Mohammad Mosaddek Hussain :
Organizations, business enterprises, conglomerates, companies are now more concerned for the investments in knowledge acquisition to achieve corporate goals and this is especially true when the investments are made in employee development and training programmes undertaken by various organizations and companies. As per view of Scott Hawkins, the strategical point has integrated employee learning into the company’s long-term innovation and sustainable growth plans of many companies and enterprises.
Skandia , a Swedish base company, developed and administered guaranteed life and property and casualty insurance products sold by its captive sales force. The company managed all the assets generated from these sales. But starting in the late 1970s, the company began to change its focus and mission due to changing situation and market.
Due to emerging demographic and political trends it has to realise that the ‘baby-boom’ generation would have a great demand for long-term savings products geared towards their retirement. Considering the situation, Skandia responded to these trends by changing its product mix to reflect the new consumer demand for investment products.
To this end, a key business innovation developed by this company that delivered these products in a new system. This model exploded the traditional insurance supply chain. Instead of developing products owning distribution and asset management Skandia focused only on product development
The 2000 Global Fortune 500 ranked Skandia as the world’s tenth largest insurance company with assets under management valued at 992bn Swedish Kroner (SEK). From its initial base in Scandinavia the company now operates with more than 7 000 employees in more than 20 countries.
This company’s success is determined by how well relationships are managed in the organization system and with other stakeholders as a whole process in business. If it fails to manage its upstream and downstream relationships among the parties the supply chain can break down that can lead to colossal hazards to business. In the long run relationships that fail to generate mutually beneficial innovations slowly become commodity businesses competing on price.
Communication and relationships through technology are interactions between people and parties. But the difficulty in managing relationships is that they are intangible. A person can’t find a warehouse full of relationships or accurately measure the input and output of a relationship management process. So, this needs to be measured well in advance, if possible through various sources and data information. Yet these intangible relationships determine long-term sustainable success for any business enterprise. And for this company with a long-term perspective this meant focusing on its intangible assets for future business success and stability as a whole.
This in turn led this company into its pioneering work on intellectual capital. This work ultimately identified the company’s prime intangible assets: its customers, employees, methods and processes. This company communicated its efforts at improving its management process, methods and techniques of these key intangible assets to the world through its supplements to the annual report and other publications.
The challenge is common to many knowledge intensive companies. Its innovative business model and products do not stay unique for very long. This is especially true in the financial services industry where traditional intellectual property protection for example in the form of patents is not available.
As a result other companies can easily copy innovations and this forces a financial service company to decide how it will compete: it could compete on price as a low-cost commodity provider of proven concepts; it could be a ‘fast follower’ letting others bear the cost of exploring new concepts; or it could compete on continual innovation hoping to grab significant market share by being the first to market.
The first mover could command the greatest profit margin in an industry where profits are measured in basis points (one basis point equals one one-hundredth of one per cent) Skandia chose to compete on innovation. As an innovative-led company it’s main competitive advantage was the skill and knowledge of its employees and the relationships with its customers and suppliers in conformity with the goals of the company.
It also couldn’t control what its customers wanted in the way of financial products and services. Likewise it couldn’t control the rise and fall of financial markets during the period. What it could control however was its ability to develop innovations to meet any customer need or respond to any competitive advance as needed as per situation.
The project relies on its employees’ ability to understand the needs of a changing marketplace and then combine that understanding with their knowledge of how to design and manufacture products and services for delivery to its customers within their need. Knowledge and relationships and the company’s ability to manage them better than the competition determine its success. Further in 1990s the management of the company realised competing as an innovator meant competing on its employees’ competence and their full ability in work
Long effort put into developing its intellectual capital management the knowledge management staff identified three high-level components to effectively develop employee competencies. These are:
A clear linkage between competence development activities and the company’s goal , strategic and tactical needs;
A strong motivation among the employees to engage in their own competence development along with the practical work method;
And a clear and strong strategic and financial ROI on the investments it makes.
Each component is crucial to maximise company’s investment in employee competency development. A linkage between development activities and the company’s strategic and tactical needs forms the foundation for making decisions about how to allocate resources among competing development activities for achieving goal and continuous success. It is important that the link must be between strategic and tactical needs. Strategic needs are the high-level drivers of sustainable success while tactical needs are the operative actions and plans implemented to achieve strategic needs. Employee competency must be developed within the context of either of these needs; failing to do so minimises the impact the new skills and knowledge will have on the company’s plans.
The management of the project believes in ‘hiring for attitude and training for skills’. But it knows that the best development plans will fail if employees fail to understand the concept, method and cooperate during its implementation phase. Experience has shown that learning occurs best when employees take responsibility for their own development and think of the project goal. As a result motivating employees to develop themselves is important to achieving successful competence development.
Investing in employee competence development is no doubt highly expensive in financial and intangible resources for both the company and the employee. Providing a clear and strong strategic and financial ROI to both is crucial to continued investment. This project looks to strategic and financial ROI to provide feedback to employees and management as to which development activities are effective and which are not. This method could help them in finding the appropriate ways to implement plans.
The knowledge management staff recently set about organising them into an integrated framework for employee competence development. This competence development’ framework is built upon the concept of ‘plan-do-act-check’. For its purposes the project management renamed these steps as ‘plan-allocate-implement-feedback’.
A manager and employee work together on mutual understanding process for employee competency development. It allocates resources to enable these competency development plans to be implemented in proper way with a view to ensuring competency development among employees. They implement this plan and generates feedback that influences the subsequent round of competency development planning.
The company has developed methodologies and tools to address specific intellectual capital management needs. What is now clear to the knowledge management staff is that these separate tools can be integrated into the competence development framework.
The management realized that finding a way to improve its intangible asset management to achieve the level of innovation necessary for sustainable growth. The project “Skandia” developed the Intellectual Capital Navigator management model to communicate and explain this concept within the company. The navigator concept asks its users to understand how today’s actions and plans affect the company’s future results. Based on the local operating environment the navigator aims to identify what is being done to renew and develop the company’s customers employees and processes to assure long-term financial success by the company.
The project developed a software system to support the global implementation of the navigator. This global system allows the company to aggregate results and determine its current position relative to its goals.
An implementation team made up of members from Skandia’s global business control unit and its global KM unit was given the responsibility for helping each local unit with its navigator implementation. The implementation team assigned a ‘navigator ambassador’ to each local business unit who would act as a liaison with the local management team during the implementation.
The implementation team also developed its own internal rating system to measure each unit’s progress. The rating consisted of two distinct parts. The first was how well the navigator concept was being used. The second was how well the Dolphin system was being used. The implementation team gave greater weight to the use of the concept rather than the system.
The implementation team examined the results and found that companies scoring highly in both concept and software implementation categories were likely to be involved in some form of change process (either a management team transition or a significant growth phase). Companies achieving a low score tended to be more established with existing business planning systems or methods in place.
(Mohammad Mosaddek Hussain , a management expert, is a regular contributor to The New Nation)
