ScottA.SnellCornellUniversity393IvesHallIthaca,NY14853(607)255-4112scott.snell@cornell.eduCompetingthroughKnowledge:TheHumanCapitalArchitecture“Youcangetcapitalanderectbuildings,butittakespeopletobuildabusiness.”ThomasJ.Watson,IBMDidIBMforget?•$168billion(TobinsQ=2.1)•Hardware,software,andservices•Nobelprize-winningscientists•3,768patents(1993-1995)What’sHappeningToday?IndustryChanges•Globalization•InformationtechnologyNeedfor…•Organizationalagility•Speed•Innovation•Cost•Knowledge-basedstrategies•Corecompetencies•Innovation•ExternalpartnershipsLeadingto…NewBusinessEquationCoreCompetence……isabundleofskillsandtechnologiesthatenablesacompanytoprovideaparticularbenefittocustomers.HamelandPrahalad,1994SONYMiniaturizationPocketabilityFEDERALEXPRESSLogisticsOn-timedeliveryHONDAEnginedesign/mfg.ReliableperformanceMOTOROLAWirelesstechnologyUntetheredcomm.CoreBenefittoCompetenceCustomerKnowledgeTechnologiesProcessesRelationshipsCRITERIA•valuable•unique•extendable•learningBenefitsVALUE=---------CostsUNIQUE=(socialcomplexity+causalambiguity)CompetingThroughPeople•Identify&developcoreskills•Integratediverseactivities•Respondwithagility&speed•Empoweraction•InnovateCoreCompetence……isabundleofskillsandtechnologiesthatenablesacompanytoprovideaparticularbenefittocustomers.--HamelandPrahaladKNOWLEDGE-customer-technology-operations-managingPROCESSES-customersegmentation-just-in-time(hrs)-masscustomization-buildtoorder(AIM)-ROICmetrics-experimentationTECHNOLOGY-Premierpages-softwareinstallation-TPMtriggers(parts,service)-customerpurchasingsystemsRELATIONSHIPS-customerintimacy(Boeing)-Platinumcouncils-supplierpartnerships(Sony)-employeeinvolvement-thirdpartyservicemaintainers(TPMs)-distributionagreements(UPS,Airbourne)Leadingto…•Value•Uniqueness•Learning“Alow-valueproductcanbemadebyanyoneanywhere.Whenyouhaveknowledgenooneelsehasaccessto--that’sdynamite.Weguardourintellectualassetsevenmorecarefullythanourfinancialassets.”--RoyVagelos,formerCEOMerckKNOWLEDGE-customer-technology-operations-managingPROCESSES-customersegmentation-just-in-time(hrs)-masscustomization-buildtoorder(AIM)-ROICmetrics-experimentationTECHNOLOGY-Premierpages-softwareinstallation-TPMtriggers(parts,service)-customerpurchasingsystemsRELATIONSHIPS-customerintimacy(Boeing)-Platinumcouncils-supplierpartnerships(Sony)-employeeinvolvement-thirdpartyservicemaintainers(TPMs)-distributionagreements(UPS,Airbourne)SouthwestAirlinesKNOWLEDGE-microbiology-biochemistry-microbiology-imunodiagnostics(antibodies/conjugates)PROCESSES-R&D/Mfg.-bioconjugation-antibodypurification-PCRamplification-DNAhybridization-TQM-commercializationTECHNOLOGY-immunoassays-ELISA(serum/blood)-rapiddiagnostics-DNAbasedRELATIONSHIPS-CRC-DT,CDC-U.S.Army-WorldHealthOrg.-universities-distributionnetwork-employee(science/mkt)Leadingto…Anorganizationatthefrontierofitsintellectualfieldismorelikelytostayatthefrontier.Itcanattractandchallengemoreandbetterintellectthanitscompetitors.Bysolvingmoreadvancedproblems,ithasmorecapacitytosolveothers.Andsoon.”---JBQuinn•Value•Uniqueness•LearningBIOTECHINC.Benefits=---------CostsCombinationofpeopleandsystemsleadsto...HumanCapitalSocialCapitalOrganizationalCapitalBioTech,Inc.:IntellectualcapitalPeopleSystemsKNOWLEDGE-microbiology-biochemistry-bioconjugation-imunodiagnosticsPROCESSES-R&D/Mfg.-bioconjugation-antibodypurification-PCRamplification-DNAhybridization-TQM-commercializationTECHNOLOGIES-immunoassays-ELISA(serum/blood)-rapiddiagnostics-DNAbaseddetectionRELATIONSHIPS-CRC-DT,CDC-U.S.Army-WorldHealthOrg.-universities-distributionnetwork-employee(science/mkt)C2=“RapidLearning”PEOPLESYSTEMSCoreCompetenceKnowledgeKnowledgeTechnologiesTechnologiesProcessesProcessesRelationshipsRelationshipsBenefitsVALUE=---------CostsUNIQUE=(socialcomplexity+causalambiguity)LEARNING=(experiencexchallenge)Howdoeshumancapitalcontributetothecorecompetence?•Value•UniqueResourcesneedtobe:BenefitsVALUE=---------CostsDrivesinnovationRespondstocustomerdemandsProvidesexcellentcustomerserviceAchieveshighestqualityInstrumentalinprocessimprovementsDevelopsnewbusinessopportunitiesDirectlyaffectsefficiencyandproductivityMinimizescostsofproduction,service,deliveryNotwidelyavailableinthemarketCannotbeboughtorappropriatedDifficulttoimitateorduplicateSpecializedKSAsDifficulttoreplaceCustomizedtoourfirmDevelopedthroughon-the-jobexperiencesDistinguishesusfromourcompetitorsR&DManufacturing/OperationsDistributionSalesSalesTMTCustServHRR&DRapidsFinCustomerServiceMfgR&DR&DPartnersCoreKnowledgeLowVALUEhighLowUNIQUEhighBIOTECH,INC:MappingHumanCapitalKEYFinanceHRTMTMISMfg/OperationsMarket/SalesR&DQualityBiologicalsCust.ServiceRapidDiag.Legal/Reg.DistributionRapidsScottA.Snell,CornellUniversityC2=RapidLearningHRLegalMISBiologicalsFinQualityTMTCompulsoryKnowledgeIdiosyncraticKnowledgeAncillaryKnowledgeHighValueLowValueGenericCoreIdiosyncraticAncillaryCompulsoryUniqueHumanCapitalArchitectureHumanCapital•unique•valueHRMSystemEmployMode