Article (December-2016)


Digital Cultures Knowledge - Intellect Interface

Dr. Ganesh Shermon

Designation : -   Managing Partner for

Organization : -  KPMG LLP


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How is data, information, knowledge, learning, training, especially the integrated view of intellect on human capital activity, aggregated to become information and eventually intelligence in a digital context. Opportunity to value invisible assets by developing a hierarchy of human values, value sets and study how these aid or impede firms' achievement of their business goals is a starting point.The emergence of the Intelligent enterprise, the digital company, the pursuit beyond the age of smart machine and development of intrinsic and systemic capability to manage knowledge - based intellect has influenced the way staff engage with digital organizations.What makes a person valuable to the organization is the consummate acumen for enterprise and execution i.e. the generation of ideas and the speed of implementation.Value of talented people is best realized when organizational competency processes helps recognize employee intellect and contribution. An alternate view on competency as that which predominantly focuses on knowledge, skills as against behavior and differentiating management of knowledge from management of intelligence.

Digital Knowledge Management (DKM) is a conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance. It is a framework, a management mindset that includes building upon past experiences and creating new vehicles for exchanging knowledge. (Knowledge enabled mobility, watches, Intranet sites,e stores, communities of practice, networks). DKM will be a foundation like TQM or ZBB that lays the basics for integrated quality management or looking at financial accounting from ground up.

"Manage Knowledge as an Asset -  A  specific project focuses on managing knowledge as an asset. One way an organization does this is by treating knowledge like any other asset on its balance sheet. Skandia, the large Swedish financial services company, internally audits its intellectual capital every year for inclusion in its annual report to stockholders. One goal is to persuade investors of the value of Skandia's knowledge capital. Another is to focus the organization on how to increase or decrease its effective use of knowledge assets over time. Some companies focus on managing specific knowledge-intensive assets more effectively to improve their return. By carefully reviewing and managing its patents, Dow Chemical, for example, saved $4 million during the first year of its new program and expects to generate more than $100 million in licensing revenues that it might otherwise have forgone. Of these two approaches to knowledge assets, we are more positive about managing assets than measuring them. Efforts to measure knowledge assets, while laudable, will eventually require major changes in worldwide accounting systems if they are to become institutionalized; we view such changes as unlikely".In, MIT SMR 1998 feature, Successful Knowledge Management Projects, Thomas H. Davenport, David W. De Long and Michael C. Beers writes,"Efforts like Dow's yield immediate monetary benefits and can improve investor perceptions, if adequately publicized".

Consequently, there are issues

  •     Emergence of the Digital Intellectual Company - Recognition of the Changing face of Talent 
  •     Only Capital, when utilized effectively, is appreciable when turned on, nurtured and developed
  •     Culture and Competencies is at the heart of this challenge - Need for maximization of Human Worth
  •     Adoption of People Technologies - Digital Knowledge Management, Social Intelligence
  •     Recognition of Intellect in Digital Organizations - Application of Intelligence

"The Intellectual Digital Company" personifies the human being and makes the human mind - intellect as the foundation of value for a corporation. 

What is intellect? The part or faculty of the human soul by which it knows, as distinguished from the power to feel and to will; sometimes, the capacity for higher forms of knowledge, as distinguished from the power to perceive objects in their relations; the power to judge and comprehend; the thinking faculty; the understanding.  

"What is Intelligence" is 'the faculty of adapting oneself to circumstances' said Francis Binet and Henri Simon, the authors of the first IQ test (Wolf 1973) and is at the heart of the today's competency movement - manifestation of behaviors influenced by a sharp intellect - Call them "Smart Thinker - Doer". Intelligence is the operation of gathering information, an ability to comprehend; to understand and profit from experience or new information about specific and timely events; "they awaited news of the outcome".  That which makes the human mind determine a course or choice of action, after sifting through alternatives, after evaluating risks or after predicting an outcome and that which has the power to create, destroy, add, delete, enhance or subsume. When must people think of intelligence they will probably think of IQ (intelligence quotient), which is someone's score on an intelligence test. The key function of intelligence, he said, is to enable anticipation of change, and thus constructive action to utilize or nullify it. 'One of the essential functions of knowing is to bring about foresight,' said Piaget. Ultimately, modularity, functionality, adaptability and intelligence are useless unless the organization design is geared to deliver products and services on a dynamic, adaptive basis. Are Organizations Intelligent? Is an organizational intellect a collection of individual intellect?

What is Applied Intelligence? - The importance of the concept, both socially and scientifically, persists undiminished including a value judgment on the people who can think and do.  The execution of business strategy is often hampered by a lack of reliable information. In today's turbulent and unpredictable conditions, it's more important than ever to gain continuous market insight and have the agility to react quickly.  In fact, organizations driven by the need to foster a learning and knowledge intensive culture are seeking ways to identify and nurture human intelligence. Intelligence that can predict and work towards an uncertain future including the need to commercially value intellect to sponsor a better market capitalization and financial gain.  Building Business Intelligence into your organization is a starting point in applying intelligence. There are a number of reasons why business intelligence projects fail. The most common is ownership of business intelligence being limited to specialists within an organization instead of being embedded in processes. Individual departments produce reports from poor quality information (which includes duplication) leading to a lack of trust in the data. Also, business intelligence is often not linked to the performance management strategy, so KPIs are poorly defined and become irrelevant over time. Indeed, it may, for various reasons, actually be increasing in importance. IQ testers say they can measure but do they state what is it that they are measuring? They say those measured differences reflect genetic differences at least as much as 'environmental' differences, but how valid have their concepts and methods for demonstrating that actually been? - Ken Richardson. In order to create truly valuable business intelligence, organizations should clearly define who owns, uses, and produces information and how it is presented. Such tight ownership and control should help give consistent, accurate reports and allow fair, "like for like" comparisons of performance. The compelling need to relate intellect, as it can be understood, at both a psychological and a cognitive level is nevertheless gaining importance. 

What is Social Intelligence? - Social Intelligence, is the historical creation of a particular culture, analogous to the notion of childhood.' To support this idea, one should review evidence indicating that what counts as intelligence varies widely across cultures, changes over time in the same culture, is defined differently for children of different ages, and changes with the changing social experiences of individuals. Rather similarly, Sternberg says that 'intelligence is invented…. it is not any one thing…. Rather it is a complex mixture of ingredients… The invention is a societal one - Social Recognition (Likes/Dislikes).' Another approach to explain and characterize human social intelligence has been to look to another primate for enlightenment (WhatsApp Forwards - Sharing). That many other species exist as social groups, presenting to the individual a particularly complex and structured social environment, has long been recognized. Accordingly, authors such as Nicholas Humphrey have stressed the role of the social world, especially in primates, as the seat of intelligence. This has been called the 'social function of intellect' hypothesis, and suggest that the need to reconcile individual needs with the social cohesion of the group (Birthday wishes, group sharing of events, active engagement to keep strangers of your status updates) requires a new order of individual smartness of primates in general, and humans in particular. Humphrey, for example, suggests that the range of technological skills the long period of dependency in offspring, and the complex kinship structures found in primate groups requires extensive powers of social foresight and understanding (Linked In Connections, Status Seekers, Pyramid Climbers, Hidden Persuaders). J. H. Crook and others point to the constant need to read others' intentions, feeling and states of mind (Feedback, Read, Unread, Downloads, Likes, Image). At least one study has indicated a relation between social complexity (albeit using only the crude index of group size - Linked In Contacts, Facebook Friends, Instagram IDs) and individual intelligence in primate groups. Richard Byrne says that this is leading us to a real understanding of primate intelligence. Ken Richardson in articulating these views has surely investigated the genesis of social collaboration and application of intelligence in the digital business world by demonstrating human social intelligence has emerged as a dauntingly powerful force from the interactive relations between a cultural level of social life and the cognitive regulations of individuals. Conspicuous behavior that one sees in the social media and staff interactions through Facebook, Twitter, Snap Chat and similar tools is one such manifestation.

Intellectual Outcomes - The argument here is neither about IQ related intellect or intelligence nor is it merely about capital (Intellectual/Human). This is more about outcomes from intellectual digital knowledge and intellectual ability; in an organizational context; in a collective context; that which can be interpreted beyond, when we say "she reads extensively to improve her mind"; "she has a keen intellect", "he can learn", "her ability to perform in a given situation", "they think and act" , "the team discovered this molecule", "this digital product was through an AI application", (all in the context of building an intellectual company) and  the capacity for rational thought or inference or discrimination; including as we are told that people are endowed with reason and capable of distinguishing good from evil or a person who uses the mind creatively, constructively or destructively. Intellect manifests itself in people whose value is to be measured as an individual or as a collective human capital group. But it is not good enough to know the definition as much as to know where does it lead us empirically. There are needs to be fulfilled.

According to Merriam- Webster's dictionary, intelligence is described as the ability to apply knowledge to manipulate one's environment or to think abstractly as measured by objective criteria. This use of knowledge and learning by people needs measurement. A working definition of an Intellect could be, a domain instinct, expertise, repository within an individual, active and dormant, utilized and unutilized to create, destroy, analyze, substitute known and unknown sources of content, actions, behavior, learnt or available through acquisition, education, experience and inheritance. (Shermon, SHCM 1998).

Why Start with Competencies, Culture and Capabilities- Competencies have undergone a radical change. While at one point in time leading an institution was an expected top management competency, today this is supplemented by learning, teaching and spiritualizing the CEO role. Leading is no more the only condition for leadership effectiveness. Causes for Human Attrition & Exits are inexplicable despite managerial assumptions on hiring and retaining people have significantly improved. People are no longer staying for traditionally understood reasons like job satisfaction, content, challenges, compensation, careers etc. employees are leaving their jobs for various other reasons. So obviously there appears to be a super ordinate goal , a need for a facilitating culture for people to be engaged intellectually.

Business Case for Digital Capital - Digital Capital takes different forms. A firm's assets are known as its capital, which may include fixed capital (machinery, buildings, and so on) and working capital (stocks of raw materials and part-finished products, as well as money, that are used up quickly in the production process). Financial capital includes money, bonds and shares. Human capital is the economic wealth or potential contained in a person, some of it endowed at birth, the rest the product of training and education, if only in the university of life. And Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in units of money. Broadly: land plus physical structures plus equipment. Human Capital can be defined as that which when deployed by an individual enables the individual/people to earn a living, and a summation of all that is put together is the capital. It is this digital capital that helps organizations continue to make investments to attract, develop and retain people. 

Intellectual Models - The accounting models, human resource accounting, historical benchmarks, balance sheet analysis, the one-off endeavors e.g. to measure qualification and state human capital worth, and other quick fix solutions have landed us in several problem areas preventing efforts at investing in the creation of a scientific model. As we have seen, there is a lack of substantive Theory & Research work in this field and Human Asset Valuation has so far ignored as being too complex to be mapped, documented and tested for validity. We take comfort in simplistic solutions of managing people on hygiene or motivating needs. There has been some degree of distraction owing to traditional approaches - As a result, financial calculations turn more predominant than human worth, apart from excessive dependence on the performance management systems, without adequate research on individual data on what makes people and organizations perform. Yet there is an opportunity to value qualitative factors of the creation of intellect, in a quantifiable manner and to remove these uncertainties in measuring the organization's human wealth and identifying the Business Einstein we need a model that first defines the "digital wealth" element in a human being.

It is all about Knowledge - Welcome to the Knowledge Organization, writes, K E Sveiby, "In Knowledge Organizations knowledge flows are more important than financial flows. People are revenue creators, not cost items. Their true output is a better performance among their customers. It is a world in which the customer relation is no longer one-way market driven, but partnerships in which solutions are co-created and knowledge flows both ways. Such organizations are not easy places to manage, because the power balance has shifted. Knowledge workers (Smart/Intelligent) know more about the technical field than their bosses, have a better feel for the market and are closer to the customers. They are environments where the staff value the approbation of their professional peers more than the approval of their leaders. And how do you stay in control when the primary production factor - creativity of the staff - flourishes best in chaos? How do you exercise power when your level in the organization's hierarchy is irrelevant and your primary power tool, control of the information flow, is usurped by the internet and collegial networks? How do you know that you are on the right track when the management information system does not report knowledge flows and the financial results are hopelessly out-of-date by the time they reach you? 

In such a world manager´ power base is their relative level of Knowledge. Their role shifts from supervising subordinates to supporting colleagues. Their management information system reports competence utilization, value added, knowledge flows, customer image and staff attitudes. This information is available for everyone on the central network. The managers no longer manage people or even knowledge, but the space in which knowledge is created. This space is both the intangible culture and the tangible environment, such as the office. The culture encourages knowledge sharing so people are recognized publicly and rewarded for sharing. 

Top management recognizes trust as the bandwidth of sharing and have made investments in trust building one of their top priorities. Hoarding of knowledge and information as a means of career advancement is actively discouraged and the best knowledge workers are paid more than their bosses. The open culture is further encouraged by the lay-out of the office."You don't keep seeing the CEO's photo plastered in every corner of the office, in all interactions with ion and outside the firm, with the corporate PR function doing excess hours/overtime to publicize this wonderful CEO, including making her presence felt in every housejournal cover photo, washroom polices and janitorial rules. But this CEO is never found solving problems, supporting associates to perform better or his leadership style delivering value to their clients".The top managers of these new age corporations no longer hide on the top floor, but have their desks on the same floors as the knowledge workers, because they recognize the value of the informal information networks. The corner rooms are used intensively for knowledge creation; they are no longer empty symbols of power occupied by bosses who are seldom there. The coffee machine is recognized as a generator of creative encounters, so it is in the center and not tucked away in a corner".

Knowledge Intellect Strategic Synthesis

3 D KM Matrix - Consequently, knowledge, learning and intellect form the three-dimensional matrix. Intellect drives its creation and expansion. Knowledge is derived through multiple variants, be it acquisition when a product, service or a company is purchased and consequently the knowledge. In the context of buying knowledge, involves learning to acquire, purchase, and negotiate knowledge sourcing. Building upon the experience of knowing and learning how and what to buy, when, at what price and through whom or the to buy or not are decisions taken through an experience ridden path. This deployment of intellect titled experience enables acquisition and buying right.  

Inheritance of Digital Knowledge occurs when it is passed down from one person to another or when a system or processes is an established norm in the organization. 

What is left by predecessor's needs to be managed maintained and should be learnt to not destroy value. Intellectual contribution arises only when inheritance as a value symbol can be upgraded for its value and for assembling its properties to make business profitability. This combination of managing inheritance and helping advance its value arises when deploying an educational intellect. That of knowing through substantive academic or training work on how to maintain what has been inherited. 

Here the intellectual contribution is limited to utilizing what has been learnt has been put to substantive use.  Facilitating creation of knowledge necessitates learning and teaching to discover and seek the unknown and becomes essential competency development in a research or thinking organization. Intellectually this can be managed only if it is supported by special, spatial capabilities, seeking the unknown, experimenting and utilizing the innate potential in the human mind. 

Special Digital Intellect - This deployment of the special intellect is a necessary condition for expanding knowledge or making learning for seeking the unknown an incentive to the human mind.  Enabling expansion of any type of knowledge would mean that the individual or the organization has to learn the art of innovation, expanding upon ideas and building upon a thought. Innovation arises when knowledge is meant to be learnt or trained depending upon the skills and competencies necessary to be administered in performing an expanding role in a context. 

Expanding Digital Knowledge intellectually necessitates incumbents of human minds to substantively deploy their learning capabilities and the skills and capabilities that they have been trained in. Similarly, knowledge has now got to be internalized by its members and a significant degree of learning to absorb, share becomes essential. Internalization has meant communication, coverage of information and data, enabling communities of practice, and pulling together into a meaningful whole aspects pertaining to the knowledge that needs to be absorbed and applied. Intellectually this would mean utilization of behavioral competencies that are effectively programmed to help individuals to develop in them capabilities that enables understanding and application of what has been learnt to a larger mass of population. 

Finally, digital knowledge has its commercial compulsions and the learning required is to train and help people learn how to market, create a selling strategy, agree on pricing and the pre requisites necessary to commercially make viable the knowledge now converted into a product or a service. This effectively connects digital knowledge and learning and demonstrates its unequivocal linkages across the people management value chain. Performance factors at an intellectual level provide the framework for enabling commercialization of knowledge and implementing measurable and tangible goals and targets make achievement of results pertaining to commercialization of such assets. And concludes with active people engagement - a goal sought by every organization.

 "Can you deal with such a world? I believe you can and you have no choice - you are already there!" asks Karl Sveiby.