But the really interesting question is what makes them smart? It won’t surprise you that this is a question that we think about a lot at Smarter-Companies.
The temptation is usually to point to one or two distinguishing characteristics at the heart of a company’s smarts: Apple and design smarts. Southwest and cultural smarts. UPS and logistical smarts. Google and data smarts.
But it’s never just one thing that makes a company smart. Today the smarts that drive success in organizations of all kinds are their intangible capital. IC distinguishes between four categories of knowledge or smarts:
- Human Capital – This includes all the talent, competencies and experience of your employees and managers. This is the intangible capital that “goes home at night.”
- Relationship Capital – This includes all key external relationships that drive your business, with customers, suppliers, partners, outsourcing and financing partners, to name a few. This kind of capital also includes organizational brand and reputation. Due to the growing importance of networks in organizational structures, this is also sometimes called Network Capital.
- Structural Capital – This includes all knowledge that stays behind when your employees go home at the end of the day. There is significant structural capital in today’s organizations including recorded knowledge, processes, software and intellectual property.
- Strategic Capital – This is a category that is not always included in academic definitions of IC. However, in our experience, this category of knowledge is the necessary complement to the others. It includes all the knowledge you have of your market, and the culture and business model that you have created to connect with market needs.
While each of these intangibles contributes to your organization’s smarts, one or two alone do not make you a smarter company. For that, you need a complete system. No business is viable without all four categories of smarts.
- You need good people coming to work every day (human capital)
- They need to have good tools and data (structural capital)
- They need access to suppliers and customers (relationship capital)
- And the organization needs to support them with a productive culture and a good business model (strategic capital)
One weak link in this chain makes the whole business weak. What makes your company smart? Strength in all four kinds of intangible capital.