Intellectual capital organization

Intellectual Capital Organization

Akbar RoshanzamirMaster student of HR in Management Faculty

Tehran University

“Intellectual capital is like a newly discovered, still uncharted ocean, and few executives understand its dimensions or how to navigate it.”

- Thomas Stewart

What is Intellectual Capital?

“Intellectual material - knowledge, information, intellectual property and experience - that can be put to use to create wealth” – Thomas Stewart

“Representation of the financial value that human innovations, inventions, and intelligence bring to a business enterprise.” Source: H.P. Agency

Intellectual CapitalKnowledge with potential for value

Example: Ideas in people, processes and customers

Intellectual AssetsKnowledge providing value

Example: Implemented know-how

Intellectual PropertyKnowledge articulated with legal ownership

Examples: Patents, trademarks, trade secrets and copyright

• “In many cases, knowledge firms such as Microsoft, Xerox, Dow Chemical, Hewlett-Packard, Eastman Chemical and others have their marketplace value at a price far higher than their balance sheets warrant”

• - Sullivan

“A company’s value is more than the tangible assets, the source of its value and wealth is no longer the production of material goods but the creation and manipulation of its intangible assets”

- Goldfinger

Skandia Concept of Intellectual CapitalMarket Value

Financial Capitalvalue of all physical and monetary assets

Intellectual Capital

Human Capital‘thinking’• competence (knowledge and skills)• attitude (motivation, behaviour, conduct)• intellectual agility (innovation, imitation, adaptation)

Structural Capital‘non-thinking’

Customer (Relationship) Capitalcustomers, suppliers, shareholders, alliance partners, other stakeholders

Organisational Capital• infrastructure• processes• culture

Innovation Capitalrenewal and development value

Process Capital

Intellectual Property Intangible Assets

Developed by Leif Edvinsson

Adam and Oleksak Concept of Intellectual Capital

Market Value

Intellectual CapitalFinancial Capital

Human Capital Structural Capital Relationship

Capital Business Model

Management

Employees Processes

Intellectual Property

Customers

Brand

Network

Current Concept of Intellectual Capital

Market Value

Intellectual CapitalFinancial Capital

Human Capital

Structural Capital

Relationship Capital

Spiritual Capital

Management

Employees Processes


Customers

Brand

Network

Business Model

Human Capital

This indicates tacit knowledge, skills, abilities and experience embedded in individuals within an organization. It stands out as collection of competencies based on skills, knowledge, abilities including leadership qualities of management and general attitudes characterized by motivation in the firm as well as intellectual agility for adaptation, innovation and cross-fertilization.

Structural CapitalIt represents knowledge and rules embedded within

organizational routines, including mechanisms and structures of the organization, assets linked to methodologies, technologies and processes, licenses, patents, trademarks, research and development strength, in addition to architectural competencies which enable a firm to integrate component competencies in new and flexible ways and build new competencies in accordance with recommendation or requirements.

Relational Capital

This involves every existing business network linking an organization to partners (distributors, suppliers and alliance associates) at higher and lower regions of its value stream; the scope of organizational and product brand, corporate image and perceptible reputation; in addition to building blocks of customer base, customer loyalty, customer-centricity quotient and market connectivity.

Spiritual Capital

This stands for virtues, divine principles, extraterrestrial guidance and faith which operate within an organization.

Business Model

This is a scheme showing how a firm intends to provide offerings and obtain revenue in return. It’s characterized by competitive ability, market control and business development strength.

“There is no other kind of capital that really works without an underlying base of spiritual capital.”

- Zohar D. and Marshall I.

Intellectual Capital Management Evaluation Guide


Management

Intellectual Assets/ Knowledge Management

Managing IC Creation

IC Value Creation

IC Value Management

IC Value Extraction

Strategic IC Management

Source: Canadian Institute of Chartered Accountants

Determinants of Value Creation

Value Creation Formula

Value Realization Formula

Value Creation Capacity

Value Creation for Key Stakeholders

Value Stream Modeling

Value Creation Reality

Value Creation Analysis

Mining Intellectual Capital

Human Capital

Intellectual Assets


Value Creation Value Extraction

Why should a firm establish Intellectual Asset Strategy?

i. It drives management activityii. It facilitates value extraction processiii. It enhances profitabilityiv. It boosts research and development

“Approximately 70% of the asset value of firms on the NYSE is derived from their intellectual capital. In this information age, as business value continues to accrue to “soft” assets such as business processes, trade secrets, and know-how and away from physical forms such as property and equipment, companies are increasingly aware of the need for intellectual asset protection.”

- Ian Reid

The Focus of Intellectual Asset Strategy

Positioning as framework to ensure IP activities of a firm is consistent with corporate strategy, business strategy in addition to research and development strategy.

Creating Competitive Advantage:a. Early recognitionb. Market penetrationc. Market controld. Pricing premium

Types of Intellectual Asset Strategies

Defensive and Offensive Strategies for attaining the following:

i. Design Freedomii. Market Freedom

Value Extraction Strategies

• Licensing• Franchising• Combination of Strategic Alliances • Divestment and Spin-Off• Financing Options• Merger and Acquisition

The Value of IP to a firm

Create Competitive Advantage: Block competitors, exploit new market opportunities, reduce risks and build loyalty.

Establish Proprietary Knowledge: Protect technologies and business techniques, enhance research and development, improve effectiveness of branding, anticipate shifts in technology and market.

Boosts Financial Performance: Obtain new revenues from IP, attract additional capital and reduce cost.

Oversight of innovation process

Patenting decision

Generating new patents

Portfolio maintenance

Competitive assessment

Valuation

Budget & patenting fee decision

Enforcement decision

Patentportfoliodatabase

Business and MarketStrategy Review andAnalysis

Commercialisationdecision

Conversion mechanismdecision

Source of newinnovationdecision

Initial valuationdecision

Competitive assessment database

internal source external

source

A Generic IP Management System, Functions and Decision Processes

Steps for Managing Intellectual Asset

Portfolio Identification

Analysis and Measurement

Crafting Strategy

Implementation of Strategy

Managing

Communication

IAM Value DriversImproved Management DecisionsEffective R&DLower costIncreased RevenueCompetitive advantage

IAM Tactics link IAM process to Value Extraction

A veritable patent strategy positions a firm for proper patent portfolio management and unlocks great fortune.

Thank You

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