Intellectual Capital: Managing A Company’s Know How

Michael D. Moberly   January 24, 2012

Effectively managing a company’s intellectual capital (IC) encompasses three key responsibilities for management teams, c-suites, and business units:

  • Acquire current knowledge and skill sets necessary to identify, assess, and distinguish where IC is developed-exist within a company
  • Conduct an inventory of a company’s IC and develop practices to monitor its status to, among other things, determine what aspects are:

                – In Usei.e., determine what and where IC exists and if it can be used more effectively and profitably to create value, efficiencies, and other opportunities for company growth, etc.

                –  Not In Use i.e., determine if existing IC remains relevant and useful to a company’s core mission and/or its business units vs. being a stagnant asset with substantial maintenance costs.

Interestingly, Davis and Harrison (authors of ‘Edison in the Boardroom’) estimate that only 30% of many company’s entire intellectual capital portfolio may actually be in use, with the remaining 70% likely found in various (other) forms, e.g., intellectual property that has become obsolete, and/or products or services that are no longer in the company’s inventory or relevant to a company’s core mission. 

Personally, I urge advocates of Davis and Harrison’s estimates exercise caution to avoid pre-judging the outcome of an IC inventory or audit.  That’s because growing numbers of company management teams and c-suites realizing their company has collectively developed and possess a variety of sometimes, very nuanced and company specific intellectual capital.  All of which warrants identifying, unraveling, applying, and monitoring.

It is not my intent to be dismissive of or otherwise discount the Davis and Harrison estimates.  They are important on many levels, one of which is that they hopefully draw much needed attention to the importance of intellectual capital as an intangible asset and to management teams, boards, and equally important, a company’s stakeholders.

Let’s suggest, perhaps hypothetically, that a company’s management team and board determine it would be useful (profitable) to resource an individual or team to literally (help) manage a company’s intellectual capital.   Should a company be sufficiently forward looking to execute this, the IC management team must, first and foremost, be absolutely dedicated to recognizing, managing, and utilizing a company’s full array of intellectual capital as genuine business assets!

Unfortunately, there remain far too many company management teams and boards who hold a mistaken perception that intellectual property (applications, registrations, and issuances) are synonymous with intellectual capital management.  In reality, intellectual capital is a subset of intangible assets and it is only through the effective management and exploitation of a company’s  intellectual property in which intellectual capital is embedded, that potential value, revenue, wealth, and building blocks for growth can be generated.

 This post was equally inspired by ‘Intangible Capital: Putting Knowledge to Work in the 21st Century’ by Mary Adams and Michael Oleksak, a book which I encourage readers of this blog to study.

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