputs that must be produced by business performance
• Performance Solutions: Specific capital that must be utilized in performance to produce results

Results are the inputs to and the outputs from performance. [more...]

Human Resource Managers are important capital managers

Are you a human resource manager? How do you approach your work? As a routine administration function? As responsibility for the enterprise human capital to ensure that human capital maintained ready to perform, is developed to acquire new capabilities to increase human worth, and provided with knowledge needed to provide value to the business?

If your answer is closer to the latter, you will clearly benefit from R-pM. The impact of R-pM on human resource management is explained in the Human Capital Management Forum, and in human capital articles, such as “Integrate Human Capability Capital with the Business” in 21^st Century Management Magazine. R-pM goes beyond 20^th century human resource administration to provide professional 21^st Century Human Capital Management.

Result-performance Management (R-pM) organizes the business for 21^st Century Management

The means to understand the actual business and the human capital that you support is through Result-performance Management (R-pM). The enterprise business and your business is defined by only two entities:

• Results: The economic outputs that create the value from the business
• Performance Solutions: The human and other capital consumed in performance to generate the costs incurred by the business to produce result value

Even as human capital manager, you manage only these two entities in your business, as a sub-set of the enterprise business. [more...].

Capital Management is the management of enterprise capital in performance solutions to produce results of value needed by the enterprise. Capital management is an important part of 21^st Century Management.

Capital is not managed in 20^th century management

20^th century management does not manage capital. 20^th century management provides administration functions like finance, accounting, human resource administration, purchasing, information technology, and corporate planning to administer selected tangible capital. Most capital is not identified or managed by the enterprise. Much capital is created and used in the enterprise, but is known only in the department that keeps it. Much enterprise capital is assigned to a responsibility center and managed no further. The capital in administrative units is administered rather than managed to provide solutions, control costs, create value, and increase in worth.

Capital investments are not managed to develop specific capital to produce value in results

Enterprises invest significant sums in the capital used, but these investments are not managed to provide the specific returns. The tangible capital is normally developed as a lump sum for an asset or a project. [more...]

Business Solutions are specific capital items that are utilized to produce specific business results.

Business solutions are the specific items of capital that are supported and are utilized to produce specific results. Business solutions are broken down to provide the specific management support capabilities needed, and to integrate with other solutions utilized to produce a specific result. The set of solutions is organized in the business solution structure. This means that the business solutions must be structured into two dimensions.

• The capital management and support dimension so that solutions can be supported by the proper human capability solutions
• The result management and utilization dimension to group like solutions that must be integrated to work together to produce a result

In the capital management support dimension, solutions should be categorized by the kind of human capability capital needed to develop, support, and provide cost-effective business solutions. In the result management and utilization dimension solutions should be classified by the way capital is organized to actually produce results.

Today, some capital is administered by functions, but most is undefined and unmanaged

In today’s enterprise, most capital is administered in different categories. Human capital is separated as human resource administration. Tangible facilities like financial and fixed assets and accounting records fall under finance and accounting or an administration department. [more...]s

The Intangible Asset Problem

Financial Management is one of the top 10 problems in the 20^th century enterprise!

The 20^th Century enterprise concentrates on financial capital in cash and accruals, which is the easiest capital to understand and manage. But all capital is created by spending and investing money and must have a corresponding monetary worth. Separating financial capital from other capital causes other high-worth capital to be ignored and mismanaged.

R-pM eliminates intangible assets

Result-performance Management (R-pM) categorizes all capital to be professionally managed and classifies capital to be utilized to produce results. All performance costs are known and are charged against to value created in results to manage result value-added. Visit result-performance-management.com to download “Organizing and Managing Performance”.

Intangible assets are ignored by conventional financial management that does not managed capital

We keep hearing about intangible assets like there is something mysterious about the assets we utilize in our enterprise. If we have intangible assets we also have unknown costs; since we incur cost when we utilize our assets. Intangible assets are of high worth in a modern knowledge and technology-driven enterprise. But, by considering the assets as intangible we make them impossible to manage to increase their worth and the value they provide. [more...].

The Human Performance Problem

Management and staff within the enterprise know that they must improve to keep up with the competition and increasing customer demands. But, these same people resist change unless they fully understand the change and are comfortable with it. People get comfortable performing routine functions in a stable organization. Often, they are told what to do and do not think for themselves. Enterprises are concerned about controlling people to ensure that nothing is done wrong, which hampers eventual change.

Second and third level management normally have been around for a long time and gain advantage from the existing situation. Perhaps they were involved in establishing the current methods. They require particular attention in a business change. Often people are pushed into new situations without the preparation and on-going support needed. This generates additional resistance and often results in the failure of the business change.< [more...].