KM 101 Dr. Nick Bontis Associate Professor of Strategic Management, McMaster U. Director, Institute for Intellectual Capital Research Associate Editor, Journal of Intellectual Capital Chief Knowledge Officer, Knexa Solutions www.NickBontis.com nick@bontis.com Seminar Agenda • Phase 1: Knowledge Era – understanding the context of the information age • Phase 2: IC Multi Perspectives – What is IC? Depends on who you ask. • Phase 3: IC Models – levels of analysis, types of knowledge, stocks & flows • Phase 4: SLAM Measures – alignment of stocks and flows with performance • Phase 5: Causal Mapping – Structural equation methodology and measures • Phase 6: National IC Index – Country level measurement and modeling • Phase 7: Software Demonstration – TangoNet and Tribute Entering A New Era ? Machine Industrial Era Agriculture Era Land Tech Mind Knowledge Era Accounting Metrics Canadian Internet Usage: 1995 4%, 1998 25%, 2005 75% In 1997 home PCs passed TVs in units sold Nielsen Retail Week Internet users: 30 million - 1999 817 million - 2005 WTO Internet traffic doubling every 70 days Dept. of Commerce KM Research Highlights • IDC reports FORTUNE 500 wasted $12 billion duplicating work • Ford reports $914 million cost savings due to KM from 1997 - 2000 • Chevron saves $650 million since 1991 due to KM • Texas Instruments saves $1 billion cumulatively since KM program launched in mid 1990s • Gartner Group reports – 90% of FORTUNE 500 working on KM – 33% of FORTUNE 1000 had begun KM programs by 1999 – will rise to over 50% by 2003 • World Economic Forum – 95% of CEOs feel that KM is critical to success Myths of Measuring KM 1. The reality is that when you finally do it, you are never satisfied 2. The few who are doing it are probably not doing it well 3. Those who say they are doing it are probably lying 4. No one is sure what it is, but they hear that it is great 5. Everyone thinks everyone else is doing it KM Research Highlights • Stats Canada (348 organizations surveyed) – 93% have KM initiatives, 25% dedicated budget – Why have KM? • Competitive advantage, human capital, intellectual capital retention • Fortune 500 – 80% have KM initiative(s) in place, 25% have CKOs 53% have KM staff, all #s expected to grow – 6% have KM initiatives company-wide, 60% < 5 years KM is owned 32% Sr.Mgt., 25% HR, 16% IT • Government - all levels • Institute for Intellectual Capital Research – CKOs from 40% HR, 40% IT, plus other (hired within) Multi - Perspectives Human Resources Marketing Economics Finance Organizational Behaviour Accounting Training & Development Technological Systems Sales Strategy Volunteer for a Reading test Aoccdrnig to rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a total mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Volunteer for a Reading test Where are we going? • Lester Thurow - MIT “The dominant competitive weapon of the 21st century will be the education and skills of the workforce.” • Jac Fitz-enz - Saratoga Institute “The contingent workforce will become the dominant model.” • President Clinton - U.S. White House “By having the chance to work while you learn ... You embody the growing unity between experience and education.” • Steve Maharey - NZ Labour Spokesperson on Education “Maori and Pacific Island peoples in particular remain under represented in tertiary education.” Importance of phenomenon Choo and Bontis (2002), Bontis (2002) Fitz-enz (2000) Max Boisot (1998) & Choo (1998) Knowledge Assets, Knowing in Organizations Sveiby (1997) & Stewart (1997) & Roos (1997) Organizational Wealth Nonaka and Takeuchi (1995) The Knowledge Creating Company Drucker (1993) arrival of the “knowledge society” Toffler (1990), Handy (1989) ultimate resource, intellectual assets 3 or 4 times BV Tracing KM’s History Egyptians, Greeks, Monks, Knights Taylor (1911) Evidence of codification of knowledge Simon (1945) Cognitive capacity “bounded rationality” Schumpeter (1952) Innovation from new combinations of knowledge Penrose (1959) Organization is a knowledge repository IASC, CICA, FASB & SEC … Help! Visible (Explicit) Accounting Cash Liabilities Receivables Fixed Assets Intellectual Capital Invisible (Implicit) Accounting Shareholder’s Equity Market Value Added Distinguishing the Terms Stock Flow Stock Intellectual Capital Knowledge Management Intellectual Capital Behaviour 1 Behaviour 2 Behaviour 3 Organizational Learning System 123 Devil’s Advocate The Danger of KM Knowledge Management Achievement Driven Paternalistic Balance Organizational Slack Organizational Performance Level of Analysis: Individual recruitment building competencies assessing weaknesses retention compensation satisfaction Level of Analysis: Group • • • • • concerted team action collectively aligned mind sets synergy cohesion shared perception of the business environment Level of Analysis: Organization Continuous Improvement Strategy Systems Trust Culture Technology Structure Leadership IC Conceptualization 2nd order multi-dimensional 3 sub-domains drivers trust, culture leadership Human Capital Structural Capital Relational Capital Conceptual Model - Firm Market Value Financial Capital Intellectual Capital Human Capital Structural Capital Customer Capital Innovation Capital Organizational Capital Process Capital House Metaphor Past Future Process Capital Human Capital Renewal Capital Market Capital Present Financial Wealth IC Perceptual Model Nonaka (SECI Model) Tacit Tacit To Explicit Socialization Externalizaton Internalization Combination From Explicit Metaphors and Analogies • stocks and flows – production system – capacity utilization, bottlenecks, throughput – ties-in stocks of knowledge and flow of learning • bathtub analogy – tap in and leak (knowledge flow) – water level (intellectual capital) – the whole water system (organizational learning) We need an integrative framework! Strategic Learning Assessment Map Flow Output Individual Group Organization Cross-organization Legend: H (human), R (relational), S (structural) = IC) Individual H R S Feed-forward Group Flow Input H R S Organization Feed-back H R S Cross-organization H R S Measure, Test and Evaluate • multi-method approach (quantitative and qualitative) – IICR Knowledge Audit: survey design (Likert-type) • objective proxies (www.Saratoga-Institute.com) – benchmarking of HR metrics (turnover and training & dev.) – e-mail direction (IICR e-Flow Audit) – knowledge sweeping (dynamic corporate yellow pages) • Some tools to check out ... – Knexa.com, BrassRing.com, OpenText.com – Monster.com, eLance.com, Talent websites • Tango Simulation – www.TangoNow.net • IC Disclosure – www.Celemi.se – www.Skandia.se – www.Carlbro.dk KM Continuum e-KM Growth Continuum Tribute Technology Growth Stages Value Net Integration Cultural Transformation IICR KM Diagnostic Stabilized Systems Enablers Measurable Outcomes KM Seminars Targeted Interventions Dedicated KM Resources Leadership Commitment Beginner Knowledge Laggard Knowledge Loser Knowledge Gatherer Learning Organization Lack of Shared Vision Resistance to Change Ineffective Management Low Teamwork Low Accountability Lack of Focus Lack of Resources Knowledge Leverager Knowledge Innovator Extended Knowledge Enterprise Hurdles KM Diagnostic Audit 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training & Development 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 R2 = 28.5% - 0.337 Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business Performance R2 = 44.1% 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% Correlation vs Path Analysis Correlation between Age and Risk of Heart Attack + 0.36 (p < 0.01) Correlation between Obesity and Risk of Heart Attack + 0.32 (p < 0.01) Age + 0.36 Heart Attack Obesity + 0.32 Correlation vs Path Analysis Path between Age and Obesity + 0.26 (p < 0.01) Path between Obesity and Risk of Heart Attack + 0.43 (p < 0.01) Age + 0.26 Obesity X + 0.43 Heart Attack Outcome Constructs 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 - 0.337 R2 = 28.5% Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business Performance R2 = 44.1% 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% Participating Organizations ABN AMRO North America Inc. Allstate Insurance Company AMP Australia AMP UK Andersen Consulting Aon AXA Client Solutions Blue Cross Blue Shield of Florida Blue Cross Blue Shield of Illinois / Texas Blue Cross Blue Shield of North Carolina CNA Commercial Insurance Equitax Farmers Insurance Group Hartford Financial Services Hewitt Associates, LLC Intermountain Health Care International Monetary Fund Merrill Lynch National City Corp. Northwestern Mutual Life Penn National Insurance PNC Bank Savings Bank of Utica United Health Group Zurich U.S. Quantitative Metric Model _ Human Capital Depletion Human Capital Valuation Human Capital Investment + + Human Capital Effectiveness Quantitative Metric Model _ Human Capital Depletion Human Capital Valuation + Human Capital Effectiveness • Revenue Factor • Income Factor Human Capital Investment + HC Effectiveness - Income Factor $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Income Factor HCV Sample Banks Insurance All Insurance H&L Insurance PCP Non-Bank Financials All Industries $36,514 $42,037 $64,612 $18,107 $61,373 $78,379 $64,112 Quantitative Metric Model _ Human Capital Depletion • • Compensation Expense Factor Compensation Factor Human Capital Valuation + Human Capital Effectiveness • Revenue Factor • Income Factor Human Capital Investment + HC Valuation - Compensation Factor $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Comp Fac HCV Sample Banks Insurance All Insurance H&L Insurance PCP Non-Bank Financials All Industries $54,024 $32,509 $41,046 $37,588 $40,900 $46,531 $44,445 Quantitative Metric Model _ Human Capital Depletion • • Compensation Expense Factor Compensation Factor Human Capital Investment Human Capital Valuation • Development Rate • Training Investment + + Human Capital Effectiveness • Revenue Factor • Income Factor HC Investment - Development Rate 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Develop Rate HCV Sample Banks 82.2% 56.9% Insurance - Insurance - Insurance All H&L PCP 74.2% 87.9% 61.1% Non-Bank Financials All Industries 59.1% 66.3% Quantitative Metric Model _ • Voluntary Turnover • Involuntary Turnover Human Capital Depletion • • Compensation Expense Factor Compensation Factor Human Capital Investment Human Capital Valuation • Development Rate • Training Investment + + Human Capital Effectiveness • Revenue Factor • Income Factor HC Depletion - Voluntary Turnover 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Voluntary HCV Sample Banks Insurance All Insurance H&L Insurance PCP Non-Bank Financials All Industries 13.1% 18.8% 12.6% 12.6% 11.9% 18.6% 14.7% Areas of Concern 31 Management Leadership 30 Business Performance 29 Retention of Key People Process Execution 23 17 Employee Commitment 13 Employee Satisfaction 12 Know ledge Integration 11 Human Capital Know ledge Sharing 10 9 Motivation 7 Value Alignment 6 Education Know ledge Generation 5 Structural Capital 5 2 Relational Capital 0 5 10 15 20 25 30 35 Research Implication I 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 R2 = 28.5% - 0.337 Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business Performance R2 = 44.1% 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% Research Implication II 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 R2 = 28.5% - 0.337 Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business R2 = 44.1% Performance 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% Research Implication III 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 - 0.337 R2 = 28.5% Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business Performance R2 = 44.1% 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% Research Implication IV 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 - 0.337 R2 = 28.5% Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business Performance R2 = 44.1% 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% Research Implication V 0.506 Managerial Leadership Retention of Key People 0.442 R2 = 68.2% 0.530 Training 0.475 0.360 Relational Capital Human Capital Effectiveness 0.307 0.358 - 0.337 R2 = 28.5% Structural Capital 0.751 Employee Satisfaction 0.326 Human Capital 0.734 0.456 0.491 Employee Commitment 0.543 Knowledge Generation 0.327 Business Performance R2 = 44.1% 0.439 0.429 Process Execution Employee Motivation 0.430 Value Alignment Knowledge Integration - 0.372 0.394 0.262 Knowledge Sharing 0.285 Human Capital Depletion - 0.233 R2 = 28.5% KRA Health Canada 0.326 Management Leadership Retention of Key People 0.424 0.809 0.196 Feedback Learning 0.182 0.598 R2 = 61.1% 0.235 Human Capital 0.376 0.570 Training & Development Relational Capital -0.161 0.567 0.522 Structural Capital Process Execution 0.282 0.454 0.603 Employee Satisfaction 0.730 0.651 0.398 Employee Commitment Performance 0.328 0.446 Employee Motivation 0.442 Value Alignment -0.266 0.356 Knowledge Integration Knowledge Generation R2 = 54.1% 0.295 0.167 - 0.157 0.257 Knowledge Sharing 0.139 0.135 0.380 Turnover - 0.352 R2 = 20.0% Elements of KM Programs Critical Elements of Effective KM Programs KM Organization Communities of Practice Virtual Teams Knowledge Networks Organizational Design Business Drivers Strategy Process Design Knowledge Capture Collaboration and Sharing Innovation Business Process Enablement Change Management Executive Leadership Performance Management KM Support Tools Knowledge Technologies KM Environment Process Applications Development People Organization Technology Culture Results Shareholder Value Systems Integration Enterprise KM Systems Portals Knowledge Exchange Organizational Learning KM Applications Matrix KM Applications Matrix Individual Work Group Individual KM Strategies Applications Critical Enablers Expected Results Extended Enterprise Enterprise Group Team/Community Organization Knowledge Worker Business Objectives Organization Community Identify and capture Locate expertise Increase personal capabilities Complex problems Collaborate and share Create new knowledge Codify and reuse Knowledge Capture Transform business Leverage proprietary intellectual capital Innovation Transform industry Co-opetition Invention Expansion Knowledge Products Enterprise Expansion Knowledge Creation Knowledge Transfer Competency Models Expertise locators Personalization Learning programs Mentoring Knowledge mapping New Bus Models Sell ICAP Communities of practice/interest Collaboratories Innovation networks Extended ValueValue Network Net Knowledge portals Competitive intelligence Smart products Knowledge-based businesses B2B knowledge marketplaces Merger planning Virtual organizations Leadership Common Language Measurement Resources Program Mgmt Technology Accelerated learning Increased productivity Employee retention Increased innovation Increased customer satisfaction Reduced rework Accelerated product introductions Higher $rev/employee Competitive advantage Increase EPS Increased mkt share New business ventures Arsenal of KM Tools TACIT EXPLICIT EMBEDDED Diagnose Gather Hypothesize Awareness / storytelling KM audit / survey Values assessment Customer focus groups Data warehousing Information navigation Competitive Intelligence Environmental scanning Mathematical models Neural networks Knowledge discovery Longitudinal forecasting Contextualize Categorize Map Expertise locators Intranet yellow pages Document management Video teleconferencing Taxonomy development Intranet groupware Text mining Organizational libraries Workflow analysis Knowledge maps Statistical flow timing eFlow Audits Communicate Disseminate Simulate Apprenticeships Job rotation Organizational slack Ba design/implementation Distributed e-learning Communities of practice Knowledge portals IC reporting / disclosure Scenario planning Expert systems Virtual organization KM Laboratories Background Information • United Nations – Nationalize IC concept – Leverage for public policy – Isolate a target area for study • McMaster University – World Congress on IC – 1st MBA with KM minor – Develop methodology – Research and collect metrics – Design a structural model Arab Region Morocco Oman Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Conceptual Model - Firm Market Value Financial Capital Intellectual Capital Human Capital Structural Capital Customer Capital Innovation Capital Organizational Capital Process Capital Conceptual Model - Nation National Wealth Financial Wealth Intellectual Capital Human Capital Structural Capital Market Capital Renewal Capital Organizational Capital Process Capital House Metaphor Past Future Process Capital Human Capital Renewal Capital Market Capital Present Financial Wealth Descriptive Statistics Population World Bank Indices Total Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Djibouti Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Total Total Growth (millions) (millions) (%) 2000 1950 1950-2000 DES01 DES02 DES03 30.31 8.75 246.4 0.64 0.11 481.8 0.71 0.17 310.4 0.63 0.06 916.1 67.89 21.83 210.9 22.95 5.16 344.9 4.91 0.47 940.3 1.91 0.15 1,156.6 3.50 1.44 142.6 5.29 1.03 414.1 2.66 0.83 222.4 29.88 8.95 233.7 2.54 0.46 457.0 Projected Age 0-14 Poplution (%) (millions) 2000 2015 DES04 DES05 34.8 37.85 28.2 0.78 43.0 0.98 43.2 0.85 35.4 84.51 41.6 32.53 40.0 6.97 31.3 2.36 31.1 4.31 33.9 6.84 44.1 3.84 34.7 37.90 44.1 3.92 0.56 20.35 8.78 31.10 16.19 9.46 2.61 18.35 0.03 3.20 2.26 9.19 3.50 3.53 0.07 4.32 2,140.0 535.7 287.8 238.4 363.2 168.0 3,628.6 325.2 26.7 42.9 48.0 40.1 40.8 29.7 26.0 50.1 0.68 31.06 13.66 41.36 21.95 11.52 3.09 33.16 281.22 75.51 272.4 35.9 380.12 Gender Health Poverty Gender GEM (index) 2001 DES06 HDI (index) 2001 DES07 0.693 0.824 0.510 0.447 0.635 HPI-1 (index) 2001 DES08 23.5 GDI (index) 2001 DES09 0.673 0.814 0.503 0.714 0.818 0.758 0.770 0.437 0.596 0.747 8.5 10.2 16.7 47.2 36.4 32.2 0.698 0.815 0.741 0.748 0.428 0.579 0.715 0.801 0.754 17 0.788 0.719 0.258 0.258 29.9 34.7 31.7 0.439 0.700 0.714 0.809 0.470 34.8 19.8 0.665 27.5 0.620 0.413 0.677 0.700 0.798 42.5 0.672 Financial Capital Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Gross Domestic Product Per Capita Trade as % Per Capita Growth of Goods GDP ($PPP) (%) (%) 1999 90-99 1999 FC01 FC02 FC03 5,063 -0.4 69.90 13,688 0.8 1,429 -3.1 2,377 -5.1 3,420 2.4 42.10 3,955 17,289 4,705 7,570 1,609 3,419 13,356 Trade Barriers to Entry 2001 FC04 Stock Markets Market Listed Cap. Companies ($ millions) 2000 2000 FC05 FC06 4.0 3.0 5.0 5.0 4.0 2.0 3.0 5.0 28,741 1,076 4,943 18,814 163 76 0.4 171.60 132.70 1.3 0.4 2.8 138.20 108.20 126.10 4.0 2.0 10,899 3,463 53 131 18,789 10,815 -2.2 109.60 3.0 4.0 67,171 75 664 4,454 5,957 18,162 806 0.8 1.9 -1.6 -0.4 108.50 126.70 159.30 116.20 5.0 5.0 2.0 4.0 2,828 28,211 44 53 7,238 -0.14 117.43 3.75 165,070 1,671 Human Capital (1 of 4) Literacy Rate Number of Schools PrePrimary Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States 1980 HC01 40.10 71.40 48.30 31.40 39.30 68.40 67.60 72.40 52.90 29.00 28.60 36.80 2000 HC02 63.30 87.60 56.20 51.40 55.30 69.80 52.30 89.80 82.30 86.10 79.80 39.90 48.90 71.90 86.10 81.30 77.00 33.00 53.30 46.80 65.60 20.20 57.10 74.40 70.80 76.50 46.20 48.80 69.10 LYA HC03 Primary LYA HC04 15,426 90 2 2,367 570 932 215 1,938 78 36 33,617 5 64 893 16 7,541 1,096 1,115 327 72 8,145 2,623 286 2,160 2,392 5,806 411 1,118 174 11,506 1,224 11,158 10,783 4,417 62 50,637 78,028 Number of Staff Tertiary 1998 HC05 13 2 1 18 12 17 1 10 11 1 14 1 9 1 8 1 26 4 6 4 15 175 PrePrimary Primary Secondary Tertiary LYA HC06 1,333 LYA HC07 170,956 LYA HC08 145,160 600 1,508 1,096 310,116 145,455 45,367 10,798 591 403 259,618 52,393 1,865 80,817 12,251 7,634 3,946 115,907 2,149 14,743 2,182 36,528 9,832 13,787 1,307 2,443 643 15,868 324 2,043 4,733 6,641 3,110 680 6,225 114,406 12,052 15,903 864 175,458 10,338 102,987 114,689 59,708 16,148 90,478 91,941 1,404,552 635,513 81,065 12,050 4,841 3,346 3,525 1,051 108 39,469 347 321 7,703 133 8,897 4,427 20,867 LYA HC09 19,910 655 8,818 5,275 1,691 10,444 270 Human Capital (2 of 4) Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Labour Total Force (millions) 1999 HC10 0.23 24.00 6.00 1.00 1.00 1.00 2.00 1.00 11.00 1.00 Primary Teachers Required Certified Qual. to Teach (%) (%) LYA LYA HC11 HC12 92.96 92.96 65.00 100.00 Number of Pupils PrePrimary LYA HC13 33,503 12,308 17,778 247 289,995 85,024 69,425 54,572 164,397 15,028 800 829,384 6,989 100.00 99.75 21.10 46.70 100.00 56.00 97.40 94.70 91.00 99.00 97.10 33.20 100.00 66.10 85.50 78.90 100.00 100.00 12.00 5.00 4.00 1.00 5.00 HC 61.10 89.92 93.30 78.90 74.30 59.70 10.80 99.20 90.90 7,018 85,484 1,558 343,767 98,151 68,108 55,624 11,999 97.00 79.57 79.26 2,251,159 0.25 7.00 91.00 45.40 68.50 100.00 Primary Secondary Tertiary LYA HC14 4,674,947 72,876 78,527 36,896 7,499,303 2,903,923 1,121,866 142,308 382,309 1,357,040 312,671 3,160,907 313,516 656,353 53,631 2,256,185 196,496 3,000,048 2,690,205 140,479 259,509 2,699,788 LYA HC15 2,480,168 49,897 21,192 11,367 4,835,938 1,037,482 115,307 222,079 292,002 189,202 49,221 1,315,342 215,673 5,469 37,924 1,500,072 39,753 379,162 865,042 833,372 121,736 286,405 LYA HC16 347,410 7,676 348 161 850,051 169,665 112,959 29,509 81,588 72,899 8,496 311,743 16,032 49,599 8,475 273,992 2,040 59,824 167,186 121,787 16,213 65,675 34,009,783 14,903,805 2,773,328 Human Capital (3 of 4) Pupils to Schools PrePrimary LYA HC17 Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Primary LYA HC18 303 137 124 ` 149 74 254 85 193 22 25 1,398 110 96 97 46 90 61 240 512 357 428 498 177 131 544 763 587 308 196 161 269 249 32 194 185 338 Tertiary HC19 26,724 3,838 161 47,225 14,139 6,645 29,509 8,159 6,627 8,496 22,267 16,032 5,511 8,475 34,249 2,040 2,301 41,797 20,298 4,053 4,378 14,901 Staff to Schools PrePrimary Primary LYA HC20 LYA HC21 11 Higher Education Population Cumulative Total w/ Tertiary Graduates Tertiary Grad. (%) (/100k people) (/100k people) LYA 1980-1995 1996 HC22 HC23 HC24 1,129 184 10.3 2,090 272 5 15 5 8 4 16 13 3 1 69 5 9 8 1 4 18 17 38 3 20 29 14 5 15 8 9 11 14 4.6 4.1 16.4 2.7 1.3 13.3 0.8 2.8 11 11 14 6.3 678 2,435 1,553 3,069 2,833 4,738 2,105 743 1,147 414 2,126 1,715 944 169 530 1,391 1,320 640 337 91 213 274 657 571 486 209 107 128 101 345 244 163 9 42 200 209 120 74 1,529 224 Human Capital (4 of 4) Grade 1 Net Intake Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Male Female (%) (%) 1994-1999 1994-1999 HC25 HC26 82.0 79.0 Grade 5 Cohort Male (%) 1997 HC27 96.0 98.4 Female (%) 1997 HC28 94.0 99.1 82.0 97.5 95.2 87.0 97.7 98.1 88.0 99.0 63.0 63.0 85.0 98.0 63.0 62.0 30.0 55.0 75.0 30.0 51.0 75.0 87.0 75.0 65.4 73.1 95.6 98.0 82.3 97.0 46.0 91.0 87.0 96.0 83.0 41.0 88.0 85.0 98.0 51.0 74.6 70.1 Pupils with Basic Skills Arabic Language Math (%) (%) LYA LYA HC29 HC30 63.1 57.0 71.4 26.7 43.5 60.6 66.1 76.6 94.5 98.3 92.5 95.7 36.8 26.0 57.3 32.0 98.5 54.3 16.7 98.8 74.6 93.2 90.0 94.7 77.2 77.9 90.0 92.0 96.1 69.2 76.3 82.5 71.3 53.5 27.7 84.5 28.8 51.5 88.1 89.1 63.6 47.2 Process Capital (1 of 2) Total Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States SOURCE PC-1 in largest city (/1000 p.) (/1000 p.) 1999 1999 PC01 PC02 52 55 Telephone Mainlines Waiting Waiting Cost of Cost of Int. Intn'l List Time Local Call Call (3min) Mins/User (000's) (years) ($) ($) (minutes) 1999 1999 1999 1999 PC03 PC04 PC05 PC06 PC07 640.0 6.0 0.02 8.278 90 75 30 87 240 201 101 6 53 90 151 75 232 47 96 94 17 115 165 1290.0 2.3 0.03 29.7 0.0 0.4 0.0 80.0 47.8 17.9 3.9 1.4 >10.0 0.2 0.5 0.03 0.02 0.07 0.03 0.09 0.08 0.07 129 253 927.0 3.1 0.02 9 99 90 332 17 45 140 90 373 77 355.0 2820.0 83.7 0.6 131.0 7.0 >10.0 0.9 0.0 4.5 0.02 0.01 0.03 0.02 0.02 87 127 6314.0 1.4 0.03 7.849 8.011 8.372 8.353 7.634 7.612 8.627 8.092 32 19 258 394 124 78 489 40 463 Computer and Internet Internet Secure PC's Hosts Users Servers (/1000 p.) (/10K p.) ('000's) 1999 2000 1999 2000 PC08 PC09 PC10 PC11 5.8 0.01 20 200 12 12 100 200 7 13 50 50 2 3 16 27.2 10.8 26.4 0.85 0.00 1.45 23.15 11.89 0.01 0.20 0.33 3.00 305 57.4 1.53 300 9 99 76 165 988 109 2.9 14.3 15.3 102.1 107.0 0.00 0.00 0.10 92.13 0.06 5 20 30 400 10 1 4 24 124 25.4 0.67 1153 72 WDI, 2001 WDI, 2001 WDI, 2001 WDI, 2001 WDI, 2001 WDI, 2001 WDI, 2001 12.0 13.9 121.3 46.4 4 1 WDI, 2001 WDI, 2001 WDI, 2001 WDI, 2001 Process Capital (2 of 2) Mobile Phones Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States (/ 1000 p.) 1999 PC12 2 8 0 18 158 194 4 0 13 49 Radio, Television, & Fax Machines Radio TV TV Cable Fax Receivers Sets Subscribers Machines (/1000 p.) (/1000 p.) (/1000 p.) (/1000 p.) 1999 1999 1999 1999 PC13 PC14 PC15 PC16 242 105 0.2 580 472 141 1.9 84 45 317 119 0.5 229 83 271 82 0.1 8.4 678 505 31.6 907 375 1.4 259 140 146 24 1.3 247 115 0.7 607 694 2.7 0 0 6 283 2 450 321 53 272 278 224 355 64 404 262 15 86 70 100 134 29 12 320 184 40 0.0 0.9 1.4 3.4 21.0 0.5 6.6 Newspaper Circulation (/1000 p.) LYA PC17 38 117 38 20 42 377 141 14 1 27 28 161 59 1 27 20 31 170 15 70 Market Capital (1 of 2) High-Technology Exports Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Royalty & License Fees % of Mfg. % of Mfg. Total (A) (B) ($ millions) 1999 MC01 16 (%) 1999 MC02 Receipts 4 (%) 1999 MC03 0.656 3 0 0 15 35 2 1 0.328 0.164 10 118 0 10 0 1.639 18 0 0 0 125 3 0 0.492 Payments ($ millions) ($ millions) 1999 1999 MC04 MC05 47 0 6 329 0 201 Patents Domestic Granted Apps. by USPTO Books Periodicals (/M people) 2000 MC07 42 0.000 1.183 ($) LYA MC08 17 23 ($) LYA MC09 1,410 1 0.079 4,588 2,266 0.311 2.747 1.183 15,137 699 138 0.118 0.000 860 446 8 115 0.000 1.140 1,032 34 8 0.381 0.000 2 560 1,364 0.000 20 0.549 24,748 1998 MC06 494 68 0 90 0 0 45 0 0 6 10 3 46 0 1336 2 0.410 63 548 $000's Spent on Exports 926 381 2 4,363 Market Capital (2 of 2) Citations Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States 93-97 MC10 1,814 9,730 327 1,018 1,576 715 3,031 7,826 852 2,148 1,352 29,050 Meetings Study Abroad Number vs. studying Hosted domestically 2000 MC11 18 9 0 1 143 5 17 6 20 5 3 74 4 0 7 4 1 8 11 46 19 3 404 (%) LYA MC12 7.4 0.9 15.4 12.9 11.9 2.8 6.8 9.4 8.4 Renewal Capital (1 of 3) Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Number of Books National Public Institution Libraries Libraries Libraries ('000's) ('000's) ('000's) LYA LYA LYA RC01 RC02 RC03 623 35 1,154 1,500 706 35,790 1,227 272 2,075 4 228 138 150 101 349 329 4,844 10 2,493 13 2,865 4,403 44,773 Publications Technical Sci & Tech ISI Social Sci. Papers Articles Publications Papers (/M people) 1997 1997 1995 - 2001 1995 RC04 RC05 RC06 RC07 2.063 139 2,480 291 522 9 16 3.925 1,108 16,349 2,091 35 500 84 4.973 177 3,563 278 6.341 173 3,711 324 4.134 81 4,828 110 352 2 72 3.061 271 5,939 554 4.536 53 1,229 89 368 4.755 613 11,260 1,409 15 43 681 101 0.361 57 760 4.180 188 3,400 300 5.245 127 2,216 224 0.125 10 221 3.642 3,123 58,580 5,555 Importing Information Book Periodical Imports Imports ($000's) ($000's) LYA LYA RC08 RC09 9,717 584 4,301 1,038 1,305 13,358 163 3,387 6,734 8,767 320 6,023 28,958 64 21,542 3,703 13,943 2,442 61,373 368 769 432 889 14,642 726 827 5,923 289 570 176,548 36,609 Renewal Capital (2 of 3) R&D Expenditures Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Total % of GNI ($000's) (%) 1996 87-97 RC10 RC11 33,561 3,736 227,499 27,573 20,615 67,113 7,453 16,921 4,304 74,871 10,755 0.22 0.26 0.16 5,461 196,094 10,044 24,184 28,901 10,886 10,297 780,268 Scientists and Engineers Students in # in Tertiary R&D (%) (/M people) 1987-1997 1987-1997 RC12 RC13 58 39 15 41 28 29 30 8 41 41 13 Research and Development # of # of # in # in # in Technicians Researchers Ministry Universities Private Sect. (/M people) (/Million) (/M people) (/M people) (/M people) 1987-1997 LYA 1996 1996 1996 RC14 RC15 RC16 RC17 RC18 529 475 0 27 59 0 459 341 459 94 230 10 71 94 230 362 594 17 0.20 0.30 0.23 16 23 33 24 5 29 30 125 25 57 30 125 188 101 271 8,074 729 215 334 93 130 76 824 56 2,384 662 140 83 112 105 40 750 26 286 0 46 23 0 0 0 52 0 4 308 30 538 0 0 500 210 267 56 204 143 146 218 51 66 0 0 0 0 0 702 335 23 ESCWA, ESCWA, ESCWA, Renewal Capital (3 of 3) Algeria Bahrain Comoros Djibouti Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Arab States Public Expenditure on Education GNP Govn't Tertiary Expenditure Expenditure (%) (%) (% of RC20) 1995-1997 1995-1997 LYA RC19 RC20 RC21 5.10 16.40 73.40 4.40 12.00 31.26 4.80 7.90 5.00 2.50 5.10 14.90 19.80 14.00 8.20 65.90 14.10 40.60 53.00 30.50 32.69 4.50 16.20 24.90 16.40 3.40 7.50 22.80 49.60 40.30 31.60 85.00 53.70 43.80 1.40 4.20 7.70 1.70 7.00 13.60 19.90 20.30 21.60 43.30 43.10 43.40 38.70 80.00 4.81 17.21 47.05 Staff to Pupil Ratio PrePrimary Primary Secondary Tertiary LYA RC22 25.13 LYA RC23 27.35 LYA RC24 17.09 29.63 52.07 33.66 24.18 19.96 24.73 13.18 35.86 28.21 18.63 19.80 26.39 16.28 17.60 0.72 9.61 12.94 18.50 25.72 396.44 22.81 12.38 20.77 31.47 17.89 17.65 50.23 27.63 26.01 41.27 62.07 12.86 19.01 29.13 23.46 2.35 16.07 29.84 19.79 28.16 39.47 18.59 24.07 17.56 20.75 15.48 14.30 7.41 21.01 20.14 21.86 11.10 11.71 38.64 22.17 10.64 LYA RC25 17.45 11.72 19.24 21.41 17.45 7.81 Patents Foreign Apps. 1998 RC26 264 1,139 18 237 12.27 20.30 13.18 17.27 6.30 29.28 35.32 18.34 1,286 67,713 128 8 70,793 Sampling for the NICI 10 of 22 countries representing 77% of the population Total Population (millions) 2000 Algeria Egypt Jordan Kuwait Morocco Oman Saudi Arabia Sudan Tunisia Yemen Sample Arab States Total GDP ($ U.S. billions) 1999 30.31 67.89 4.91 1.91 29.88 2.54 20.35 31.10 9.46 18.35 47.872 89.148 8.073 29.572 34.998 14.962 139.383 9.718 20.944 6.825 216.70 401.500 Development of the NHCI Index Metric H1 HC02 H2 HC05 H3 HC11 H4 HC16 H5 HC23 H6 HC25 H7 HC26 Algeria Egypt Jordan Kuwait Morocco Oman S. Arabia Sudan Tunisia Yemen 0.633 0.553 0.898 0.823 0.489 0.719 0.770 0.571 0.708 0.462 0.124 0.077 1.000 0.151 0.135 0.114 0.114 0.241 0.183 0.236 0.930 0.998 0.467 1.000 0.910 0.990 1.000 0.611 0.933 0.743 0.498 0.544 1.000 0.672 0.453 0.274 0.585 0.084 0.560 0.156 0.368 0.793 1.000 0.923 0.374 0.135 0.308 0.173 0.430 0.110 0.82 0.88 0.63 0.63 0.55 0.75 0.87 0.46 0.87 0.83 0.79 0.85 0.63 0.62 0.51 0.75 0.75 0.41 0.85 0.51 Weighting 30% 10% 10% 15% 15% 10% 10% H1 H2 H3 H4 H5 H6 H7 HC02 literacy rate HC05 number of tertiary schools per capita relative to highest value HC11 percentage of primary teachers with required qualifications HC16 number of tertiary students per capita relative to highest value HC23 cumulative tertiary graduates per capita relative to highest value HC25 percentage of male grade 1 net intake HC26 percentage of female grade 1 net intake NHCI TM 0.586 0.647 0.842 0.726 0.481 0.537 0.638 0.382 0.644 0.410 Development of the NPCI Index Metric P1 PC01 P2 PC08 P3 PC09 P4 PC10 P5 PC12 P6 PC13 P7 PC14 P8 PC17 Algeria Egypt Jordan Kuwait Morocco Oman S. Arabia Sudan Tunisia Yemen 0.217 0.313 0.363 1.000 0.221 0.375 0.538 0.038 0.375 0.071 0.048 0.099 0.115 1.000 0.089 0.218 0.473 0.024 0.126 0.882 0.000 0.037 0.063 1.000 0.014 0.130 0.066 0.000 0.004 0.003 0.013 0.056 0.047 1.000 0.032 0.376 0.282 0.003 0.061 0.010 0.013 0.051 0.114 1.000 0.082 0.310 0.253 0.000 0.038 0.013 0.357 0.468 0.400 1.000 0.364 0.895 0.473 0.401 0.330 0.094 0.151 0.171 0.118 0.728 0.166 1.000 0.378 0.124 0.144 0.042 0.101 0.101 0.111 1.000 0.072 0.074 0.156 0.072 0.082 0.040 Weighting 20% 10% 15% 10% 10% 10% 10% 15% P1 P2 P3 P4 P5 P6 P7 P8 PC01 telephone mainlines per capita relative to highest value PC08 personal computers per capita relative to highest value PC09 Internet hosts per capita relative to highest value PC10 Internet users per capita relative to highest value PC12 mobile phones per capita relative to highest value PC13 radio receivers per capita relative to highest value PC14 television sets per capita relative to highest value PC17 newspaper circulation per capita relative to highest value NPCI TM 0.117 0.168 0.178 0.973 0.130 0.385 0.327 0.073 0.158 0.125 Development of the NMCI Index Metric M1 MC01 M2 MC08 M3 MC11 NMCITM Algeria Egypt Jordan Kuwait Morocco Oman S. Arabia Sudan Tunisia Yemen 0.042 0.004 0.236 0.150 0.036 1.000 0.016 0.000 0.757 0.000 0.000 0.027 1.000 0.013 0.013 0.016 0.004 0.000 0.035 0.002 0.122 0.433 0.712 0.646 0.509 0.324 0.040 0.053 1.000 0.034 0.062 0.183 0.655 0.307 0.219 0.434 0.022 0.021 0.637 0.014 Weighting 30% 30% 40% M1 M2 M3 MC01 high-technology exports as a percentage of GDP relative to highest value MC08 number of patents granted by USPTO per capita relative to highest value MC11 number of meetings hosted per capita relative to highest value Development of the NRCI Index Metric R1 RC08 R2 RC09 R3 RC10 R4 RC12 R5 RC16 R6 RC17 R7 RC21 Algeria Egypt Jordan Kuwait Morocco Oman S. Arabia Sudan Tunisia Yemen 0.243 0.180 1.000 0.355 0.738 0.297 0.528 0.053 0.838 0.145 0.031 0.095 0.099 0.511 1.000 0.410 0.014 0.188 0.710 0.210 0.275 0.999 1.000 0.889 0.838 0.281 0.551 0.405 0.540 0.591 0.580 0.150 0.280 0.290 0.410 0.130 0.170 0.160 0.330 0.050 0.066 1.000 0.027 0.041 0.102 0.007 0.038 0.062 0.033 0.025 0.199 1.000 0.059 0.035 0.315 0.011 0.226 0.060 0.091 0.028 0.734 0.141 0.530 0.305 0.403 0.316 0.438 0.433 0.434 0.800 Weighting 10% 10% 30% 10% 15% 20% 5% R1 R2 R3 R5 R6 R7 NRCI TM 0.254 0.699 0.480 0.411 0.564 0.187 0.309 0.204 0.395 0.267 RC08 book imports as a percentage of GDP relative to highest value RC09 periodical imports as a percentage of GDP relative to highest value RC10 total R&D expenditures as a percentage of GDP relative to highest value RC16 number of ministry employees in R&D per capita relative to highest value RC17 number of university employees in R&D per capita relative to highest value RC21 tertiary expenditure as a percentage of public education funding Countries Ranked by NICI NHCI Kuwait Jordan Tunisia Egypt Oman Morocco S. Arabia Algeria Yemen Sudan FC TM 0.726 0.842 0.644 0.647 0.537 0.481 0.638 0.586 0.410 0.382 NMCI TM 0.307 0.655 0.637 0.183 0.434 0.219 0.022 0.062 0.014 0.021 NPCI TM 0.973 0.178 0.158 0.168 0.385 0.130 0.327 0.117 0.125 0.073 NRCI TM 0.411 0.480 0.395 0.699 0.187 0.564 0.309 0.254 0.267 0.204 NICI TM 0.604 0.539 0.459 0.424 0.386 0.349 0.324 0.255 0.204 0.170 FC 1.000 0.229 0.345 0.198 0.773 0.198 0.626 0.293 0.047 0.038 FC01 national financial capital, GDP per capita relative to highest value Is the NICI a good predictor of a nation’s wealth? Structural Model of NICI National Process Capital National Market Capital H4 H6 H1 H2 National Human Capital National Financial Capital H5 R2 = 20.9% H3 Hypothesis coefficient H1 0.450 National Renewal Capital H2 0.106 H3 0.775 H4 0.279 H5 0.273 H6 0.277 Clustering by NICI and GDP National Process Capital National Market Capital Relative FC GDP / capita Kuwait 1.0 National Human Capital Oman National Financial Capital S. Arabia R2 = 20.9% 0.5 Tunisia National Jordan Renewal Capital Morocco Algeria Yemen Sudan Egypt 0.0 0.0 0.5 NICITM 1.0 Conclusions National intellectual capital accounts for nearly one-fifth of the explanatory power of the financial wealth of an Arab country. Human capital is the pre-eminent antecedent for the intellectual wealth of a nation. As a nation’s citizens codify their knowledge into the systems and processes of a country (H1), those structural capital assets can then be renewed for the future (H2) by investing in research and development. A feedback loop further develops a nation’s human capital (H3). Eventually, the codified knowledge base of a nation can be marketed (H4) within the global and domestic economies. As the human capital continually develops (H5), a nation’s ability to market its intellectual wealth will result in a higher financial well-being (H6). Future Research • Larger sample across many more nations (allows for bench-marking). • Longitudinal nature of impacts (i.e., time lag effects of constructs and measures). • Alternative financial capital measures • In-depth intra-national analysis (i.e., within industrial sectors or subgeographies) • Intermediating effects (i.e., poverty, gender empowerment, health) Background Information Conceptual Model - Firm Market Value Financial Capital Intellectual Capital Human Capital Structural Capital Customer Capital Innovation Capital Organizational Capital Process Capital Conceptual Model - Nation National Wealth Financial Wealth Intellectual Capital Human Capital Structural Capital Market Capital Renewal Capital Organizational Capital Process Capital Developed Nations Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden UK USA Descriptive Statistics (1 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States GDP/Cap PPP $ 25,693 27,840 3,976 24,996 24,223 25,103 23,626 26,755 20,070 29,918 8,377 23,356 24,277 23,509 34,142 2000 Pop Millions 19 31 1,263 5 59 82 58 127 4 4 146 4 9 60 282 2015 Pop Millions 21.9 34.4 1410.2 5.2 61.9 80.7 55.2 127.5 4.1 4.7 133.3 4.8 8.6 60.6 321.2 2015 - 2000 % Change 14% 12% 12% 0% 5% -2% -4% 0% 7% 5% -8% 19% -3% 1% 14% Descriptive Statistics (2 of 2) Unemploy Youth Unemp Urban Pop Svc Empt Life Exp Rate % Rate % % of total % of total Years 6.3 14 85 73.6 78.9 Australia 6.8 14 77 74.1 78.9 Canada 3.1 3 32 12.9 70.3 China 9.8 22 67 66.0 77.5 Finland 9.5 27 76 74.0 78.9 France 7.5 8 88 62.6 77.4 Germany 10.7 33 67 62.2 78.7 Italy 4.7 9 79 63.1 80.7 Japan 6.0 14 87 67.6 78.2 New Zealand 3.4 10 76 73.8 78.6 Norway 13.3 7 73 58.8 65.3 Russia 3.2 8 100 71.1 77.7 Singapore 4.7 14 83 72.2 79.6 Sweden 5.5 12 90 72.8 77.3 United Kingdom 4.0 10 77 74.5 77.1 United States Prime Minister’s Report Category Canada's Performance Top Performer Economy Labour markets Average Top U.S. U.S. Innovation Environment Education Poor Poor Average Sweden Sweden U.S. Health Average Japan Financial Capital Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States GDP/Cap PPP $ 25,693 27,840 3,976 24,996 24,223 25,103 23,626 26,755 20,070 29,918 8,377 23,356 24,277 23,509 34,142 GDP, PPP $ billions 493 856 5,019 129 1,427 2,062 1,363 3,394 77 134 1,219 94 215 1,404 9,613 Market Cap (listed) % of GDP 95.6 122.3 53.8 241.7 111.8 67.8 71.5 65.2 37.3 40.2 15.5 165.7 144.4 182.2 153.5 Human Capital (1 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States Adult literacy Secondary Public $ on Educ. Pupil:Teacher % age > 15 enrolment % % of GDP Ratio 99.9 79 4.8 4.8 99.9 94 5.6 5.6 84.1 50 2.3 23.7 99.9 95 7.1 17.8 99.9 94 5.9 5.9 99.9 88 4.6 4.6 98.4 88 4.7 4.7 99.9 97 3.5 3.5 99.9 84 7.2 7.2 99.9 96 7.7 7.7 99.6 78 92.3 75 25.4 99.9 100 8.0 8.0 99.9 94 4.7 4.7 99.9 90 5.0 5.0 Human Capital (2 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States Teachers' comp Educ exp Edu Exp % of Educ Exp as % of GNP as % of Gov Exp 5.5 13.5 18.0 6.9 12.9 21.5 2.3 12.2 17.3 7.5 12.2 18.9 6.0 10.9 17.0 4.8 9.6 11.3 4.9 9.1 21.0 3.6 9.9 7.3 17.1 7.7 16.8 17.6 3.5 9.6 25.3 3.0 23.3 12.3 8.3 12.2 19.1 5.3 11.6 15.4 5.4 14.4 Process Capital (1 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russian Federation Singapore Sweden United Kingdom United States Telephones Moblies TV sets Cable TV PCs Radios Internet hosts per 1,000 per 1,000 per 1,000 per 1,000 per 1,000 per 1,000 per 1,000 525 447 738 68 465 1,376 85.7 677 285 715 259 390 1,047 77.4 112 66 293 61 16 339 0.1 550 720 692 184 396 1,564 102.3 579 493 628 45 304 950 19.1 611 586 586 247 336 948 24.8 474 737 494 1 180 878 17.8 586 526 725 147 315 956 36.5 500 563 522 4 360 997 90.6 532 751 669 184 491 915 101.1 218 22 421 78 43 418 2.2 484 684 304 63 483 672 45.2 682 717 574 199 507 932 67.3 589 727 653 57 338 1,432 28.2 700 398 854 252 585 2,118 295.2 Process Capital (2 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russian Federation Singapore Sweden United Kingdom United States Electricity consumption IT exp. IT Exp. / capita kwh per capita % of GDP US$ 8,884 9.7 1,922 15,260 8.4 1,911 758 5.4 46 14,366 7.8 1,835 6,392 8.7 1,916 5,690 7.9 1,798 4,535 5.7 1,068 7,443 8.3 3,118 8,426 13.6 1,771 24,248 6.9 2,445 4,050 3.7 63 6,641 9.7 2,104 14,138 10.4 2,674 5,384 9.1 2,187 11,994 8.1 2,926 Internet users (active) % of population 34% 41% 2% 37% 14% 29% 23% 37% 22% 49% 2% 30% 46% 30% 34% Market Capital (1 of 1) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States High-tech exports License fees receipts Outgoing Int. telecom Daily newspapers % of Mfg. exports US$ per person mins / subscriber per 1,000 15.22 17.9 136 293 18.60 44.7 347 159 18.58 0.1 11 27.33 219.9 164 455 24.26 39 129 201 17.71 34.4 184 305 9.19 9.8 101 104 28.35 80.5 35 578 10.16 12.9 340 207 17.13 29.3 234 581 13.53 0.6 29 105 63.00 538 298 22.00 144.2 209 432 32.00 123.9 227 329 34.00 134.3 153 213 Renewal Capital (1 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States R&D Exp. R&D Scientists Science students % of GDP per million % of tertiary 1.7 3,320 24.2 1.7 3,009 15.7 0.1 459 53.0 2,668 36.6 2.2 2,686 48.0 2.3 2,873 39.2 1.0 1,322 30.8 2.8 4,960 26.7 1.2 2,197 19.9 1.7 4,095 26.1 1.1 3,397 48.0 1.1 2,182 18.5 3.8 4,507 37.6 1.8 2,678 29.0 2.5 4,103 36.5 Renewal Capital (2 of 2) Australia Canada China Finland France Germany Italy Japan New Zealand Norway Russia Singapore Sweden United Kingdom United States License fees paymt. Trademarks filed US$ per person per million 52 3,065 106 1,313 1 131 106 1,828 35 1,708 66 1,044 21 778 87 961 80 4,327 87 3,026 0 199 0 3,921 101 1,755 103 1,186 57 926 Patents granted per million 75 31 1 187 205 235 13 994 103 103 131 8 271 82 289 Development of the NFCI United States Finland United Kingdom Singapore Canada Sweden France Australia Japan Norway Germany Italy New Zealand China Russia GDP/Cap PPP GDP, PPP Market Cap (listed) $ $ billions % of GDP 34,142 9,613 153.5 24,996 129 241.7 23,509 1,404 182.2 23,356 94 165.7 27,840 856 122.3 24,277 215 144.4 24,223 1,427 111.8 25,693 493 95.6 26,755 3,394 65.2 29,918 134 40.2 25,103 2,062 67.8 23,626 1,363 71.5 20,070 77 37.3 3,976 5,019 53.8 8,377 1,219 15.5 NFCI 3.64 3.02 1.64 1.16 1.11 .89 .32 .15 -.03 -.29 -.38 -.63 -2.07 -4.09 -4.45 Development of the NHCI Sweden Norway Canada Finland Italy France New Zealand United States United Kingdom Germany Australia Japan Russia Singapore China H1 99.9 99.9 99.9 99.9 98.4 99.9 99.9 99.9 99.9 99.9 99.9 99.9 99.6 92.3 84.1 H2 100 96 94 95 88 94 84 90 94 88 79 97 78 75 50 H3 8.0 7.7 5.6 7.1 4.7 5.9 7.2 5.0 4.7 4.6 4.8 3.5 H4 8.0 7.7 5.6 17.8 4.7 5.9 7.2 5.0 4.7 4.6 4.8 3.5 2.3 25.4 23.7 H5 12.3 18.0 17.3 11.3 18.9 15.4 19.1 17.0 21.0 17.6 25.3 21.5 H6 8.3 7.7 6.9 7.5 4.9 6 7.3 5.4 5.3 4.8 5.5 3.6 3.5 3 2.3 H7 12.2 16.8 12.9 12.2 9.1 10.9 17.1 14.4 11.6 9.6 13.5 9.9 9.6 23.3 12.2 NHCI 1.27 .71 .49 .46 .44 .40 .40 .31 .20 .19 -.01 -.10 -.22 -1.86 -2.69 Development of the NPCI United States Norway Sweden Finland Canada Australia Japan United Kingdom Germany New Zealand Singapore France Italy Russia China PC1 700 532 682 550 677 525 586 589 611 500 484 579 474 218 112 PC2 398 751 717 720 285 447 526 727 586 563 684 493 737 22 66 PC3 854 669 574 692 715 738 725 653 586 522 304 628 494 421 293 PC4 252 184 199 184 259 68 147 57 247 4 63 45 1 78 61 PC5 585 491 507 396 390 465 315 338 336 360 483 304 180 43 16 PC6 2,118 915 932 1,564 1,047 1,376 956 1,432 948 997 672 950 878 418 339 PC7 295.2 101.1 67.3 102.3 77.4 85.7 36.5 28.2 24.8 90.6 45.2 19.1 17.8 2.2 0.1 PC8 11,994 24,248 14,138 14,366 15,260 8,884 7,443 5,384 5,690 8,426 6,641 6,392 4,535 4,050 758 PC9 8.1 6.9 10.4 7.8 8.4 9.7 8.3 9.1 7.9 13.6 9.7 8.7 5.7 3.7 5.4 PC10 2,926 2,445 2,674 1,835 1,911 1,922 3,118 2,187 1,798 1,771 2,104 1,916 1,068 63 46 PC11 34% 49% 46% 37% 41% 34% 37% 30% 29% 22% 30% 14% 23% 2% 2% NPCI 1.53 .88 .85 .64 .58 .36 .34 .18 .05 -.05 -.20 -.30 -.76 -1.92 -2.17 Development of the NRCI Japan Sweden United States Norway Canada Finland Germany United Kingdom Australia New Zealand France Russia Singapore Italy China RC1 2.8 3.8 2.5 1.7 1.7 2.3 1.8 1.7 1.2 2.2 1.1 1.1 1.0 0.1 RC2 4,960 4,507 4,103 4,095 3,009 2,668 2,873 2,678 3,320 2,197 2,686 3,397 2,182 1,322 459 RC3 26.7 37.6 36.5 26.1 15.7 36.6 39.2 29.0 24.2 19.9 48.0 48.0 18.5 30.8 53.0 RC4 87 101 57 87 106 106 66 103 52 80 35 0 0 21 1 RC5 961 1,755 926 3,026 1,313 1,828 1,044 1,186 3,065 4,327 1,708 199 3,921 778 131 RC6 994 271 289 103 31 187 235 82 75 103 205 131 8 13 1 NRCI 1.97449 1.45856 .59575 .47169 .28614 .18849 .17207 .12403 .02155 -.16539 -.22504 -.77830 -.83511 -1.17329 -2.11564 Development of the NMCI Singapore Finland United Kingdom Sweden United States Japan Norway Canada Germany France New Zealand Australia China Italy Russia MC1 63.00 27.33 32.00 22.00 34.00 28.35 17.13 18.60 17.71 24.26 10.16 15.22 18.58 9.19 13.53 MC2 219.9 123.9 144.2 134.3 80.5 29.3 44.7 34.4 39 12.9 17.9 0.1 9.8 0.6 MC3 538 164 227 209 153 35 234 347 184 129 340 136 11 101 29 MC4 298 455 329 432 213 578 581 159 305 201 207 293 104 105 NMCI 2.11881 1.30552 .78730 .72343 .53448 .43603 .19953 -.19449 -.38188 -.45042 -.60013 -.69522 -.95016 -1.38288 -1.44992 Countries Ranked by NICI NHCI NPCI NRCI NMCI 1.27062 .84501 1.45856 .72343 Sweden United States .30747 1.53446 .59575 .53448 -.10460 .33760 1.97449 .43603 Japan .46333 .63571 .18849 1.30552 Finland .71069 .88401 .47169 .19953 Norway United Kingdom.20407 .18041 .12403 .78730 .49292 .58380 .28614 -.19449 Canada .18696 .04741 .17207 -.38188 Germany -.01249 .36316 .02155 -.69522 Australia New Zealand .40285 -.04699 -.16539 -.60013 .40326 -.30324 -.22504 -.45042 France -1.85927 -.20475 -.83511 2.11881 Singapore .44235 -.76415 -1.17329 -1.38288 Italy -.22235 -1.92334 -.77830 -1.44992 Russia -2.68582 -2.16912 -2.11564 -.95016 China NICI 1.07440 .74304 .66088 .64827 .56648 .32395 .29209 .00614 -.08075 -.10241 -.14386 -.19508 -.71949 -1.09348 -1.98019 NFCI .89213 3.63611 -.02992 3.02013 -.28583 1.64398 1.11303 -.38255 .15366 -2.06696 .31559 1.15927 -.62521 -4.45314 -4.09029 Is the NICI a good predictor of a nation’s wealth? Structural Model of NICI National Process Capital National Market Capital H4 H6 H1 H2 National Human Capital National Financial Capital H5 R2 = 20.9% H3 Arab Region G8 + Path coefficient coefficient National Renewal Capital H1 0.450 0.742 H2 0.106 0.868 H3 0.775 0.771 H4 0.279 0.645 H5 0.273 -0.418 H6 0.277 -0.670 Modified NICI ? National Process Capital Poverty H7 National Market Capital H4 H6 H1 H2 H10 H8 National Health Gender Human Capital H9 H5 H3 H1 H3 H2 H4 H3 H5 H4 H6 Region 0.450 coefficient Arab coefficient 0.106 0.450 0.775 0.106 0.279 0.775 0.273 0.279 0.277 0.273 0.277 -0.418 -0.670 Path H1 Path H2 R2 = 20.9% R2 = 83.3% National Renewal Capital Empowerment Arab Region National Financial Capital G8 + G8 + coefficient coefficient 0.742 0.868 0.742 0.771 0.868 0.645 0.771 -0.418 0.645 -0.670 G8 + G8 + coefficient coefficient 0.742 0.868 0.742 0.771 0.868 0.645 0.771 -0.418 -0.670 0.645 0.578 -0.578 H7H5 H8H6 H9H7 H10 H8 -0.418 0.454 -0.544 0.208 0.454 0.913 0.208 -0.544 Poverty UN Human Poverty Probability not People lacking Population below Index @ surviving to 60 functional skills poverty line 15.8 12.8 20.7 16.9 United States 30.1 20.1 Russian Federation 15.1 9.9 21.8 13.4 United Kingdom 12.9 9.1 17.0 14.3 Australia 12.3 9.5 16.6 12.8 Canada 12.2 9.1 14.2 Italy 10.7 18.4 New Zealand China Singapore 11.2 8.2 11.8 Japan 11.1 11.4 8.0 France 10.5 10.6 14.4 7.5 Germany 8.8 11.3 10.4 5.1 Finland 7.5 9.1 8.5 6.9 Norway 6.7 8.0 7.5 6.6 Sweden Poverty 1.61749 1.25961 1.23980 .56012 .32925 .28208 .26560 .00000 .00000 -.08392 -.31247 -.51778 -1.28109 -1.55023 -1.80848 Health Italy Germany Norway United States France Sweden Australia New Zealand Japan Finland Russia Canada United Kingdom Singapore China Health Exp. Baby measles Physicians Life Expectancy % immunized per 100,000 per Capita PPP Years 1,676 554 90 78.7 2,697 350 95 77.4 3,182 413 93 78.6 4,271 279 92 77.1 2,288 303 84 78.9 2,145 311 96 79.6 1,714 240 89 78.9 1,163 218 83 78.2 2,243 193 94 80.7 1,704 299 96 77.5 421 97 65.3 1,939 229 96 78.9 1,675 164 91 77.3 678 163 93 77.7 40 162 90 70.3 Health 2.18991 1.33894 .93127 .71905 .57583 -.02859 -.18666 -.22436 -.35919 -.37005 -.42537 -.51542 -.73388 -1.21061 -1.70086 Gender Empowerment Finland Sweden Norway New Zealand Australia Canada Germany China United States United Kingdom France Singapore Russia Italy Japan UN GEM % Seats in Female pros Income Value parliament % of total ratio 0.803 36.5 27 0.70 0.824 42.7 49 0.68 0.837 36.4 49 0.64 0.765 30.8 54 0.67 0.759 26.5 48 0.69 0.777 23.6 53 0.62 0.765 31.0 50 0.50 21.8 0.757 13.8 54 0.62 0.684 17.1 45 0.61 10.9 0.592 11.8 42 0.50 0.450 6.4 64 0.64 0.539 9.1 44 0.44 0.527 10.0 45 0.44 Gender Empower 1.51276 1.40361 1.08853 .70486 .70061 .33363 .13904 -.00311 -.07301 -.11351 -.36633 -.95806 -1.39917 -1.47306 -1.49677 Clustering by NICI and GDP Kuwait 1.0 Oman Relative GDP / capita ? S. Arabia 0.5 Tunisia Jordan Morocco Algeria Yemen Sudan Egypt 0.0 0.0 0.5 NICI 1.0 G8 + by NICI and NCFI United States 4.0 Finland Relative NFCI United Kingdom France Singapore Australia 0.0 Canada Germany Italy China -4.0 -2.0 Sweden Japan Norway New Zealand Russia -1.0 0.0 1.0 Relative NICI 2.0 Further Developments ... • IICR KM Diagnostic Tool (business and government) – Health, financial services, software, chemical, hospital • IICR KM Seminars (business and government) - certification • Education (McMaster University, Tangonow.net) • eFlow Audit (codified proxy of e-mail flow) • World Congress (http://worldcongress.mcmaster.ca) Jan 19-21, 2005 • Journal of Intellectual Capital (http://www.emeraldinsight.com/jic.htm) • 1 text Oxford U. Press with Choo, 1 books with BH KMCI Press • Knexa.com (Tribute incentive methodology, ICUs, rewards) • NICI (National Intellectual Capital Index) for United Nations • Longitudinal causal mapping with integration (RBC project) • Citation impact (literature and cases) • Knowledge auction experiments Knexa Solutions • New knowledge assets with old value measures • Market mechanism “the invisible hand of the market” • Exchanges – what’s next? … talent markets … total markets • Internet Auction Model – E-bay, Yahoo, Bid.com, etc. … stickiness, bid-ask • Cost / benefit micro calculation • ICUs – electronic tokens and the reward of redemption 5 To Do’s Immediately 1. 2. 3. 4. 5. Raise awareness about knowledge era challenges Action: Fully engage employees about KM Don’t throw training dollars down the toilet Action: Benchmark your T&D / FTE investment Attempt to recoup talent that leaves the firm Action: Implement universal exit (entry) interviews Accelerate your knowledge absorption rate Action: speed reading test (www.bontis.com/speedread) Be mindful of technology investments Action: Test that search costs are reduced Thank you! Speaking, training Keynotes, seminars Consulting, surveys www.NickBontis.com Dr. Nick Bontis Ph.D. DeGroote Business School McMaster University Tel: (905) 525-9140 x23918 Fax: (905) 304-7734 Director, Institute for Intellectual Capital Research Chief Knowledge Officer (CKO), Knexa Solutions Associate Editor, Journal of Intellectual Capital nick@bontis.com www.NickBontis.com