Saturday, November 21, 2009

Organizational Capital versus Widgets

EconLog has had several posts about the recent productivity growth measured (of the US economy) and how it relates to 'organizational capital'. The idea is that productivity doesn't necessarily measure more labor on the part of the (remaining) workers; rather it can include substantial improvements in things like business processes, procedures – i.e. how a business operates. See this post for a recent example.

I have a perfect example from my own job: software as organizational capital. I work for a small software company and my job, as Support Director, has consisted in large part of developing improvements for our existing processes, like building the software from the latest 'source' version (e.g. making the new version of the program based on the accumulated changes made to fix bugs and add new features), or tracking the time we spend on specific projects or tasks. More and more, 'organizational capital' will be 'informational capital' in the form of software developed by internal programmers within a company!

Those spreadsheets that the Excel-guru in your company makes to track earnings, sales, etc. – encourage them to make them even better! Invest in your internal organizational-capital accumulators!

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