Using Scenarios to Explore the Potential for Shifts in the Relative Priority of Human, Structural and Relational Capital in Generating Value

Abstract

Collaborative research over a two year period involving eighteen knowledge management practitioners and a team of academics explored the evolution of a next generation knowledge management agenda. Three scenarios were developed that explored the implications of two dimensions: firstly the underpinning organisational purpose in relation to the factors of production in both an industrial and a knowledge economy paradigm, and secondly the consequences of a predominantly transactional or relational psychological contract between individuals and organisations. By studying the drivers shaping the dynamic evolution of each scenario, we identified that organisations need to pay different levels of attention to the components of structural, human and relational capital in order to optimise value generation in each scenario. The first scenario looks at the natural evolution of the industrial economy paradigm as the pace of change accelerates and the expansion of the competitive environment increases the need for product innovation. The stimulus for this innovation is the quality and motivation of the people employed. Human capital management is the main lever to optimise organisational performance in this scenario. The next two scenarios look at organisations operating in the knowledge economy paradigm. One considers the consequences of continuing with the conventional psychological contract with employees based on a transactional exchange of money for time. A large investment is needed in the structural capital mechanisms to manage the organisational ownership of knowledge and to monitor and stimulate performance in delivering knowledge‑based services. In the other scenario, the focus shifted to a situation where individuals and organisations negotiate common areas of interest before becoming involved together in something approaching a partnership. Learning and competitive agility emerge from networks of individuals and groups coalescing around shared objectives. Relationship capital becomes the basis of value generation.