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C. The Potential Downside of Social Capital
To provide balance to the discussion, it is useful to address some of the downsides of
social capital. There are primarily two issues:
First, when people identify strongly with a group they sometimes support ideas that are
suboptimal or simply wrong. If there are strong social pressures (such as “groupthink”), people
Second, if there are deep-rooted mindsets, dysfunctional human resource practices may
Third, the socialization process whereby individuals are socialized in the norms and
Fourth, individuals may use their contacts solely for personal gain.
IV. Using Technology to Leverage Human Capital and Knowledge
Here, we discuss how technology can be used to leverage human capital and knowledge
in organizations, as well as beyond their boundaries to include customers and suppliers. We will
A. Using Networks to Share Information
Clearly, email is a very effective means of communicating a wide range of information. It
is quick, easy, and almost costless. It can, of course, become a problem if it is used
The following SUPPLEMENT addresses some of the other challenges and limitations
associated with the use of email.
Extra Example: E-mail—Challenges and Limitations
Some well-known problems associated with the use of e-mail include the distraction of spam and stuffed in-boxes as
well as the potential for legal liability. However, an additional concern is misinterpreted messages, as well as the
degree to which e-mail becomes a substitute for the nuanced conversations that are critical in the workplace.
Business has undervalued the social dimension of communication,” says Daniel Goleman (of Emotional Intelligence
“fame”), whose book, Social Intelligence, examines the science behind interpersonal connections.
Research suggest that the perils of e-mail are greater than many assume. Justin Kruger, of New York University’s
Stern School of Business, has found that as few as 50 percent of users grasp the tone or intent of an e-mail. Further,
most people vastly overestimate their ability to relay and comprehend messages accurately. Smiley faces and
exclamation points add another layer of confusion. Misinterpretation is highest, studies have found, when the e-mail
comes from a boss.
Source: Brady, D. 2006., *!?@ the e-mail. Can we talk? BusinessWeek, December 4: 109.
Teaching Tip: Clearly, email can be a double-edged sword. In the chapter we talk of its
productivity-enhancing properties. Ask the students how email can end up consuming
We also provide an example of how sloppy use of email can provide embarrassment and
damage to a career.
Strategy Spotlight 4.5 suggests an innovative approach one firm took to reduce the huge
We also address how technology can play a key role in helping a firm develop a
Ask:
Discussion Question 31: What must Access Health do, other than implementing
technology, to make this network effective? (Hint: Mention reward systems, evaluation
systems, effective culture, etc.)
B. Electronic Teams: Using Technology to Enhance Collaboration
Technology has also enabled professionals to work as part of virtual teams to enhance the
speed and effectiveness with which products and services are developed. For example, it helps to
We discuss the two main ways in which electronic teams are different from traditional
Two major advantages of electronic teams parallel the first two sections of this chapter.
First, it enables the firm to access a broader range of human capital (i.e., skills necessary for
The two key challenges of making e-teams effective include: members must identify with
Ask:
Discussion Question 32: Have you participated in electronic teams? Have they been
successful? Have they conformed to the above five attributes? What other attributes have
they had? Did those attributes add to or detract from performance?
C. Codifying Knowledge for Competitive Advantage
There are two different types of knowledge: tacit (embedded in personal experience) and
codified (knowledge that can be documented, widely distributed, and easily replicated). A
We provide the example of Accenture (formerly Andersen Consulting), which has
successfully codified the knowledge of its consultants by storing it in electronic depositories.
For such a system to work, training becomes very important. Using the knowledge
Discussion Question 33: Are there knowledge management systems with which you are
familiar? Are they effective? Why? Why not?
We then discuss the knowledge management system used by Access Health, a call-in
medical center. Although it was very expensive to develop, the company’s paying customers—
STRATEGY SPOTLIGHT 4.6 discusses how SAP uses crowdsourcing to tap knowledge
The SUPPLEMENT below provides some guidelines on making knowledge management
systems effective. Prior to discussing the supplement, you may pose the following question:
Discussion Question 34: What are some guidelines on making knowledge management
systems effective? (It will be interesting to see what issues are brought up and how they
compare and contrast with the supplement.)
Extra Example: Making Knowledge Management Systems Effective
Persuading people to empty their brains into a knowledge management system isn’t easy. Fortune magazine
asked some experts how to make it effective. Here are some of their perspectives:
1. Create heroes: Build a system that rewards those who share knowledge.
2. Follow through: Hire someone to manage and update the system.
3. Don’t let it be in vain: Make sure employees get something out of it.
4. Bring in the boss: Involve upper management to emphasize the system’s importance.
5. Make it a no-brainer: Design a tool that is easy to use.
6. Focus on culture: Foster an environment where sharing information is in vogue.
Source: Koudsi, S. 2001. Actually, it is like brain surgery. Fortune, March 20: 234.
EXHIBIT 4.7 provides a series of questions that managers should consider in determining
V. Protecting the Intellectual Assets of the Organization: Intellectual
Property and Dynamic Capabilities
The management of intellectual property involves
patents,
contracts with confidentiality and noncompete clauses,
A. Intellectual Property Rights
The protection of intellectual rights raises unique issues, compared to physical property
rights. Much of the production of intellectual property is characterized by significant
development costs and very low marginal costs. Indeed, it may take a substantial investment to
We discuss recent patent battles that Apple has been fighting against smartphone makers
running Android, Google’s mobile operating system.
B. Dynamic Capabilities
Developing dynamic capabilities is the only avenue providing firms with the ability to
reconfigure their knowledge and activities to achieve a sustainable competitive advantage.
IVI. Issue for Debate
This issue should generate a lot of interest and debate among your students. And, I would
expect many would have very strong opinions on it. At one extreme, some may claim to have an
DISCUSSION QUESTIONS:
1. Do you think David Cote made the right decision? Why? Why not?
As noted in the “debate”, Mr. Cote provides a strong rationale for the furloughs. That is,
managers typically overestimate the savings from layoffs and don’t spend time talking and
thinking about how the choices they make will affect performance during a recovery. He claims
Mr. Cote did mention in the HBR article that although most everyone felt good about the
approach initially, some of the higher performers (or at least those who thought they were high
Mr. Cote did mention two mistakes he made. He said he should have told employees at
town hall meetings—when they asked what sacrifice he was making—that he had forgone his
2. Do you think the decision was well received by the employees? What factors, changes in
events, and so on, do you think would affect how employees came to accept (or reject) this
decision?
Generally, speaking this would depend on the “culture” of the organization in terms of how loyal
people are to the organization, the sense of collective spirit and enthusiasm, and concern people
have for their colleagues. One factor in Honeywell’s favor is that the firm had been performing
VII. Reflecting on Career Implications
Below, we provide some suggestions on how you can lead the discussion on the career
implications for the material in Chapter 4.
Human Capital: Does your organization effectively attract, develop, and retain talent? If
not, you may have fewer career opportunities to enhance your human capital. Take
At least some students in the class are likely to be taking advantage of their firm’s human capital
developments programs like tuition reimbursement. Getting them to discuss why the firms are
Human Capital: Does your organization value diversity? What kinds of diversity seem
to be addressed (e.g. age-based or ethnicity-based)? If not, there may be limited
Getting the students to expand the notion of diversity beyond just race-based diversity would be
Social Capital: Does your organization have effective programs to build and develop
social capital such that professionals develop strong “ties” to the organization?
Alternatively, is social capital so strong that you see effects such as “groupthink”? From
your perspective, how might you better leverage social capital toward pursuing other
career opportunities?
Social capital is often an abstract idea even after a lecture on the topic. Many students may be
●Social Capital: Are you actively working to build a strong social network at your work
Discuss with students the topic of developing relationships outside the organization. Networks of
friendships and working relationships may have long-lasting benefits. The part of the chapter on
social network analysis is particularly relevant. Important relationships may be those that link
Technology: Does your organization provide and effectively use technology (e.g.,
groupware, knowledge management systems) to help you leverage your talents and
expand your knowledge base?
Most students are very familiar with social networking websites. Some are likely members of
professional networking websites as well. While these websites enable the instructor to illustrate
VIII. Summary
Firms throughout the industrial world are recognizing that the knowledge worker is the
key to success in the marketplace. However, we also recognize that human capital, although
vital, is still only a necessary but not sufficient condition for creating value. We began the first
section of the chapter by addressing the importance of human capital and how it can be attracted,
The second section of the chapter addressed the attraction, development, and retention of
human capital. We viewed these three activities as a “three legged stool.” That is, it is difficult
for firms to be successful if they ignore or are unsuccessful in any one of these activities. Among
the issues we discussed in attracting human capital were “hiring for attitude, training for skill”
Finally, some mechanisms for retaining human capital are employees’ identification with the
organization’s mission and values, providing challenging work and a stimulating environment,
the importance of financial and nonfinancial rewards and incentives, and providing flexibility
The third section of the chapter discussed the importance of social capital in leveraging
human capital. Social capital refers to the network of relationships that individuals have
throughout the organization as well as with customers and suppliers. Such ties can be critical in
obtaining both information and resources. With regard to recruiting, for example, we saw how
The fourth section addressed the role of technology in leveraging human capital. We
discussed relatively simple means of using technology such as email and networks where
individuals can collaborate by way of personal computers. We also addressed more sophisticated
The fifth section addresses key differences between the protection of physical property
