All entries for Monday 19 November 2012

November 19, 2012

Human capital and sustained competitive advantage

The value of human capital can never be reiterated enough. Many academics and practitioners believe that human capital is, at the most fundamental level, a main source of sustained competitive advantage. This perspective is also shared by Peter Senge, who is a pioneer in the field of learning organizations, and aligns with Deming's System of Profound Knowledge and the EFQM Excellence Model. The belief is that humans are agents who are able to act upon the system they are a part of and influence it. However, it is substantial to mention that while humans are capable to learn, the infrastructure in which they have to function is often not simple and straightforward and is dependent on internal and external constraints. Thus, the system does not always necessarily conform to reflection and involvement. Therefore, the consensus derived from Peter Senge, Deming's System of Profound Knowledge and the EFQM Excellence Model is that albeit people are the main force driving learning and progression, all the interrelated and interconnected parts of an organization have to work together to ensure the effective running of the larger whole organization.

The Importance of Systems Thinking

To resolve the challenges we face today at a global corporate level, it is imperative that our business leaders must overcome the erroneous beliefs that lead to the predicament. Fundamentally, this would require diverging away from a "linear" approach of thinking which focuses on instantly fixing the most apparent errors resulting in negative correlation with the system, to a "systems" approach that emphasises perspectives and practices in conjunction with the foundational laws of sustainability. Irrespective of the fact that literature available on systematic thinking dates a few years back, only a few organizations have understood the significance of this approach and adopted it. This is due, in part, to the limitation of a coherent framework to pioneer the application of systems thinking. I believe that more investment needs to be done in this field of study, so that more organizations are able to not only understand the significance of implementing this framework, but also understand its application, and apply it within their organizations to attain sustained competitive advantage.

November 2012

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