Concept of Intellectual Capital

& Learning Orientation in the

Organization…

INTELLECTUAL CAPITAL…..

The term Intellectual capital collectively refers to all resources that determine the value and the competitiveness of an enterprise. Collective knowledge (whether or not documented) of the individuals in an organization or society. This knowledge can be used to produce wealth, multiply output of physical assets, gain competitive advantage, and/or to enhance value of other types of capital.

The value of an enterprise is made of physical assets, various financial assets and, finally, intangible assets, i.e., intellectual capital (IC).

--The intangibleness refers to the fact that IC is not easily translatable in financial terms. All other assets of a company, such as a piece of real estate or a credit note, can be monetized:i.e., there exist standard criteria for expressing their value in currency. IC, instead, is mainly made of elements (such as the quality of employees or the reputation of a brand among consumers) for which there is no consensual model for monetary expression.

--A more precise name for IC would therefore be "non-financial assets".

Components of Intellectual Capital—Intellectual capital is divided into 3 categories—

+MARKET ASSET-are potential an organization has due to market-related intangibles. Example-various brands, customer and their loyalty, distribution channels, various contracts and agreements such as licensing ,franchises and so on.

+HUMAN ASSET-comprises the collective expertise, creative and problem solving capability, leadership, entrepreneurial and managerial skills embodied by the employees of the organization.

It is the job of the good manager to ensure that each human asset has access and opportunity to mechanisms which enable the employee to achieve their full potential within the organization.

+INFRASTRUCTURE ASSET-infrastructure asset are those technologies, methodologies and processes which enables the organization to function. Basically the elements which make up the way the organization works.

LEARNING ORGANIZATION….

Organizations do not organically develop into Learning Organizations; there are

usually factors prompting their change. It has been found that as organizations grow, they lose their natural capacity to

learn as company structures and individual thinking becomes rigid. When

problems arise in the company, the solutions that are proposed often turn

out to be only short term and re-emerge in the future. In order to remain

competitive, a lot of organizations have faced restructurings which have resulted in fewer people in the company and this means that those who remain need to be

used more effectively. To create a competitive advantage, companies need

to be able to learn faster than their competitors and also develop a customer responsive culture.

Modern organizations need to maintain knowledge about new products and processes, understand what is happening in the outside environment and produce creative using the knowledge and skills of all employed within the organization. This requires co-operation between individuals and groups, free and reliable communication, and a culture of trust[5]. These needs can be met through embracing the tenets of the Learning Organization.

LEARNING ORGANIZATION—Definition

Organization that acquires knowledge and innovates fast enough to survive and thrive in a rapidly changing environment.

Learning organizations-

(1) create a culture that encourages and supports continuous employee learning, critical thinking, and risk taking with new ideas,

(2) allow mistakes, and value employee contributions,

(3) learn from experience and experiment, and

(4) disseminate the new knowledge throughout the organization for incorporation into day-to-day activities.

Benefits of being a Learning Organization…

There are many benefits for improving learning capacity and knowledge sharing within an organization. The main benefits are-

+ Maintaining levels of innovation and remaining competitive.

+ Being better placed to respond to external pressures.

+ Having the knowledge to better link resources to customer needs.

+ Improving quality of outputs at all levels.

+ Improving corporate image by becoming more people orientated.

+ Increasing the pace of change within the organization.