{"id":3961,"date":"2018-10-03T07:03:54","date_gmt":"2018-10-03T12:03:54","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=3961"},"modified":"2020-12-19T20:54:30","modified_gmt":"2020-12-20T01:54:30","slug":"do-you-realize-the-value-of-developing-becon-behavior-cognitive-network-capital-in-the-digital-age","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/do-you-realize-the-value-of-developing-becon-behavior-cognitive-network-capital-in-the-digital-age\/","title":{"rendered":"Do You Realize the Value of Developing BeCoN (Behavior, Cognitive, Network) Capital in the Digital Age?"},"content":{"rendered":"

\"brain-2029391_1280\"At the pinnacle of the Industrial Revolution, not many organizations realized the complex subtleties of the Financial<\/strong> Capital<\/strong><\/a>.\u00a0 The organizations that were able to develop innovative methodologies to administer their financial capital outsmarted the rivals by achieving a competitive edge.<\/p>\n

At the advent of the 20th century, two more forms of capital became known and gained prominence, in addition to the financial capital. These assets included: the Human<\/strong> Capital<\/strong><\/a>\u2014the value acquired as a result of development and deployment of employees<\/a> and contractors\u2014and the Natural<\/strong> Capital<\/strong>\u2014the manageable value of land, water, and other environmental resources.\u00a0 Altogether, these 3 assets are categorized under the Traditional Capital.<\/p>\n

In this digital age, with the tremendous pace of technological innovation, 3 additional types of capital\u2014referred to as the \u201cBeCoN Capital<\/a>\u201d or the \u201cDigital Age Capital\u201d\u2014 have been found to be essential for creating value and staying ahead of the curve, together with the Traditional Capital:<\/p>\n

    \n
  1. Behavior Capital <\/strong><\/li>\n
  2. Cognitive Capital <\/strong><\/li>\n
  3. Network Capital <\/strong><\/li>\n<\/ol>\n

    \"BeCoN<\/a><\/p>\n

    Behavioral Capital <\/strong><\/h2>\n

    Behavior Capital is gathering and demonstrating data to track the behavior of people, companies, and products. The application of behavioral data has reached new levels, nowadays. Apple watch monitors the heart rate, Google monitors every activity that anyone does on its platform, and GE\u2019s aircraft engine business uses sensors built into its engines and turbines to describe what the engine is doing in runtime and generate high levels of behavior capital.<\/p>\n

    Cognitive Capital<\/strong><\/h2>\n

    Cognitive Capital is the set of algorithms that signify codified information streams pertaining to people and organizations in the electronic world. With each passing day, these algorithms are becoming increasingly complex and mature enough to make decisions on their own, or to execute a machine-learning process leading to automated, constantly-progressing sequences.<\/p>\n

    There are many practical utilities of the Cognitive Capital. For instance, Bridgewater, a large hedge fund, employs artificial intelligence-based algorithms to make decisions. GE\u2019s aircraft engine business utilizes machine-learning algorithms to conduct diagnostics and engine controls. Likewise, Amazon drives algorithms\u2014utilizing specific product sales and customers\u2019 purchase data\u2014that modify prices, formulate deals, and present better offers in real time.<\/p>\n

    Network Capital <\/strong><\/h2>\n

    Network Capital is the set of connection points that an organization can utilize to develop and implement a successful strategy<\/a>.\u00a0 The Network Capital is built by establishing strong connections, affiliations, and linkages.\u00a0 Organizations with large network of affiliates, followers, and loyal customers have a profound competitive advantage over the rest.<\/p>\n

    For instance, over the years, Netflix has developed scores of followers who watch shows there, share messages with one another on social media about the programs watched, and rate programs.\u00a0 This network not only increases the value of an individual show, but also add to the value of Netflix\u2019s programming.<\/p>\n

    Similarly, the venture capital firm, SignalFire, maintains an extensive database of talent\u2014i.e., software engineers, data scientists, and designers\u2014with profiles of more than 10 million engineers in its database. SignalFire uses this information as an input into investment decision making\u2014along with performance metrics\u2014to make sure it is backing the best teams. The firm utilizes its network of resources and other websites (such as, Bitbucket and Github) to identify the contribution of its engineers to academia or to open-source projects, and how successful their prior companies were through their contribution.<\/p>\n

    The Bionic Companies<\/strong><\/h2>\n

    The 3 forms of BeCoN Capital<\/a> are most effective when applied together. But their understanding is as limited as the financial, human, and natural capital were in the 20th century.\u00a0 Organizations that are able to develop sound capabilities in the Traditional Capital as well as the BeCoN Capital are referred to as the \u201cBionic Corporations\u201d.\u00a0 Some of these Bionic Corporations have grown manifolds in a very short time period\u2014e.g., Apple, Alphabet, Amazon, Facebook, Microsoft\u2014and account for around 13% of the capitalization of the entire U.S. stock market.<\/p>\n

    The Bionic companies have expanded rapidly by utilizing their physical assets\u2014such as, people, land, and funds and investments effectively\u2014as well as by establishing and linking digital cross-boundary platforms and tools that make the most of their BeCoN Capital.\u00a0 For\u00a0these organizations, developing BeCoN Capital is a\u00a0foundational to their overall Digital Transformation Strategy<\/a>.<\/p>\n

    How to Develop the BeCoN Capital<\/strong><\/h2>\n

    Senior executives in traditional companies who are aspiring to develop their BeCoN Capital to reinforce their growth should start by finding answers to the following key questions:<\/p>\n