The Australian economy has thrived on businesses extracting maximum value from their capital assets. However, we need to think beyond capital assets to deliver competitive advantage for Australian businesses. Despite acknowledging its critical link to sustained performance, many organisations continue to discount or ignore a powerful driver of competitive advantage and bottom line results: knowledge capital.
A report commissioned by IT services provider, CSC, titled Mind the Gap: Australia's Knowledge Capital Shortcomings, shows 68% of senior decision makers place the same or higher value on knowledge capital as other assets in the organisation, yet little is being done to protect and manage it.
The research conducted amongst senior executives responsible for knowledge capital management in large Australian organisations examines Australia's knowledge capital status and identifies areas for improvement so organisations can better grasp the concept and understand the benefits it offers to operational efficiency, customer engagement as well as the balance sheet.
Despite the key report finding that the majority of senior executives understood knowledge capital assets are central to delivering a sustained competitive advantage and ensuring organisational success, less than one third are achieving significant performance increases as a result of knowledge capital. This gap between vision and results can be explained by a number of key trends.
There is a high degree of inconsistency as to who in the organisation should be responsible for the creation and maintenance of knowledge.
While 76% of organisations do not allocate a budget to maintain knowledge, 96% are in fact spending money on tools - ranging from the company intranet through to social networking.
Although the majority of organisations say the value of knowledge assets is at least as great as the value of the any other asset, 50% are not measuring the value of the knowledge assets, and are therefore unable to optimise that value.
While the GFC has impacted negatively on many organisations, for 24% it has provided a catalyst for positive change in the knowledge management processes and practices.
By studying those organisations identified as leaders in the survey, it was found that the ability to derive the most value from knowledge assets is dependent on having key infrastructure and support in place, with the top three being: technology infrastructure, a culture and philosophy that values knowledge and having a product and services lifecycle that relies on knowledge processes.
The feeling among leading Australian business and government organisations is that "there is work to do". By identifying the key drivers for focus, Australian organisations can work towards achieving their vision of harnessing that knowledge to drive improved performance results.
Mind the Gap: Australia's Knowledge Capital Shortcomings underscores the importance of knowledge capital and how, with proper understanding, investment and management, not only will more Australian enterprises reap the benefits, but we will contribute towards the building of a more sustainable economy.
Making the most of your organisation's knowledge capital is about learning the lessons and harnessing the insights from your employees. It's about having the culture, processes and tools in place to protect, manage and share that information. It's about making almost intangible assets like company culture, values and ethics tangible for all your people to share. It's about communicating to your team: 'the wheel already exits - don't reinvent it!' More than that - it's about letting them know where to find it and the instructions for its use.
Knowledge capital needs to be on the business agenda - even more so when economic times are tough - because it protects in times of crisis and offers a competitive advantage not only to individual organisations but also to our national economy.
About the author
Nick Wilkinson is the CEO of CSC. For more information: www.csc.com/au/ .