THE CHALLENGES OF COMPETITIVENESS IN THE CARIBBEAN TOURISM INDUSTRY: MANAGING INTELLECTUAL CAPITAL

K. Michael Haywood Professor School of Hotel and Food Administration University of Guelph Guelph, Ontario, Canada

The island nations of the Caribbean are under extreme pressures to enhance the competitiveness and future prospects of their tourism industries. The challenges in ensuring industry survival are profound. Indeed, as hurricanes of industrial and societal change pass through the islands, there is no other option but to appreciate and master the managerial arts of renewal transformation and sustainability. This mastery will necessitate the aggressive pursuit of clearer national and regional visions of tourism Once people have a shared view, tourism's contributions can be enhanced. Visioning is facilitated through an improved understanding of the activities that determine improvements to industry competitiveness, and can be implemented coherent objectives that are set and pursued by tourism's stakeholders.

Achievement of objectives or improvements to competitiveness can be measured through a balanced set of "higher order" performance drivers. As argued in this paper, assurance of competitiveness requires development of a new, if not radical model for realizing tourism's potential. This model necessitates leveraging the islands' most precious but hidden resource or asset - their intellectual capital. Appreciation of this capital occurs with the judicious application of knowledge management. In this way Caribbean tourism can be pulled into and become a proud member of the "New Economy".

INTRODUCTION AND RATIONALE The necessity to move quickly with determination and resolve is obvious. The Caribbean region has not benefited fiom the recent break-neck growth rate of the world economy. Massive flows of world trade and investment rarely touch the shores, and the trading system is not responsive to the needs of the Caribbean. Consequently economies, with a limited range of value-added economic activities, remain fiagile. The islands' natural comparative resource advantages, however, do provide widespread appeal to tourists seeking momentary escapades in the sun and sea. As a result the economic development and prosperity of many Caribbean nations is virtually and unavoidably tourism based.

The attractiveness and accessibility of the islands has resulted in a flurry of tourism demand that has brought about impressive inflows of investment capital. Provision of resorts, attractions, infrastructure projects, and services have provided visitors with security, comfort and, hopefully, memorable island experiences. The derived benefits from tourism have grown to the point that tourism is now the leading or a major contributor to the gross national product of most Caribbean nations.

Unfortunately some of the benefits achieved are quite hollow. The industry is highly seasonal and cyclical in nature so capacity is underutilized; visitors are perceived as fickle and disloyal, and repeat visitation is weak; developers are viewed as selfish and uncaring of the environment; and, tourism activities are insufficiently integrated into domestic or regional economies. The local populace does not derive adequate compensation or a share of the reward; they feel marginalized by the industry. Furthermore, tourism's impacts (for example, low multipliers, high leakage rates, environmental destruction, insufficient local control) are anything but benign. According to many concerned observers and participants, these issues, left unchallenged and unattended, make tourism inherently mustainable.

Confounding the problem are a multitude of other issues. Changing demand conditions influence the mobility of visitors who must weigh a myriad of factors and make trade-off decisions in choosing where, when and how to travel. Supporting and complementary tourism businesses could provide quantum benefits and national advantages, but too often the important transportation and tour operating businesses are owned and operated by foreigners in the visitor-generating countries. This is not to say that Caribbean countries are incapable of deriving advantages &om their geographic clustering of resorts, attractions and amenities. It is just that the synergy and value-creation potential of cooperation, collaboration, and networks at regional, national and international levels has yet to be hlly exploited. Barriers to the creation of value is forcing the Caribbean tourism industry to identifl where else in the tourism value system (Porter, 1990) it can create new value and derive competitive advantage. Obviously most emphasis has been focused at the point of service delivery, but there are other streams of activities that provide new opportunities to boost value.

Visitors and business-to-business customers are more becoming more sophisticated. They make choices on their priorities not simply their needs. Responsive companies and destinations are realizing that responding to these priorities is not simply a process of creating new benefits and service features. The task, and a daunting one at that, is the creation of new business designs or business models that generate profit for each provider and the greatest utility for all customers who are part of tourism's entire value system Understanding customers at the level of their decision making goes beyond the purview of marketing research; it requires significant relationship building (Shapiro and Sviokla, 1993) and results in mutual learning, an exchanges of ideas, joint development of products and services, efficiency, trust and respect.

Structural forces, particularly revolutionary changes in information and cornrnunications technology, rapid scientific and technological advance, and increasing global competition are driving economic transformation and have significant impact on industry competitiveness and business and customer relationships (Slywotzky and Morrison, 2.301). As these forces demand the movement of Caribbean tourism into the digital world (beyond the simple use of the internet), tourism policy will have to be re-shaped. Consequently, over the next decade, tourism's value and business models will be radically altered. With these changes it is becoming exceedingly evident that there is a need for the industry to engage in an interdependent, symbiotic relationship with a wider

variety of stakeholders. Indeed the industry is a system of explicit and implicit "contracts" with each of its stakeholders - visitors, citizens, industry employees and their representatives, developers, managers, government, marketing and distribution channel members, environmentalists, educational institutes, trade and research associations. Tourism's untapped potential will emanate fiom initiating, developing and nurturing profitable and satisfj.ing relationships with stakeholders.

Another fbndarnental shift finally on the radar screen is recognition that manipulating and exploiting tourism resources (natural, material, cultural and human) at will, just to satisfy visitor needs, has deep and permanent consequences. Tourism and other forms of economic development have the potential to destroy more than they create. Abuse and misuse of these resources irreparably damages the inherent beauty of the islands, along with the soul of Caribbean nations and their citizens. It undermines all attempts at building trust and credibility. Acknowledging the environment and the sustainability crises must lead to the rejection of "values-fiee" tourism policies and strategies. Sustainable environmental codes and accords are being put into place, but the sustainability message still has to permeate the behaviour and actions of all stakeholders.

Caribbean nations face an uphill battle as they attempt to move fiom the confines of dependence and unsustainability to the fieedoms of interdependence and sustainability. Movement along this fiont has begun with the development of industrial policies for tourism For example, through membership in the O.A.S. and other forums, tourism has been declared a priority economic sector. The A.C.S. has resolved to improve the airlift into the Caribbean. The Caribbean Health, Safety and Resource Conservation Project is helping make the region the safest, happiest and healthiest of comparable destinations in the world. With the help of the I.L.O. effort is underway to improve working conditions in the industry. Attempts are being made in numerous countries to optimize tourism investment policies. As part of a joint USALD/UNEP Caribbean Environmental Network (CEN) environmental quality and coastal and marine natural resource protection is being pursued. The Caribbean Action for Sustainable Tourism under the Caribbean Hotel Association has been launched in order to educate and develop practices of the region's hoteliers. There is a Caribbean Tourism Credentialing Program. Tremendous effort has gone into developing tourism policies on other fronts: cruise ships, taxation, culture, waste, airports, ports, marketing, tour guides, and so on. Numerous government and NGO organizations, along with the Caribbean Tourism Organization, are worlung diligently on these and other initiatives.

It is time to ask, however, whether and to what extent these leadership and policy initiatives are resulting in the development of a preeminent, world-class tourism industry in the Caribbean? Are these initiatives responsive to and in sync with the massive economic, social political and technological transformations that have been underway for the past decade? There is a lot of good intention and rhetoric, but it appears as if the pursuit of improved competitiveness stall revolves around the creation of new tourism projects. on leveraging efficiency gains and competing for market share by lowering prices. The fascination with price competitiveness (Dwyer, Forsyth and Rao, 2001) is extremely evident. Emphasis on the search for volume growth is contained in all national

Strategic Plans for Tourism. The question that arises is whether this growth objective is achieved at the expense of creating real growth in value? Studies of corporations reveal that undue emphasis on sales volume is a self-defeating prophecy that more often than not leads to low-margin activities and no-profit zones (Slywotzky and Morrison, 1997).

Prudence demands that more effort be put into finding the keys that will unlock the potential profitability and sustainability for tourism that exists within the islands. Answers need to be found to such questions as: Where is the profitability and sustainability today? How does it really happen? Where will it be tomorrow? How should profit and sustainability be identified, determined and measured, and by whom? Until recently tourism Caribbean tourism has focused primarily on economic returns; but economic growth and change are no longer predictable and manageable; tourism planning has become more complex.

Today tourism is entering a new-world order that embraces non-economic goals along with the economic. It is characterized not by equilibrium but by fluidity. There are new rules of engagement. Partner and stakeholder interests are more intense and ultimately determine the issues that affect performance. In fact determination of what creates or results in high value, profit and sustainability is being challenged. Even the arenas in which high valuelprofit zones occur keeps changing and moving. As such there is a need to re-invent industry and business designs. At its most basic level, market share thinking is yielding to a newly defined "sustainable profit-centric" approach. Tourism's leaders must become less obsessed with volume and more focused on a new duality - visitors (customers) and the values (community) (Haywood, 1988 and 1990).

VALUES LED VISION FOR TOURISM A visitor and value-based focus for tourism extends beyond the usual mission statement approach which most Caribbean nations and organizations have excelled at articulating. What is called for is a shared clarity of vision for tourism - what it is and what it is capable of achieving. When there is lack of perspective no one sees beyond individual tasks, activities and jobs; no example is set in terms of values, standards, behaviour and the importance of the visitor or customer.

The visioning process can be conceived in two ways: (1) Thinking into the hture - creating a destination for the industry. The clearer the image of the goal, the more force the fbture exerts on the present, pulling a country or organization into that desired state - k Zssence like the force of gravity. (2) Visioning, however, should also be viewed metaphorically as a field. Vision is limited if it merely a linear destination. Conceived as a field of vision the strategic intent is to permeate a country's or organization's psyche with the notion of tourism's true potential. Acceptance and realization of a vision comes a b u t by involving all stakeholders in its creation and use (providing expectations of behaviours and rewards), disseminating it throughout the community and tourism organizations, reaching all comers, and making the vision available everywhere (Wheatle y, 1 994).

The process of creating a field of vision for tourism requires serious work simply because the peoples of the Caribbean already carry in their minds their own field of vision. For example, the concepts of neo-colonialism, servility, and exploitation are common sentiments. Understanding of the paradox of existing mindsets may be appreciated through the work of Castell (1996, 1997, and 1998), who argues that "two macro trends ... characterize the Information Age: The globalization of economy, technology, and communications; and the parallel affumation of identity as the source of meaning" (1998, 3 1 1). In other words, as a community-based activity, tourism cannot be managed, let alone understood, without considering the depth of cultural sensitivity associated with tourism activity. Without a coherent, omnipresent field of vision for tourism, behaviour, as expressed through hospitality and courtesy towards strangers, is unlikely to be genuine. Integrity and respect are diminished. More profound is the loss of an opportunity to build a community of cooperation, and a partnership and commitment among developers, employers and entrepreneurs to a community, in which tourism, as an industry, promises to provide real and sustainable value and profits for all.

Managing through vision, as a destination and a field of vision, necessitates discussion and inclusion of values and principles. These might be similar to those in the Caribbean Code of Conduct for Tourism and the recently tabled Global Code of Ethics for Tourism (World Tourism Organization); they provide an outline of principles and protocol for implementation. Tourism leaders, however, might question whether values, vision and ethics are too soft, and thereby incapable of providing a semblance of control. Many people feel more secure by all things visible, by structures that are tangible, and by rules and regulations that are clearly spelled out. Today, however, the old rules no longer seem relevant. The world is in a perpetual state of evolutionary change that requires subtler forms of order. This phenomenon is particularly evident in scientific studies of chaotic systems. All of them display self-organizing mechanisms (Gleik, 1987; Nonaka, 1988). Indeed these and similar studies suggest that it is information that is the basic ingredient of life that governs behaviour. Ours is not a life or universe of things, but a universe of the "no-thing" of information, where meaning provides the "software" for the creation of ideas and the development of structures (Talbot, 1986, 157- 158).

Tourism displays chaotic characteristics; it is boundaryless, dynamic and in transition. Yet industry leaders are still bent on applying rigid, top-down approaches to planning and management without significant results. Perhaps tourism would flourish if it were re- fiamed around self-organizing principles. The process might begin with recognizing that tourism, as a community-based industry, must be more responsive to the priorities of visitors and a wide range of stakeholders, while being dedicated to ideals expressed and communicated through a field of vision. Re-fiaming tourism fiom this perspective is but a first step in pulling Caribbean tourism into the "new economy". But, it will require a determined effort to identify, manage and measure its knowledge components that, as will be made evident, are embedded in the notion of competitiveness - the concept and quest that is constantly on the industry leaders and change agents.

TOURISM COMPETITIVENESS The economic system throughout most Caribbean nations is market based. The marketplace establishes an economic framework within which firms compete on the basis of a number of factors: price, quality service, etc. Competitiveness is usually viewed, therefore, as a measure of the ability to succeed in this context. From a definitional point of view this suggests that competitiveness is, ".....the ability to design, produce and market goods and services, the price and non-price characteristics of which form a more attractive package than those of competitors" (W.C.R. 1990,199 1 and 1992). A more robust definition is "the capacity to achieve high rates of growth on a sustainable basis" (Porter et al, 2000). These high rates of growth would be predicated on national economies upgrading technology, either through innovation at home or through the rapid and extensive adoption of technologies developed abroad. The current 2000 G.C.R. utilizes two indices: The Growth Competitiveness Index aims to measure the factors that contribute to fbture growth of an economy, measured by the rate of change of GDP per person. The Current Competitiveness Index aims to identify the factors that underpin high current productivity and hence current economic performance, measured by the level of GDP per person.

Unfortunately much of the tropical world faces special disadvantages in achieving superior competitiveness ratings. Competitiveness cannot be viewed merely fiom a domestic perspective, since the majority of products, agricultural and natural resource commodities, tourism and financial services, are fundamentally international in scope. The consequence is greater susceptibility to macroeconomic instability. Suffice to say many countries often succumb to short term crises and vulnerabilities associated with exchange rate overvaluation, a weak domestic banking sector and high amounts of short debt in relation to hard currency reserves of a country's central bank. Leaders without effective policies, or entrenched elites resisting change, also account for part of the problem.

Global competitiveness, however, should never be viewed as an end in itself but a means toward an end, more specifically the requirement for enhanced social well-being. Wealth creation is necessary to fimd social services and to produce a high and rising standard of living. It also appears to be a necessity for society to ultimately achieve its higher-order goals, including personal fieedom, security, and a high and rising quality of life that goes beyond materialism

In the context of the tourism industry, and its linkages within national economies, it is unfortunate that competitiveness has come to imply the need to drive down costs to the lowest common denominator - reducing wages and social entitlements of workers. Consequently some people would argue that the industry, despite its significance, has remained under-optimized and under-capitalized in the broadest sense, and is incapable of achieving its true potential. Not forgotten are the larger, hidden social costs: unemployment, under-employment, reduced productivity, and diminished national competitiveness. As low-wage and service-oriented the industry gets little respect

If tourism's competitive potential were pursued as a means toward an end, greater emphasis would have to be given to increased productive capacity, superior technology, continuous skill-enhancing and a concern with social equity and environmental preservation. This latter approach would lead to a value enhancing society - a viewpoint advocated by Crouch and Ritchie (1 999) in their work linking tourism with competitiveness and societal prosperity. For example, if the Current Competitiveness Index were applied to tourism, efforts would be made to measure the conditions that would determine the industry's and the nation's sustainable level of productivity. As a micro-economic index emphasis would be placed on two levels: the sophistication with which a nation's tourism enterprises compete, and the quality of the nation's businessltourism environment. The sophistication of tourism business enterprises would have four components: (I) the level and utilization of production, process and distribution technologies; (2) the extent of marketing; (3) the uniqueness of products and services; and (4) the approach to the global characteristics of the industry and its marketplace. The purpose would be to gauge the knowledge, technology, physical and natural resource capital, and managerial skills reflected in operating practices and strategies.

The business environment would include measures of the infrastructure, skills, technology stocks, rules and regulations, and institutions that constitute the context in which tourism operates. The productivity with which organizations compete is partially governed by activities outside the organization, as well as by the organization's own choices. The quality of the business environment would be based on four components: (1) the quality of the inputs (human resources, physical infrastructure, availability of information); (2) the availability and sophistication of local suppliers and the presence of clusters of related firms providing tourism and management services; (3) the sophistication of demand for the "best" that tourism can offer around the world, including the stringency of regulatory requirements; and (4) the policies governing the vitality of competition and the incentives for productive modes of rivalry and for encouraging "complementarity" and higher levels of cooperation.

Because of the need to achieve a high rate of growth in G.D.P. per capita, the Growth Competitive Index would identlfy possible micro-economic and macroeconomic growth determinants. This index in Porter's model includes measures for economic creativity that emphasize economically effective innovation or effective transfer of technology; measures for finance focusing on high rates of saving and investment; and measures of economic integration, particularly domestically and regionally.

These measures of competitiveness as applied to tourism, arguably, would need to account for tourism's price-insensitivity and its susceptibility to changes in exchange rates. Indeed competitive pressures ensure that a nation's or a company's comparative advantage is quickly lost as competitors act to lower costs, compete on price and continue the innovation process. Nevertheless international competitiveness, especially when viewed within a bro<?der and nobler context of activities that enhance the overall quality of life - pursuit of sustainable development and social justice - would spur a commitment to gaining the high ground, being the best. A revitalized pursuit for competitiveness,

coupled with a shared vision is undeniably a knowledge-intensive quest. Considerable intellect, across a spectrum of industry stakeholders, will have to be leveraged.

INTELLECTUAL CAPITAL AND TOURISM Efforts to improve the competitiveness and sustainability of tourism are absolutely indispensable to the well being of Caribbean nations. Yet despite best efforts - increasing accommodation capacity, strengthening air transport, marketing throughout different outbound markets, development of professional training in tourism services, integration with other sectors of the economy, and the elaboration of different laws regulating the sector - inherent problems remain. Improving competitiveness through policy initiates is a "no win" game when the following events are commonplace: Work bogs down due to bureaucratic stupor and is frequently duplicated. Visitor and distribution channel relations are strained when expectations are not known or communicated. There is a lack of trust. Emphasis is on competition not cooperation or collaboration. Mistakes are repeated. People and companies hide their faux pas. Good ideas do not get shared.

The list of problems goes o n For example, competition continues to be based on price despite the fact that nobody wants to operate as a commodity industry. Few people know how to price for service because few people understand visitors' priorities, let alone the principles of yield management. Keeping up with market leaders gets harder, despite the fact that it is possible to outwit them - consider the success of Southwest Airlines. People are dependent on a few key individuals; perhaps there is a lack of teamwork or decisions get made too high in the organization. New products and projects are slow to get launched because of a lack of market intelligence, or a slow cornrnercialization process. Capacity management and the problems associated with business cycles are taken too lightly. Environmental laws are not enforced, so there is non-conformance. Repeat visitation rates remain low because there is inadequate attention focused on visitors, and there are no concerted attempts to track or measure satisfaction.

These problems are not due to a lack of policy or planning. They can all be traced back to an inability or unwillingness to share knowledge and an inability and unwillingness to work cooperatively. The consequences are immense. Each contributes to the incremental demise of competitiveness. When these problems occur there is something inherently misguided about the ways in which companies, or the industry, manage brainpower. Common sense dictates resolution of these issues, but progress is slow. The primary reason is that the framework for solutions, and the tools and measurements used to achieve value, economic progress and sustainability are inadequate to meet the demands, desires, and realities of the various stakeholders each demanding improved performance fiom tourism At the heart of the problem are mindsets that are dictated by tradition, and out-of-date models.

For instance, at the organizational level the current model of accounting reveals that value lies in assets - current, futed and investment assets. No credence is given to the asset value of intellectual property, ideas, inventions, knowledge, or brands. Indeed labour costs, training, research and development are characterized as expenses that must

t?e carefully controlled as they act to diminish profits. Similarly, traditional measures of economic progress, like the gross domestic product (GDP), consider the monetary transactions in economies and provide inadequate and insufficient information on the genuine well-being of people and the natural resource base. In a perverse way, environmental and social costs actually contribute to a rise in GDP as money to correct the problems changes hands. As costs, however, they are ignored in the GDP.

Fortunately, in many communities around the world, there are initiatives under way to provide new indicators of genuine progress and sustainability (Pembina Institute, 1999). At the corporate level many jurisdictions have passed legislation making corporate boards of directors personally liable for organizational compliance with environmental, health and safety regulations. Consequently, compliance reporting has become an additional board responsibility. Now many leading companies have added additional performance "domains": customer satisfaction, employee satisfaction, risk management, shareholder value and environmental performance.

It was the advent of "virtual" companies (Davidow and Malone, 1992) producing virtual products high in added value, rich in variety, and available instantly in response to customer needs, that led to a new understanding of assets and value. Building on a set of common beliefs, many corporations realized that the dynamic fiictors responsible for the creation of wealth, underlying even the visible and tangible buildings and products, were in effect intangible. Following the lead of Leif Edvinsson (Edvinssen and Malone, 1997) of Skandia AFS, a leading Swedish insurance company, a number of corporations, for example, GE Capital Dow Chemical, the Canadian Imperial Bank of Commerce, Clarica and Hughes Aircraft, set out to identiq and measure these intangibles. Their discovery led to the realization that the keys to improved competitiveness were contained, but often hidden, in employees, customers, systems, procedures, and brands. The question that they faced was how to use these keys to unleash, what Leif Edvinssen termed, intellectual capital. Senior executives, in the firms mentioned, tended to agree that at least eighty percent of the worth of their firms was tied up in intellectual capital Measured as the difference between the book value of the firm as compared to its market value, it was realized that the multiples could be considerably higher if intellectual capital could be more effectively utilized.

From a broader tourism industry point of view, it should be evident that intellectual capital provides an exciting perspective with which to examine, understand and improve the performance of the industry and tourism enterprises. In other words, value resides not only in terms of tangible assets (eg. hotels, airports, marinas), and financial capital (eg. stocks, bonds, investments), but more precisely in terms intangible assets which can act to enhance the tangible. These intangible assets - the intellectual capital - are commonly divided into three areas:

- "Human Capital". It identifies the mindsets and competencies (skills, know- how, experience and creativity) of individuals to provide solutions to visitors and to improve industry and organizational performance.

- "Structural or Organizational Capital". It refers to the supporting infrastructure or capability of tourism enterprises through their strategies,

structures, culture, systems, procedures and activities to meet market requirements and socio-economic and environmental goals and objectives

- "Customer Capital". It represents the value of customer/visitor relationships as revealed through their coverage, penetration, loyalty, durability and profitability, as pertains to either the destination and/or individual businesses.

A strong argument can be made for inclusion of a fourth component, "Community Capital". Caribbean communities are repositories of knowledge, culture and wisdom. This capital is available for use when there is commitment to and empowerment of a community; when there is a commitment to achieve sustainability and eco-efficiency of the environment through technologies and systems, and when cultural awareness is brought alive. The distinctiveness of the Caribbean islands is their underlying beauty and attractiveness, and their people and culture. These elements provide the rationale for tourism Destroy them and the Caribbean soul withers; the true value components of tourism disappear. Savour and embellish them, and the spirit of the community rises; the true essence of the Caribbean nations comes to the fore. Tourism flourishes

KNOWLEDGE MANAGEMENT The intellectual capital model can be conceived as a set of capital stocks and flows between these stocks. "Knowledge", as a fiee public good that engages minds, is what flows between the human, organizational customer and community components. These flows are integrative because value is created at the convergence of these capital stocks. And, as the flow of knowledge intensifies, the ability and pace of learning quickens. This means that it is folly to treat these capital stocks as independent. Examination of the implications for human resource management and distribution or channel management in the Caribbean tourism industry should provide some clarity.

First of all it is important to go over some basic considerations. The major goals being pursed in virtually every Caribbean nation are: Improve the competitiveness of the tourism industry; enhance its economic returns; meet expectations of all stakeholders; provide superior value to visitors and customers; and ensure environmental sustainability. Any knowledge initiative should be based on generating individual and organizational capabilities that would allow the destination (country) or business enterprise to address these goals, given the current and evolving economic, environmental societal, and technological challenges.

The beginning point in the management of knowledge is always strategic. These goals are best screened through a field of vision. The application of knowledge to tourism requires a culture of shared values, shared ownership, collaboration and self-initiative. If this process is effective the notion of "dependency" begins to unravel. Furthermore, true collaboration among organizations and individuals works when there is a belief in partnership and inter-dependence. Individual and organizational success is ultimately tied to the success of tourism as an industry and vice versa. In other words considerable effort must be put into establishing an alignment of values and goals to ensure that learning contributes to enhanced organizational and industry-wide capabilities.

The other consideration is the role of technology. Tourism technologies are re-writing the rules of engagement occurring at all levels in the industry (Slywotzky and Morrison, 200 1). Knowledge management depends on establishing a technology infkastructure that enables people to translate information into knowledge. Establishment of a tourism- based intranet nationally or regionally is a very convenient way to access this knowledge. Regardless of the system used, effort needs to be put into facilitating, gathering and disseminating knowledge throughout the industry or within individual organizations. The objective is simple: Ensure that every person has complete access to information as part of their work or interest in tourism

Knowledge can be categorized into two parts. The first deals with explicit information that deals with facts, rules, regulations and procedures. It is usually termed "codified" knowledge. It identifies "best practices", and these should be readily available and easily retrieved. The second type of knowledge is implicit or "tacit" knowledge that people have accumulated and learned through experience. It involves the sharing of wisdom, norms, traditions, culture and represents a "community of practice" that people in need of advice can inquire about.

Application of knowledge management principles to human resource management is critical because they provide the potential to transform the approach to managing this critical resource. But, there are obstacles that need to be overcome. First of all, it is important to believe that people are reservoirs of knowledge, creativity and change. In many tourism organizations this belief is not widely held. Then there is the perpetual challenge facing all organizations: How to get people's talents energized, their abilities unlocked, and their skills well honed. As Deming (1994) noted, the implementation of an effective quality management system is the result of an intrinsic ethos of producing quality for its own sake based on the pride and self-esteem of the workers. Then there is the problem of knowing how to encourage the sharing of codified and tacit knowledge that must be supplemented with contextual knowledge and practices. For Caribbean nations the work of re-creating the more universal institutional schema within the local matrix of economic, political and cultural factors is taking place. But fbrther changes to the institutional framework could be required because a shift to a knowledge based tourism industry requires flatter learning structures such as networks of semi-autonomous teams along with greater emphasis on intrinsic learning.

At the organizational level a basic model for enhancing strategic capabilities of human capital necessitates a move ffom the old "employment contrzct" to a new "partnership contract". The difference is far ffom subtle. The old model implies an exchange of loyalty for a guaranteed fbture. Individuals expect to be told what to do, and they operate fiom a position of entitlement. There is a tendency to hoard knowledge; in fact any request for knowledge may be an admission of ignorance. On top of all this is the notion that knowledge is "branded" - it belongs to organizations. It should be obvious that this contractural mold is extremely hard and difficult to break.

Efforts to enhance competitiveness fiom a human resource standpoint start when tourism organizations actively encnurage the achievement of higher levels of visitor satisfaction.

From visitors' points of view this satisfaction is a consequence of the seamlessness with which the travel, sojourn and all components of the trip come together. Ultimate satisfaction depends on the receptivity and ability of hosts to exceed expectations and address their individual priorities. The quality of the relationships with agents, tour operators, customs officials, hotels, and attractions also depends on the appropriateness and effectiveness of operating systems. A "partnership" model, therefore, is achieved in an environment in which individual employees share a sense of purpose, and exchange a commitment to create value for visitors and the organization for the opportunity to develop their capabilities. Though the process requires self-initiative, its success is tied to careful crafting of policies and procedures associated with career development, capability mapping, recruitment, staffing and achievement management. Obviously there have to be clear ties between activities and outcomes - outcomes that create a visitor- centered, environmentally conscious, high performing and sustainable organizations, that provide superior value for all stakeholders.

Enhancing the stock of human capital requires an external as well as an internal focus. The external focus is on visitors and on those firms and agencies that are also instrumental in delivering visitor-perceived value. The emphasis is on generating the ability of individuals and organizations, collectively, to gain knowledge about and fiom visitors that can be used to create mass customization (Peppers and Rodgers, 1997). Equally important, though, is offering knowledge to visitors and partnering agencies. It creates additional value to the stock of "customer capital". And, when knowledge is applied to the improvement of systems and procedures there is a simultaneous improvement to "structural or organizational capital". An internal focus refers to those investments in improving the competencies of all those people associated with the industry. This is accomplished through providing easy access to codified and tacit knowledge, learning fiom simulations and creating careers based on knowledge management. Again the value of the industry's intellectual capital appreciates.

The distribution or channel management process for Caribbean nations necessitates another timely application of knowledge management. With the degree of destination choice available in the market place nothing is more important than the creation of "customer capital" on a sustained basis. As a result of every visit, "customer capital" is either enhanced or depleted. This places the distribution process and all the channel members at the center of a destination's capability to create value. This task is becoming increasingly complex. On one hand the pursuit of individual lifestyles and vacation interests, along with pervasive new technology that makes their realization possible, now creates a need for customization (Peppers and Rogers, 1997). This means that organizations and destinations must excel in the knowledge management approach that delivers the most value to visitors one at a time. The challenge of trying to accomplish this feat requires all channel members to show commitment and a sense of ownership for the outcome of each visit. Because channel members profile and present destinations to prospective visitors, they provide the prism through which potential visitors perceive the destination. The quality of the channel member-visitor interface and the partnership between the destination or host and its channel members, therefore, is exceedingly important.

These ~artnerships or alliances have not been carefully managed in the past and often lead to practices that diminish the value offered to visitors. Consequently the economic performance of all those involved has been less than it could be, and the value of "customer capital" falls. To optimize this value the relationship has to move fiom being counter-dependent (in which all parties question everything, argue as to who owns the customer and do not feel a sense of trust), to a point of interdependence (in which all parties realize that their partnership produces the most visitor perceived-value through close collaboration). So how can channel members and organizations in destinations work together to create more value? Gaining a high trust climate suggests an alignment of values, vision and strategies and a degree of mutual understanding. Application of organization learning principles (Senge, 1990) could lead to the resolution of issues in relationships and challenges encountered in the marketplace. Fostering a durable sense of partnership also requires mutual exploration of the possibilities that can be realized with a high level of cooperation. Through these dialogues there will be an exchange of tacit knowledge, an affumation of values and principles, and a joint desire to better understand the customer. Consequently the sharing of knowledge generates improvements in intellectual capital, particularly "customer capital". Further energizing occurs through customer relationship marketing (CRM) tools and brand management activities (Knapp, 2000). And, all efforts to improve contractural arrangements, and systems and procedures flow into "structural capital".

MEASURING TOURISM'S INTELLECTUAL CAPITAL As corporate and societal growth becomes increasingly based on knowledge and other intangible assets, intellectual capital accounts need to be created in order to inform about the composition and importance of intellectual capital. It is this capital that is embodied in the skills, knowledge and experiences of people and in organizational procedures, systems and routines. As a major factor in the production, change and innovation of tourism services these accounts identify hidden values and could be used by investors, banks, and other stakeholders to evaluate performance and the potential for growth and development. Intellectual capital is important then because it links the present with the future; it balances the short-term objectives with l o n g - t k goals. This accounts for the differences between book value (financial capital) and market value. Intellectual capital, therefore, refers to the hture through a presentation of growth prospects. Taken a step further intellectual capital must be managed over the long-term; it is developed and embodied over time. In fact, as opposed to tangible capital the more frequently it is used the more its value appreciates.

A coherent measurement fiamework that fits a knowledge-based tourism industry has not been developed. Most "intangible measures" are hard to design. The problem lies with what to measure and outcome interpretation, Another problem is that intellectual capital is not simply a stock of assets but part of a process whereby the various types of intellectual capital interact with each omer and with tangible assets. Intellectual accounts cannot stand alone. They become important only when seen in context: That is, there must be a fit with the tourism industry within the national environment, a fit with the

competitive field, as well as alignment with the vision field. Seen this way, intellectual capital fosters a 'hew reality" for Caribbean destinations as they learn to operate through knowledge about visitors, the competencies of individuals, systems and processes, the community, and the environment.

As mentioned previously, organizations such as the Pembina Institute (2000) are working on the creation of genuine progress indicator accounts. These national accounts provide interesting models for the tourism industry. They attempt to measure progress f8t. beyond the purview of more typical tourism satellite accounting models. At the organizational level an approach to measurement that has gained popularity is the Balanced Scorecard (Kaplan and Norton, 1996); for example, it is employed by companies such as Hilton and Marrioott. While not designed to measure and publish information on intangible assets, it does provide a more "balanced view" on internal performance measurement by trying to lift non-financial ratios and indicators fiom an operational level to the strategic level of organizations. This strategic approach provides an initial point of departure but there is little if any consideration given to the "knowledge perspective" of an organization - that people are wealth creators, or that knowledge or people's competencies are sources of sustainable wealth creation.

The Skandia Navigator is a more appropriate, and constantly evolving, measurement tool utilized by this Swedish insurance firm (Edvinssen and Malone, 1997). Its utility emanates fiom its ability to organize and guide users to the right body of measurements or "meta-indices" that highlight an organization's intellectual capital strength over time and up-to-the-minute. The Navigator provides the tourism industry with an example of what could become a universal yardstick for examining value creation. Indeed, when there is a coupling of competitiveness measures, progress measures and measures of environmental sustainability, it is possible that the Caribbean tourism industry could develop their own version of "tourism navigator" indices. This report would have a financial focus, a customer (visitor) focus, a process focus, a human and community focus, an environmental focus, a competitiveness focus as well as a renewal and development focus.

RESOLVING THE COMPETITIVENESS CHALLENGE Globalization, intensity of competition, technological innovat ions, sustainability challenges, and quality of life issues are forcing Caribbean nations to question the fundamentals of how the tourism industry should operate and business be conducted. Response to these competitiveness challenges requires shifts of mindsets that begin with appreciation of tourism as a complex system of capital accounts - physical natural, community, organizational, human, and customer. Knowledge acts as the driving force that generates powers to deliver value to visitors; to enhance the ability of everyone to be and do their best; and, to create a truly sustainable industry in which all stakeholders can achieve their goals.

For tourism to be perceived as knowledge-based industry leaders must find ways to leverage vast stores of information and expertise. Knowledge management will need to

be institutionalized throughout the industry and most organizations in order to realize a broad scope of benefits. Individuals from different disciplines, teams and sites will have to work together to share and improve their collective knowledge, so that this knowledge can be applied nationally and throughout the Caribbean in a repeatable and sustained manner. In essence this requires development of knowledge communities who through incentives and motivation create the opportunity to share knowledge. Basic ground rules may need to be established, along with clarification and definition of what knowledge to share. In essence, the Caribbean tourism industry needs to form a brain trust dedicated to advancing individual and organizational learning.

Determination as to the scope of knowledge to be shared should be based on priority requirements. To survive and excel in this rapidly changing industry this means paying attention to the following key drivers of change:

- Innovation. To quickly develop the products, processes, and services that partners and visitors want at a competitive price; to find new solutions to old problems; to adapt solutions to changing circumstances; and to apply the lessons of experience.

- Responsiveness. To give visitors and all customers the services and features they want at the places the want to be; to implement speedily; to streamline processes; and to eliminate the costs of transformation by learning and benefiting fiom lessons learned by others.

- Productivity. To improve practices that are tailored to accommodate regional variations; to create a hmework and culture for collaboration, particularly throughout the Caribbean; and to continually improve operational efficiency and productivity. ;

- Competency. To bring productive resources together and to develop leading- edge and differentiated thinking that is valued in the marketplace; to foster the rapid transfer of experience and ideas that can be applied in a consistent manner; to prepare people to anticipate, drive and support or respond to change; to ensure the availability of complete and objective information about core competencies.

- Sustainability. To ensure that the natural resource base on which tourism is anchored and developed remains healthy and vibrant; to improve the consistency of the fit among all tourism activities with the natural and cultural milieu; improve the fit between policies, plans, and practices aimed at enhancing sustainability as an over arching goal; improve the inter- relationship between long-term, organizational profitability and environmental sustainability.

The ability to learn, collaborate, and innovate faster than competitive tourism regions is the only sustainable source of competitive advantage. Even infrastructure, long considered the backbone of tourism, requires the application of intellectual capital to ensure its sustainability. Expedience is of vital importance as customers, suppliers and business partners have become accustomed to accessing information quickly. The internet has been instrumental in this regard. But it should be recognized that the internet has also reduced the level of intermediation in the marketplace. As a result tourism

businesses are under pressure to re-align their visitor and customer services in order to achieve loyalty and retention. Tourism organizations must have mechanisms in place to capture and communicate the thoughts and feelings of visitors. This will require systems to quickly transform knowledge into new services and corrective action.

.Application of intellectual capital through knowledge management techniques is likely to be enigmatic, however, unless the following paradox is resolved. For decades the Caribbean tourism industry was in a highly dependent, defensive and compliant mode. For example, visitors were lured through incentives, as were investors; and tour operators negotiated fiom positions of power. Everyone was demanding this or that. Responses to this grating deference swung the pendulum towards independence with very mixed results. Governments wrestled back control of the industry, but visitors were often made to feel unwelcome. Partners became co-dependent and did not trust each other. Only now are Caribbean tourism leaders and policy makers achieving a balance between these two extremes. Put another way, there is recognition that tourism requires an inward as well as outward orientation. The balance is being achieved through interdependency based on trust and understanding. Feelings of true ownership occur when individuals pursue their own initiatives and do so with a common vision. The reward is ownership and realization of the value created within an organizational or industry context. It is achieved and optimized with visitors and others who are co-contributors within tourism's value system. When there is this degree of alignment then intellectual capital fosters true value enhancement.

Healthy interdependence results fiom a high degree of sharing, listening and trust. It is achieved through a common vision and recognition that competitiveness for the Caribbean tourism industry is ultimately knowledge based. Industry leaders have a . opportunity, dare it be said, an obligation, to access, use, leverage and measure this intellectual capital in such a way that value throughout the Caribbean tourism industry is enhanced. In this way all stakeholders can achieve their goals and objectives. The competitiveness of the Caribbean industry is not in question; it is the will of the industry.

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