|
 |
 |
|
|
Welcome: Anonymous User |
Why PRISM matters |
|
|
The backdrop against which this project's objectives have been defined is well-known and yet, poorly understood. Capital markets, in particular, have grabbed the headlines both in their meteoric rise and their dramatic falls. Companies championed as stars of the next century have fallen dramatically from grace, most notably Enron and Marconi. Billions of dollars have been allocated to the acquisition of an intangible asset base, parts of which have now proved to be of illusory value. Were the values simply wrongly appraised? Were the decision-making tools, concepts and processes used ineffective? Or was this a failure of organization and education in so much as the values embedded in the complementarities were not realised by ill-equipped and competency-deficient decision-makers? Much has been written about the so-called 'new' economy, yet little has emerged in the way of better tools, both for management and measurement, to help managers in the field cope in an increasingly complex, networked and dynamic economy and to help politicians foster the optimal conditions for enterprise to flourish. Sound and transparent information flow between the recipients and providers of financial, social and political capital � at national, company and project/division levels - is a prerequisite to effective capital allocation and, therefore, to stable and sustainable growth. Without measurement and reporting systems which are closely aligned to the real value drivers of the economy, imperfect economic decisions will be made by policy-makers, corporate executives and investors alike � to the detriment of all. The context in which firms operate has changed. The roots of competitive advantage have likewise changed. This can be conceptualised in a number of ways. We have chosen to illustrate the point with the following diagram, an adaptation of a model used in Richard Normann's 'Reframing Business'.
Long gone is the vertical production model Henry Ford devised for his automobile value chain. The resource-based view of the firm is out-dated. Today's firms' organizational cores, even of globalized giants, tend to be shrinking. Their extended enterprises, however, are growing. The scope of what firms do in-house is probably narrower, but the scope of what it orchestrates through its network of relationships with customers, suppliers, partners and employees is broader. Firms' value is increasingly contingent on the effective organization of its interconnected production and distribution processes which not only produces the particular product or service, but also the information and knowledge gained from the market interaction necessary to continually and dynamically refine the process and improve the end-product. The physical inputs into this process are generally commodities. What makes the difference is the organization of the intangible inputs into the process. Skandia has grouped these inputs into three inter-related and interactive classes � customer, human and organizational capital. Firms have moved from the bottom left quadrant of our model to the top right. And yet measurement systems still tend to conceptualize the world in a way that suggests firms' boundaries are definable and that they operate in an insular and self-sufficient manner. Accountancy, for example, concentrates on measuring assets such as cash, land, plant and machinery in historic cost terms, ignoring, for the most part, values embedded in brands, patents, research, knowledge and organizational design and the values of belonging to an efficient network. Intangibles are dynamic in their very nature and call for a horizontal view of the world. Our current measurement methodologies, however, are static and vertical in form. Attention to this growing problem has been inadequate. The need to enhance and improve understanding for policy makers, corporate executives and the supportive cast of professional service professions is pressing, not only for the European economy but also the global one. This 2-year programme cannot provide final solutions. However, it can hope to build on previous work, to stretch and stimulate the debate across a wider cross-section of economic actors and to focus more minds on addressing these key questions:
Each of the portfolio's projects will be looking to shed light on issues relevant to one or more of these questions.
|
|
|
|
