I have seen what happens where start-ups do not invest in employee development or large organizations cut back on it with damaging consequences. As Charles Handy, the economist observes in a post-industrial economy, it is people that have knowledge who now own the new means of production, not their bosses. He points out that this change from an industrial to a knowledge-based economy requires a new approach to management.
Managers now must understand and operate under the principal that the unique knowledge and skills that employees bring to work is the key competitive differentiator. People also have to be able to bring out their unique role–based knowledge and skill together in harmonious ways whether it is on a sports team or any other business.
We do not have a way to properly measure this new capitalism. Ironically it is partially covered under the concept of intangible assets as through people were intangibles. The rise of intangible assets as a percentage of enterprise value is partially, but not completely a part of the rise of the recognition of the value of people.
As my Merced Group Partner, Catherine Shinners, shared with me, Juergen Daum provided evidence in this direction in his book, Intangible Assets and Value Creation. In 1982 62% of enterprise value was in tangible assets and 38% in intangible assets. In 1999 only 16% of enterprise value was in tangible assets and 84% in intangible assets.
I am sure this spread has gotten even larger in the last dozen years. Now we need news ways to segment the measurement of intangible assets since they are no longer this bucket of “other stuff” but where the real value of an enterprise is located.
Post script: If you are at next week's Enterprise 2.0 conference in Boston be sure to attend Catherine's session on " Building an Online Community from Strategy, Planning, and Launch to Effective Engagement and Adoption.” Her session is at 11:15 – 12 on Tuesday June 19 in Room 312.