Where there is a successful company, someone once made a brave decision.
Peter Drucker
(1909-2005). Austrian writer and consultant.
Introduction
The Hidden Roots of Courage
Decisions are crucial, they generate opportunities or losses, the important thing is to try to take into account all the necessary elements of valuable information, before making them, which is why the central theme of this reading focuses on showing and managing to persuade the reader, that the world is more dynamic and global every day, leading to the ways of doing business and the transactions that are carried out based on historical information, whether financial, administrative or accounting, only shows us a photo of a setting and time determined of everything that we can perceive and have in writing or recorded in accounting or financial form through the various transactions and interactions with the business environment and economic agents where the organization is developed and managed as a business and living entity.
Which is not only important to have information about its accounting and financial performance for Decision Making and Valuation, but it is incomplete and the current business world, as well as the management gurus show us with various successful examples of it. in various business and management books such as for example the same by the authors of this reading and the author's book Intellectual Capital: Leif Edvinson and Michael S. Malone where various companies that are not only valued for their assets are shown accounting and through traditional means of accounting, claim that this is as in the past which would not only be a serious mistake but would put the life of the Company at risk,In today's business world, the big successful companies in the world teach us this every day, if not look at the cases of Soutwest Airlines, Xerox, CNN, Microsoft, Intel, Skandia, etc. that they greatly exceed their competitors in wealth, that despite having more time in the business world and possessing greater assets, their Real Value is much lower, such as, for example; the centennial Chrysler or Boeing and we cannot fail to mention the sadly famous Arthur Andersen the same one that succumbed and disappeared before the ENRON scandal, but that was a successful company and of a high prestige for a long time in the world, not for its assets but for their Intellectual Capital.that they greatly exceed their competitors in wealth, that despite having more time in the business world and possessing greater assets, their Real Value is much lower, such as, for example; the centennial Chrysler or Boeing and we cannot fail to mention the sadly famous Arthur Andersen the same one that succumbed and disappeared before the ENRON scandal, but that was a successful company and of a high prestige for a long time in the world, not for its assets but for their Intellectual Capital.that they greatly exceed their competitors in wealth, that despite having more time in the business world and possessing greater assets, their Real Value is much lower, such as, for example; the centennial Chrysler or Boeing and we cannot fail to mention the sadly famous Arthur Andersen the same one that succumbed and disappeared before the ENRON scandal, but that was a successful company and of a high prestige for a long time in the world, not for its assets but for their Intellectual Capital.but that it was a successful and highly prestigious company for a long time in the world, not for its assets but for its Intellectual Capital.but that it was a successful and highly prestigious company for a long time in the world, not for its assets but for its Intellectual Capital.
Let us define then Intellectual Capital, as it is concluded from the reading that it is the most important set of intangible assets of knowledge-based companies, knowledge being understood as the new agent that produces economic and organizational capital.
The main elements of the base of intellectual capital can be expressed as follows:
Intellectual capital
Human Capital + Capital of the Market Economy + Structural Capital
The first of the three modular components of intellectual capital is Human Capital, which comprises the competence, knowledge, values and innovative potential of individuals within the organization. A phrase clearly graphs its importance.
The only capital that really matters is human capital.
The second can be called Market Economy Capital, which includes a company's distribution and marketing channels, its network of partners for strategic alliances, and the loyalty and capacity to generate ideas of its clients and suppliers.
Structural Capital is the innovative infrastructure of the company, the means by which Human Capitals and Market Economy Capital are leveraged and finally become financial capital and profit. Structural capital includes the organization's capacity for change, the leadership of managers, learning and teamwork, its strategies, vision, culture, computer systems, databases, patents and countless intangible issues that are the true sources of potential. of value and comparative advantage.
Previously, the assets that appear in the balance sheets, their profit and loss reports, and other tools of the administrative civilization of the industrial era, were the basic area to which the managers of the companies focused. With the advent of innovative forms of negotiation, new markets and the speed in which they develop, we are obliged to permanently innovate our negotiation strategies, placate hidden potential value, adopt an entrepreneurial attitude, globalize our businesses in a world without physical borders., modernize our infrastructure and computer and telecommunication systems, to survive and be at the competitive level that is currently required.
The total assets of companies can be compared to an icerberg:
Of the 100% existing, only 10% can be viewed, which includes Financial Capital, the remaining 90% that is hidden, is the Intellectual Capital of the Company.
But to discover this, we will have to manage Knowledge Management, which is the process of continuously managing the resources of Intellectual Capital, acquiring, identifying, analyzing and exploiting them to satisfy existing and future needs, as well as planning and controlling them to develop new opportunities. in order to achieve the organizational objectives.
With this management concept, the company will be supported in the search for a competitive position creating new business opportunities.
The revolution of the information superhighway (internet), satellite and wireless communication, computer technologies have substantially changed the rules of international markets and the structure of organizations, transcending political, geographic and social barriers within and between companies, allowing small businesses and countries to compete with larger ones, rewrite the rules of organizational administrative competition and achieve strategic restructuring, create entirely new industries, reinvent the operation of an existing industry, and set the global business standard de facto for a developing industry.
Companies with the beliefs of maintaining long-term competitive advantages in their respective businesses, misdirect their intellectual and financial energies in building impractical competitive strengths. On the contrary, continuous innovation is the mechanism of the company by which they remain at the forefront of business in their respective areas. The global hypercompetition of this time has not respected any field, and constant innovations have become a competitive necessity.
The hidden potential value of companies is the untapped Intellectual Capital that every company owns. Creative and successful efforts to appease and uncover hidden potential value require true intellectual effort and great skill to study your own resources with enough ingenuity and strategic insight to discover new sources of value that will bring benefits to companies. The manager's mission is to uncover these potential sources whether these are human resources, inefficient manufacturing processes, and even underutilized existing technology, whether the hidden value lies within or outside the organization, the bottom line is that there are many.
The speed with which organizations manage to produce new business fields is an essential tool that gives them added value so that they can be superior to their competitors. The first to exploit the field of business discovered, has more points in favor than his peers. The rewards are extraordinary, among which the following can be named:
The ability to establish de facto industry standards by being the first to bring innovative offerings to the markets and the ability to stay ahead by incorporating technological advancements in products and services faster than its competition.
The ability to respond more quickly to market opportunities and radically reduce commercial risk by introducing new offers, to obtain and secure the most attractive and strategic distribution channels.
The change of mentality of the personnel, granting them the power of decision and the necessary resources, breaking the intellectual, ideological and organizational barriers of the companies, since the problems are solved faster, improving productivity and obtaining concrete results.
The organizational barriers of the companies appear in three different varieties, the horizontal barriers, which very often avoid collaboration between different departments and specialists; vertical or hierarchical barriers, which separate high-level executives from collaborators free of charge; and the barriers of the company itself, which separate the entire company from the other key participants in this business system such as customers, suppliers and competitors.
Companies will find a better mechanism to conduct their business and internal policies, solving the problem of horizontal and vertical barriers, using new technologies that provide the infrastructure and the possibility of releasing information and knocking down hierarchies, with the ability of the executive to handle and channel this aspect.
On the other hand, the so-called associations called strategic alliances between companies, have become a way of life for large, medium and small organizations, and the improvement of negotiation policies and interrelation with their customers and suppliers, have allowed to eliminate external barriers of companies.
By overcoming these types of barriers, the positive results are reflected in all the strategies of commercialization, distribution, manufacturing, production, logistics, alliances, and most importantly, in the strategies to acquire and spread the knowledge-value throughout the organization..
II.- CRITICAL ANALYSIS
Financial information provides us with information on the structure, behavior, position and changes planned or already made in the company, so it is very useful for those who have to make economic decisions.
Making sound decisions has become the fundamental objective of the financial groups, which have encountered difficulties in dealing with certain intangible items, not only in terms of determining their value, but even in their own identification.
The changes that are taking place in the environment cause these intangible items to become increasingly important in the financial statements of any organization.
The status quo maintained by large organizations such as IBM and AT&A due to the size of their infrastructure, stability and industrial experience, is no longer enough to keep up in today's business world, the predictable instability of global hypercompetition has devalued completely the values and business virtues that existed.
To survive today, you need a change mindset and an entrepreneurial attitude, with new ideas and unusual management and marketing policies. Under these types of conditions, what counts is the desire and ability to accept risks, get real-life feedback and the need for immediate action; in other words, the ability to be enterprising.
The competitive circumstances of the modern, purely globalized world have allowed the development of an entrepreneurial mindset with an international vision, business is now carried out around the world, geographical distance is relative due to the advancement of the media. If managers want to pursue new business opportunities, they must look in new, untapped markets, which are generally not located within the cloistered and economically stagnant limits of their own regions, today business is conducted in an interrelated and comprehensive world.
One of the most important sources of wealth of our time is the value-knowledge, it is probable that the intellectual assets of most companies are worth more than the material value established in the accounting books, successful companies are those that constantly They create, acquire, and transfer the new knowledge, spread it throughout the organization, and incorporate it into their new technologies and products. Organizational learning becomes essential, due to the difficulty, speed and complexity of the hypercompetitive environment of this time.
The Skandia group, one of the largest financial services companies in the world, is the first company to exploit its Intellectual Capital. In 1991 he hired Leif Edvinsson as the first Director of Intellectual Capital and later added Tove Husell as Controller of Intellectual Capital. It now has a team dedicated solely to the growth and development of Skandia's Intellectual Capital base. On the Internet we can see that this organization has published some articles such as Skandia AFS: Balanced Annual Reporton Intellectual Capital; Visualizing Intellectual Capital in Skandia, so much so that now Skandia's Intellectual Capital jobs belong to Harward Business School.
But let us not forget that in order to negotiate and value a Company as competing in the global business world, accounting and financial information is key to be able to determine the status of a company and that it is provided to us reliably through valid and verifiable methods and systems., but it is not complete, it is necessary to see its interior and roots in greater depth, from which it is nourished, grows and develops, which is through its human capital of knowledge called Intellectual Capital, which we must always be clear about. and not even pretend to make decisions only through it, excluding or paying the level of importance that accounting and financial information requires in the business world and the survival of organizations.
III.- CONCLUSIONS
Most companies are able to identify ships, land, furniture, machinery, patents, reproduction rights or trademarks as active items of their assets. They are usually accounted for by their cost price and not by their market value, but at least they appear in the corporate assets. What is no longer reflected in these states is the set of values that we have defined as intellectuals. The seriousness of the fact lies not so much in its ignorance at the accounting level, but in that in most cases the company has not even noticed its existence. In some cases, accounting practices have not only been inadequate, but have also had a significant negative influence.Instead of considering as medium or long-term investments the amounts contributed to the items that make up the set of intellectual values, they have considered them as expenses that must be minimized and then amortized as soon as possible.
There is a difference, in some very large cases, between the real value of a company and the value that is deducted from its listing or from the information contained in its financial statements. This difference will vary depending on the reason that justifies the determination of value, and expresses the extra value (or, where appropriate, the negative value difference) that the market estimates for the company. This can give an idea that something is wrong with the financial information. Identifying, valuing and enhancing the factors that cause this extra value becomes an aspect of enormous importance for the survival and future of the company, in addition to explaining the reason for the difference.
Intellectual capital has become the cornerstone of the philosophy of value creation. In any case, the measurement and management of intellectual capital should not be understood as an end in itself, but as one more tool in the value creation process. We think that the concern of organizations should not be on how to include intellectual capital in traditional financial statements, but rather on how to create a broad set of indicators integrated in independent statements from traditional and related to value creation.
The financial information registered in the company is based on the execution of transactions with third parties. That is why it has been considered objective and real in any case, even if it did not conform to market values. However, most techniques for measuring the value of intellectual capital are based on indicators and not on transactions. That is to say, transactions with third parties are not necessary to reflect the variations produced on the items that make up the intellectual capital.
The company must potentiate and effectively use those intangible assets that allow it, over a medium or long term, a technical performance that is greater than the financial cost of its tangible assets. This establishes the necessary, but not sufficient, condition for obtaining maximum returns, while placing intangible assets where they belong, at the core of the company's performance. Regardless of the problems caused by the treatment of intangibles, the philosophy that must be used in relation to them is the one that considers them as the gravitational center of the company, a key piece for the achievement of margin surpluses, and a key and fundamental piece in strategic decision making.
Being different or, better said, being perceived differently requires using new strategic lines and considering assets that until now were, in some cases, totally ignored, as fundamental. It is not enough that companies create value, but it is necessary that this created value is also perceived, which explains the obsessive concern of companies to create value "perceived" by the customer. Success is assured if the organization is able to include customer orientation as another value of its own culture. The company must begin by making valuations that will gain in accuracy as time progresses. Despite the inaccuracies in the initial assessments, what is really important is that the company will have had to start an identification process,cataloging and subsequent valuation of items that would otherwise go unnoticed.
Let us keep as an important and strategic present value that people generate capital for the company through their competition, their attitude and their ability to innovate. Competencies include skills and education, while attitude refers to behaviors. But it is ultimately the ability to innovate that can generate the most value for a company. All of this constitutes what we call Human Capital.
Intellectual Capital, meanwhile, is linked to all that value that arises from the difference between the market value of a company and the value of its assets. That hidden, intangible and difficult to identify value is mainly made up of Human Capital and something else, which is Structural Capital.
Structural Capital is generated from the relationships, routines and systematic procedures that allow the company to carry out its daily tasks. It includes databases, manuals, brands and all those things whose value for the company is greater than its material value.
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Based on: Intellectual capital of Jorge Iván Guerra Román's company
