A key reason why organizational transformation is important is to increase the “intelligence” of the organization. Organizational intelligence refers to the collective assemblage of value-added benefits derived from the organization’s intangible assets (knowledge from employees, management, stakeholders, and customers). To increase the IQ of the organization, we should first build a hierarchy of components that contribute to the intelligence of an organization. The traditional hierarchy is shown in
Data relates to discerned elements. Once the data is patterned in some way, it becomes information. Information plus insights and experience becomes knowledge. Knowledge in a specialized area becomes expertise.
Expertise morphs into the nirvana state of wisdom after many years of experience and lessons learned. At an individual level, my sons sometimes say that they are more intelligent or smarter than I am. Although this may be true, my usual retort is that they may be smarter but not wiser. Similarly, people say that others may be book-smart, but not street-smart.
Knowledge and experience go hand-in-hand in developing intelligence, especially in an organizational setting. It reminds me of the first job that one tries to get where they want you to have experience first to get the job, but to gain experience, you must get that first job (the chicken and the egg phenomenon).
Organizational intelligence, according to the knowledge management community, must be built on three main types of capital: human, structural, and relationship. Human capital refers to the knowledge embodied in the employees of the organization.
Structural capital is the knowledge that you cannot easily take home with you from the office such as intellectual property rights, certain databases, and the like.
Relationship capital is social capital learned from your customers and stakeholders. Some people say there is a fourth type of capital called competitive capital. This refers to the intelligence in knowing what your competitors are doing. For an organization to maximize its intelligence, all four types of capital must provide value-added benefits to the organization.