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Cogitare - The official blog of the Human Capital Lab

Posted
20 August 2014 @ 3pm

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Valuation Creation in the 21st Century (Part 1 of 3)

For the past couple of centuries income per capita in the developed world has grown substantially. Research shows that most, if not all, of this growth has come from improvements in productivity. Most people today understand that we are in a knowledge-based economy and that innovation has had a major effect on productivity at all levels — including the firm, industry, and country. These innovations come from R & D, patents, designs, and just plain great critical thinking.

Ample evidence exists today that the stated natural law of learning creates value exists. So why is it that most organizations that hire employees are unwilling to spend money on increasing the innovation and critical thinking of what they frequently call their most important asset — “their people.” Why is it that these same organizations that invest millions and billions of dollars in buildings and infrastructure fail to invest in their people when approximately 90% of the U.S. economy is driven by the Service Sector. And why is it that our accounting profession fails to recognize “human capital investment” as “capital” rather than as an expense. The challenge is to define what specific, executable actions policy makers and executive decision makers need to make to take advantage of this natural law to create value for individuals, organizations, and nations.


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