Knowledge and Accounting

Hubert SAINT-ONGEChief Executive Officer,Konverge Digital Solutions CorporationCanada

Knowledge and Leadership in the 21st Century

presented by

Hubert Saint-Onge

...in addition to financial capital, ...in addition to financial capital, the capital of an enterprise is made up of both the capital of an enterprise is made up of both

tangible and intangible assets tangible and intangible assets

Intangible Assets

Tangible Assets

The The EnterpriseEnterpriseas a wholeas a whole

Financial Capital

the building blocks of the enterprise...the building blocks of the enterprise...the building blocks of the enterprise...the building blocks of the enterprise...

Intangible Assets

Tangible Assets

The The EnterpriEnterpri

seseas a as a

wholewhole

Financial Capital

20%20%

10%10%

70%70%

11

70%70%

10%10%

20%20%

22

IndustrialIndustrial KnowledgeKnowledge

the emerging prevalence of knowledge capital...the emerging prevalence of knowledge capital...the emerging prevalence of knowledge capital...the emerging prevalence of knowledge capital...

Financial Capital

Tangible Assets

The Enterpriseas a whole

……knowledge capital is the sum of knowledge capital is the sum of human, structural and customer capitalhuman, structural and customer capital

Intellectual Capital

Structural CapitalCustomer Capital

Human Capital

the components of knowledge capital...the components of knowledge capital...the components of knowledge capital...the components of knowledge capital...

Customer CapitalCustomer Capital Structural CapitalStructural Capital

Human CapitalHuman Capital

customer capital is key to financial performance…customer capital is key to financial performance…customer capital is key to financial performance…customer capital is key to financial performance…

Financial Capital

In the knowledge era, the social contract has irrevocably In the knowledge era, the social contract has irrevocably shifted from “entitlement” to “self-initiative”.shifted from “entitlement” to “self-initiative”.

In the knowledge era, the social contract has irrevocably In the knowledge era, the social contract has irrevocably shifted from “entitlement” to “self-initiative”.shifted from “entitlement” to “self-initiative”.

Entitlement Contract

• submit to authority• deny self expression• sacrifice now for an unstated

future promised benefit

In this new contract, everyone becomes a “business of one” In this new contract, everyone becomes a “business of one” where their capabilities are the most important assets they ownwhere their capabilities are the most important assets they own

In this new contract, everyone becomes a “business of one” In this new contract, everyone becomes a “business of one” where their capabilities are the most important assets they ownwhere their capabilities are the most important assets they own

The relationship between the individual and the organization is The relationship between the individual and the organization is based one’s commitment to create value in exchange for the based one’s commitment to create value in exchange for the opportunity to enhance capabilities.opportunity to enhance capabilities.

The relationship between the individual and the organization is The relationship between the individual and the organization is based one’s commitment to create value in exchange for the based one’s commitment to create value in exchange for the opportunity to enhance capabilities.opportunity to enhance capabilities.

Personal Responsibility Contract

• authority within• supports self expression• commitment, passion, motivation,

energy comes from within

human capital: the new social contract…human capital: the new social contract…human capital: the new social contract…human capital: the new social contract…

Strategy

Structure

Systems

Leadership... the manner in which individuals choose to exercise their responsibilities

Culture

structural capital: the elements of organizational capabilitystructural capital: the elements of organizational capabilitystructural capital: the elements of organizational capabilitystructural capital: the elements of organizational capability

the culture of an organization shapes its the culture of an organization shapes its charcater in the market placecharcater in the market place

your culture can make or break your your culture can make or break your businessbusiness

the impact of culture on the viability of an organization...the impact of culture on the viability of an organization...the impact of culture on the viability of an organization...the impact of culture on the viability of an organization...

The commodity modelThe commodity modelThe commodity modelThe commodity model

• focus on robust processes, seamless focus on robust processes, seamless integration of legacy systems and integration of legacy systems and efficiency for low cost provider statusefficiency for low cost provider status

• focus on robust processes, seamless focus on robust processes, seamless integration of legacy systems and integration of legacy systems and efficiency for low cost provider statusefficiency for low cost provider status

• focus on customer relationship, mass focus on customer relationship, mass customization and knowledge exchange customization and knowledge exchange to generate customer loyalty to brand to generate customer loyalty to brand

• focus on customer relationship, mass focus on customer relationship, mass customization and knowledge exchange customization and knowledge exchange to generate customer loyalty to brand to generate customer loyalty to brand

The knowledge modelThe knowledge modelThe knowledge modelThe knowledge model

Customer StrategyCustomer Strategy

Customer ExperienceCustomer Experience• customers have low search costs to customers have low search costs to find competitive quotesfind competitive quotes

• loyalty is not a factor, the switching loyalty is not a factor, the switching costs for commodity products are costs for commodity products are low low

• customers have low search costs to customers have low search costs to find competitive quotesfind competitive quotes

• loyalty is not a factor, the switching loyalty is not a factor, the switching costs for commodity products are costs for commodity products are low low

• customers are looking to form trust customers are looking to form trust relationship with providers to ensure relationship with providers to ensure long term benefitslong term benefits

• they want to be known and to be they want to be known and to be given solutions that fit their contextgiven solutions that fit their context

• customers are looking to form trust customers are looking to form trust relationship with providers to ensure relationship with providers to ensure long term benefitslong term benefits

• they want to be known and to be they want to be known and to be given solutions that fit their contextgiven solutions that fit their context

• knowledge is used to reduce knowledge is used to reduce transaction costs by seeking and transaction costs by seeking and replicating best practices for replicating best practices for efficiencyefficiency

• knowledge exchange with customer is knowledge exchange with customer is central, provider and customer learn central, provider and customer learn more from one another with each more from one another with each transactiontransaction

Role of KnowledgeRole of Knowledge

customer capital: the fundamental choice for brandingcustomer capital: the fundamental choice for brandingcustomer capital: the fundamental choice for brandingcustomer capital: the fundamental choice for branding

… … shaping culture is about bringing together shaping culture is about bringing together three elements into one definition of three elements into one definition of

the corporate characterthe corporate character

what we what we stand for stand for now...now...

what we what we stand for stand for now...now...

what we are what we are striving to be striving to be

in the in the future...future...

what we are what we are striving to be striving to be

in the in the future...future...

brand brand positioning...positioning...

brand brand positioning...positioning...

……customer capital and culturecustomer capital and culture……customer capital and culturecustomer capital and culture

membership experience

customer experience

internalinternal externalexternal

the brand

promisevalues, culture and leadership

principles

delivering on the brand promise

the character of the firmthe character of the firm

… … a meaningful approach to brandinga meaningful approach to branding… … a meaningful approach to brandinga meaningful approach to branding

Values and culture serves as a key platform for Values and culture serves as a key platform for enacting a meaningful branding that will shape enacting a meaningful branding that will shape

the overall character of the organizationthe overall character of the organization

the exchange of knowledge builds these three stocks…the exchange of knowledge builds these three stocks…the exchange of knowledge builds these three stocks…the exchange of knowledge builds these three stocks…

Structural Capitalorganizational capabilitiesStructural Capitalorganizational capabilities

Customer Capitalcustomer relationshipsCustomer Capitalcustomer relationships

Human Capitalindividual capabilities Human Capital

individual capabilities

knowledge value

creation

Risk ManagementRisk Management

... the open exchange of knowledge is key to managing risk... the open exchange of knowledge is key to managing risk ... the open exchange of knowledge is key to managing risk... the open exchange of knowledge is key to managing risk

Structural Capitalorganizational capabilitiesStructural Capitalorganizational capabilities

Customer Capitalcustomer relationshipsCustomer Capitalcustomer relationships

Human Capitalindividual capabilities Human Capital

individual capabilities

knowledge knowledge value value

creationcreation

Gatherinformation

Learn Transfer Act

meetingsmeetings

interaction interaction with customerswith customers

exchanges across exchanges across organizationsorganizations

self-directed self-directed learninglearning

from a variety of sources...

Changes in how value is created for the customer

knowledge value creation: creating conductivityknowledge value creation: creating conductivityknowledge value creation: creating conductivityknowledge value creation: creating conductivity

……leveraging organizational knowledgeleveraging organizational knowledge……leveraging organizational knowledgeleveraging organizational knowledge

withoutwithoutwithoutwithout

Personal Personal KnowledgeKnowledge

OrganizationalKnowledge

withwithwithwith

Sum total of Sum total of knowledge for knowledge for building building customer value customer value by any one by any one individualindividual

Sum total of Sum total of knowledge for knowledge for building building customer value customer value by any one by any one individualindividual

a knowledge strategya knowledge strategya knowledge strategya knowledge strategy

Organizations that do not give appropriate attention to Organizations that do not give appropriate attention to their knowledge capital sub-optimize their performance their knowledge capital sub-optimize their performance potential because they either...potential because they either...

leak knowledgeleak knowledge

or or

impede knowledge transfer impede knowledge transfer

the inability to leverage knowledge in the firm...the inability to leverage knowledge in the firm...the inability to leverage knowledge in the firm...the inability to leverage knowledge in the firm...

… …organizations waste their knowledge capital organizations waste their knowledge capital through the leakage of knowledgethrough the leakage of knowledge

Structural Capitalorganizational capabilities

Customer Capitalcustomer relationships

Human Capitalindividual capabilities

knowledge knowledge value value

creationcreation

mistakes are mistakes are repeatedrepeated

dependence on key individuals

work gets duplicated

good ideas don’t get shared

slow to introduce new

solutions

competing on price

customer relations are strained

can’t keep up with market leaders

dis-intermediated into a commodity game

the profile of an organization that leaks knowledge...the profile of an organization that leaks knowledge...the profile of an organization that leaks knowledge...the profile of an organization that leaks knowledge...

… …organizations that suppress the exchange of knowledge become organizations that suppress the exchange of knowledge become less transparent or opaque and less open to internal scrutinyless transparent or opaque and less open to internal scrutiny

Structural Capitalorganizational capabilities

Customer Capitalcustomer relationships

Human Capitalindividual capabilities

knowledge knowledge value value

creationcreation

issues are not addressed

issues are not addressed

issues pile up without resolution

issues pile up without resolution

management management goes under siegegoes under siege

management management goes under siegegoes under siege

fear becomes the prime motivator fear becomes the prime motivator

people cut corners to keep up performance

people cut corners to keep up performance

everyone knows but no one talks everyone knows but no one talks

conversations are suppressed

conversations are suppressed

everyone’s everyone’s values/ethics are values/ethics are

compromisedcompromised

everyone’s everyone’s values/ethics are values/ethics are

compromisedcompromised

integrity/trust integrity/trust deterioratesdeteriorates

integrity/trust integrity/trust deterioratesdeteriorates

an organization that impedes the exchange of knowledge...an organization that impedes the exchange of knowledge...an organization that impedes the exchange of knowledge...an organization that impedes the exchange of knowledge...

…the swamp

……leadership that shapes a culture of integrityleadership that shapes a culture of integrity……leadership that shapes a culture of integrityleadership that shapes a culture of integrity

… …levels of leadership integritylevels of leadership integrity

HonestyHonesty … I mean what I say

… I do what I sayReliabilityReliability

CoherenceCoherence … I stand for what I believe

VisionVision …I lead to make it happen

visionvision visionvision

serviceserviceserviceservice

couragecouragecouragecourage

systemic systemic viewview

systemic systemic viewview

targetstargets selfself

interestinterest““silo”silo”viewview

safetysafety

leadership is the energy that brings about integrity …leadership is the energy that brings about integrity …leadership is the energy that brings about integrity …leadership is the energy that brings about integrity …

Give as much attention to your knowledge and intangible assets as you do to your tangible and Give as much attention to your knowledge and intangible assets as you do to your tangible and financial assetsfinancial assets

Don’t go technical and feed the leadership deficit: exercise the strength of your leadership to build the Don’t go technical and feed the leadership deficit: exercise the strength of your leadership to build the character of your organizationcharacter of your organization

Model and stand for a values-centred vision of the firmModel and stand for a values-centred vision of the firm

Build a worthwhile brand that is lived both externally and internallyBuild a worthwhile brand that is lived both externally and internally

Foster open discussions of issues and provide legitimate platforms for the escalation of conflicts/issuesFoster open discussions of issues and provide legitimate platforms for the escalation of conflicts/issues

Engender active partnering Engender active partnering

Leverage systematically the knowledge of your people to build the firm and create value for Leverage systematically the knowledge of your people to build the firm and create value for customerscustomers

what should you do about this...what should you do about this...what should you do about this...what should you do about this...

hubert.saint-onge@konvergeandknow.com