This essay was written for a book to be published later this year in Italy by Smarter-Companies member Andrea Gasperini. We'll share a link to the book when it comes out!
I write this essay as we enter the year 2013. A new year is a popular time for predictions. There’s always risk in trying to make predictions but I welcome the opportunity to sketch out some of my ideas as a way to add to the collective conversation about the field of IC. To do this, I’ll use the basic journalism questions we were taught in school:
Who is going to drive the future adoption of IC ideas? I believe consultants are the key.
The basic definition of IC includes many categories of knowledge—human, relationship, structural and strategic capital. This definition suggests a holistic vision of organizations. Today, only the CEO takes charge of such a holistic vision. Yet, the CEO cannot do the work of developing and implementing IC concepts. The same goes for the COO and CFO, two other managers who have a broad vision of the organization.
Consultants, on the other hand, get paid to bring new ideas to companies. They have the flexibility, time and ability to organize projects aimed at driving change and improvements (assuming they are hired to do so). So consultants will be key change agents
In the long run, however, I do not believe that any one person will be responsible for IC. That's because IC will be everyone's job. Everyone in business will have to have some basic skills in what I like to call ICounting. ICounting will be a skillset, not a job. And at the beginning, consultants will be important in introducing this skillset to the market.
What will be the character of the IC ideas that are adopted? Simple and specific.
The IC community has done amazing work to develop concepts and frameworks for the knowledge intangibles that have become the core asset class in organizations today. But intangibles are not an easy subject and too many of the solutions are complex and theoretical.
Management teams don’t have time for a lot of theory. They need relevant and actionable information. To me, this suggests that most of the conversation with management teams needs to be about their own unique intangibles. This is why my company has offered two simple tools as open source methodologies: The first is the ICounts Index which helps business people determine the relative importance of tangible vs. intangible assets in their own companies. The second is the ICounts Inventory which helps business people create a list of the core intangibles of their company. This inventory can be the foundation for all kinds of strategic measurement and management projects. But the right next steps depend on the company and the situation. There’s no one right answer except to keep it simple and specific to the unique intangibles of each organization.
Over time, the uses of IC information will grow more prevalent, more complex and more detailed. But it will start out simply.
Where will this happen? – From the bottom up
One of the great lessons of the era in which we live is that top-down solutions don’t work well anymore. Knowledge and power don't flow from the top down today. We need to remember that. IC will never be adopted because someone tells companies they have to do it. The action will be with individuals, teams, divisions and, eventually, larger organizations. Their inspiration will come from each other and from the internet, but not from the business schools or the government or the IASB.
This has been a tough lesson for the IC community. Even though we in this community are forward thinkers, we are like everyone in our generation, a product of our formation. A lot of the things we were taught about making things happen date back to the industrial era. Too often we default to looking for the top-down solution, for the set of rules or requirements that will require adoption of our ideas. Give up that dream now. Start thinking about how to foment change from the bottom up.
Why will business people finally pay attention to IC? – Social is the tipping point
When you see the data, the shift away from the industrial economy has happened gradually over decades (albeit with two spikes with the introduction of the PC and the internet). IC is already the currency of our current era. But the ideas have not taken hold because most people have been able to cope with the new economy using the old core of tools (GAAP accounting, organization charts, and command and control management) with just small adjustments at the margins. Until now, using old tools might have slowed you down but they haven’t been viewed as a liability.
But now we are at the point where old management concepts are actually doing harm to companies. They block the movement of knowledge and learning. They prevent innovation. They motivate employees to guard rather than share knowledge. They encourage competition rather than collaboration.
The introduction of social technologies is turbo-charging this trend. Social technologies (beginning but not ending with social media) empower employees, customers, partners, stakeholders and the general public to comment and critique everything an organization does. They also create the opportunity for individuals to share their knowledge—but only if they want to. This shifts the balance of power. If you don’t have engaged stakeholders who trust you, you don’t have a license to do business. Mainstream managers are sensing this and scrambling to find an alternative set of tools for their toolkit. IC is at the core of this nee toolkit.
When will IC cross the chasm? In 2015
OK. This one is a shot in the dark. But I feel that the shift is already beginning and we will move from early innovators to the mainstream business community in a couple years or so. Why? Economic stagnation and the need for innovation make the need for change more urgent all the time. And, as explained above, social technologies are making it clear that change is necessary. But the real reason that I believe that it will happen is because these new social technologies will make it easy to change (more on this below)
How – By building a collaborative ecosystem
One of the great opportunities of the moment in which we live is the ability to create collaborative ecosystems. John Dumay calls this the shift from competitive advantage to collaborative advantage. A community that bands together to collaborate in building a market has the potential to disrupt the status quo and compete with even the largest company or the most entrenched ideas.
To spread IC thinking, we need to adopt 2.0 collaborative thinking and change the world from the bottom up. At Smarter-Companies we are creating a prototype of such an ecosystem. We are offering our own tools and training side by side with the tools developed by other companies. None of us has all the answers but together we can come close. And by collaborating and sharing what we learn, we will get better and faster answers than we could on our own.
What's the future of IC? Let's create it together!