Leadership Brief
Shared by Larry Wolff
(President & COO of Ouellette & Associates)
How to Monetize Organizational, Human and Information Capital
Have you ever noticed that the more you practice something the better you understand it? I experienced this with the Balanced Scorecard strategy management technique over the past 20 years.
I remember reading The Balanced Scorecard (Kaplan and Norton, 1996) and applying what I learned. A year later, I read it again and picked up new understanding. As I continued to apply the methodology, I would refer back to sections of the book and always learn something new.
One concept that always intrigued me was the idea that strategy transforms intangible assets into measurable financial results. What the heck did that mean? I probably skipped through that section the first couple of times that I read the book.
And then it hit me. Intangible assets refer to organizational capital (your culture), human capital (your people) and information capital (your data). Our strategy leverages these assets to create value for our clients and revenue for our business.
Information Capital
Information capital is probably the easiest to explain because most industry disruption, today, is based on technology or, more specifically, data. Let’s explore a couple of examples.
In the late 1990’s I worked for Reed Elsevier, one of the largest publishing companies in the world. We published, among many other titles, the Hotel and Travel Index, which was the “bible” of the travel agency industry. Microsoft approached us to see if they could use our database – the deepest and
broadest source of hotel and destination information in the world. I then helped Microsoft create an online travel site called Expedia. Based on our data, Expedia became the world’s leading online travel company. Expedia transformed information capital, or data, into a new, fast, easy, inexpensive service for its customers and, ultimately, great value for its shareholders.
You can look at Amazon, Uber and Airbnb the same way. Like Expedia, they all transformed information capital into customer value and revenue. The key for all of these disrupters was that they used their information in new, unique ways to create value for their customers.