Human Capital Is Reshaping Business Theories

by Jay Deragon on 01/24/2013

human capitalThe success of an individual or organization is directly tied to effective understanding and use of human capital.

Identifying your individual or organizational human capital is the first step to creating economic value for all stakeholders.

Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to do something that produce economic value. Economic value is a measure of the benefit that an economic actor can create from their brand.

An organization represents the collective human capital of all the “people” (actors) engaged in creating value on behalf of the organization (actor) and for the benefit of its customers.  Relationship, strategic and structural capital cannot be optimized without the right human capital for the stated purpose.

Human Capital Is Reshaping Business Theories

Every organization, whether a business or not, has a theory of the business. Since the future is uncertain and the social environment is constantly changing, even the soundest business theories eventually become obsolete.  For this reason every business and organization should periodically examine their fundamental assumptions to see if they continue to reflect the current realities they face and if not, how should they be changed.

Economic and technological changes are reshaping the nature of business. Having a great product does not guarantee your organizations success; your organizational competence no longer depends on what management thinks it knows rather it is a function of recognizing and enabling the use of human capital.

Welcome to a new era of business, where your future depends on being able to tap into and optimize the economic value of human capital.

IBM’s recent CEO study  shared insights from over 1,700 executive interviews from around the world. To earn trust, takes resolve inside and outside the organization. To that end, IBM found that CEOs are investing in the following three organizational attributes:

  1. Ethics and Values = 65%
  2. Collaborative Environment = 63%
  3. Purpose and Mission = 58%

It is interesting, and sad, to think that 1, 2, and 3 above is evident by a study from IBM. Shouldn’t these attributes be self-evident?

Maybe what is becoming evident is the essence of any business, any society, culture or instituion rest within  Human Capital.  Then again that also ought to be self-evident.

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