intellectual capital project presentation
TRANSCRIPT
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Intellectual Capital ModelKPMG Hazem Hassan
Presented To: Dr. Tarek Abdeen By: Marwa Mohamed
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• What is Intellectual Capital?• Classifications of Intellectual Capital.• Characteristics of Intellectual Capital.• Value Creating Logic
– Value Chain– Value Shop– Value Network
• Resource Distinction Tree• Why should Intellectual Capital be measured?• Intellectual Capital Model in KPMG
Agenda
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What is Intellectual Capital?
All nonmonetary and nonphysical resources that are fully or partly controlled by the organization and that contribute to the organization's value creation.
Is the intangible stuff that provides your organization with knowledge, strategy, customer service, etc. It is becoming the preeminent resource for creating economic wealth.
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Classification of Intellectual Capital
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Classification of Intellectual Capital
● Organizational Capital The knowledge that stays within the
firm. It comprises organisational routines, procedures, systems, cultures and databases.
It is everything in an organization that supports employees (human capital) in their work.
Organizational capital is owned by an organization.
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Classification of Intellectual Capital
● Human CapitalAs the knowledge, skills and experience
that employees take with them when they leave.
Human capital is an organization’s combined human capability for solving business problems.
Human capital is inherent in people and cannot be owned by organizations.
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Classification of Intellectual Capital
● Relational Capital All resources linked to the external
relationships of the firm – with customers, suppliers or partners in research and development.
It includes the connections that people outside the organization have with it, their loyalty, the market share, the level of back orders, and similar issues.
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Characteristics of Intellectual Capital
1. Intellectual assets are non rival assets.2. Human Capital and Relational Capital cannot be
owned, but have to be shared with employees and suppliers and customers.
3. Organizational capital is an intangible asset that can be owned and controlled by managers.
4. Human, Structural and Relational Capital often work together in judicious combinations to give rise to core competencies that assume strategic significance.
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Value Creating Logic
Knowing how to use and develop resources over time to create shareholder value is a central management responsibility.
The Value Chain
The Value Shop
The Value Network
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Value Creating Logic
1. The Value Chain
Companies that operate a series of input-process output activities and seek tobuild sustainable competitive advantage primarily through their effective use ofmonetary and physical resources. Value is created by transforming inputs intoProducts.
2. The Value ShopIt produces solutions, using human capital to creatively solve unique problems.People and the methods they use are the basis for a value shop’s competitiveAdvantage.
3. The Value NetworkValue networks bring individuals or organizations together and help themtransact business with each other.The basis for value creation lies in connecting people or organizations.
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Resource Distinction Tree
An RDT is a structure that in a step by step way breaks down overarching resources into constituent resources until a suitable level of granularity is achieved.
All Resources
Traditional Resources
Physical Resources Monetary Resources
Intellectual Capital Resources
Organizational
Resources
Relational Resources
Human Resources
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Why should Intellectual Capital be measured?
• A review of over 700 papers that studied Intellectual Capital measurement related issues found five generic reasons as the purpose of measuring Intellectual Capital (Marr et al 2003):
1. To help organizations formulate their strategy2. To evaluate strategy execution3. To assist in the firm’s diversification and expansion decisions4. For use as a basis for management compensation5. To communicate with external shareholders
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Intellectual Capital Model
KPMG’s Vision
We will be the recognized global leader of professional service firms by delivering innovative advisory services to our clients on a global basis and generating superior financial results.
KPMG’s Objectives
Are to provide consistent, high quality services to multinational, regional and local clients and to enhance the product offering in certain previously under-serviced markets. The benefits for our clients include being able to draw upon the best resources available.
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First Model Title: Partner – Enabling Technology
Weighted Resource Distinction Tree
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Quality Judgment
Green /Yellow Red
Quantity Judgment
Green
Building
Image
Service Providers
Education
Hardware
Servers
Organization Structure
Know-How
Orange/ Yellow
Cash
Experience
Network
Red Clients Intellectual Property
Consultants Innovation
Action Table for quality and quantity
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Normalized Transformation Matrix (ICN)
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Second Model Title: Senior Functional Manager – Advisory
Weighted Resource Distinction Tree
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Action Table for quality and quantity
Quality Judgment
Green /Yellow Red
Quantity Judgment
Green
Building
IT
Reputation
Partners
Customers
Orange/ Yellow Skills
Experience
Network
Process
Suppliers
Culture
Attitude
Red Know-How Cash
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Normalized Transformation Matrix (ICN)
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Third Model Title: Recruitment Manager – HR Advisory
Weighted Resource Distinction Tree
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Action Table for quality and quantity
Quality Judgment
Green /Yellow Red
Quantity Judgment
Green
Office Facilities
Image
Customer
IT Facilities
Org. Structure
Owners
Capabilities
Orange/ Yellow
Cash
Network
Policies
Community
Personal Networks
Red Know-How
Experience
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Normalized Transformation Matrix (ICN)
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Consolidated Model
Consolidated Weighted Resource Distinction Tree
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Action Table for quality and quantity
Quality Judgment
Green /Yellow Red
Quantity Judgment
Green
Building
Office Facilities
Image
Suppliers
Clients
IT Facilities
Networking system
Capabilities
Orange/ Yellow
Cash
Organization structure
Culture
Attitude
Process
Red Consultants Know-How
Experience Innovation
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Consolidated Normalized Transformation Matrix (ICN)
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(NICN) Normalized and Cleaned transformation Matrix
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The Pictorial Representation
Physical ResourcesMonetary Resource
sOrganizational Resources
Relational Resources
Human Resources ∑
Physical Resources
0.00 1.10 1.60 0.00 0.00
2.70
Monetary Resources
1.00 0.00 0.70 1.00 5.508.20
Org. Resources
0.00 1.50 7.60 2.70 1.80
13.60
Relational Resource
0.00 4.50 6.30 4.00 8.60
23.40
Human Resources
0.00 6.30 10.60 10.10 5.20
32.20
80.10
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The Pictorial Representation
Physical Resources
Monetary Resources
Relational Resources
Human Resources
Organizational
Resources
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Critical Review
For KPMG, physical and monetary resources will not be the primary basis for business success. As KPMG depends on providing advisory services and producing solutions, using human capital to creatively solve unique problems.
Intellectual Capital resources and the organization's ability make use of these resources in the most effective way to achieve its strategic intent of becoming a more volume based business is the key to success.
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Critical Review
Consultants and the techniques they use are the basis for the organization’s competitive advantage. Value creation comes from a firm’s ability to continuously reconfigure its resources to address problems that are qualitatively and significantly new. The shop logic has an inherent management focus on effectiveness.
As Shown in the consolidated Weighted RDT, all managers allocate the highest percentage of the resources to the human resources (the knowledge, skills and experience that the employees have ) and the relational resources (all those relations the organization has with entities outside the organization that influence the organization's ability to create value).
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Thank You