The valuation of a company usually involves 4 areas:
- physical capital,
- financial capital,
- intellectual capital, and
- human capital
Valuation is a combination of science, art, and straight voodoo (Enron anyone???). Voodoo aside, when I recast these valuations from a new angle, I see each relies, in their entirety, on people:
- physical capital – people are trained to use, maximize, and maintain machines
- financial capital – people manage, buy, sell, and negotiate
- intellectual capital – people research (question/challenge) and invent
- human capital – people and their knowledge, skill, and abilities contribute individually and collectively as part of a company’s social network
If people are the lever for a company’s value, no amount of their knowledge, skills, and abilities will matter without their motivation. When 70% – 80% of all projects fail, too much is at stake to ignore human capital. You lose people’s motivation, you fail, your company fails, and your stakeholders fail.
When you cast all projects as human capital projects you can coach involvement, motivation, and performance.
Cast as human capital projects you can continually uncover your greatest asset – people.
P.S. Is it really an Information Technology/Enterprise Application issue???
