Intellectual capital gets a great deal of lip service these days as a “company’s most important asset.” But surprisingly few companies have a coherent strategy for identifying intellectual capital and holding on to this valuable asset. The Technology Brokers, a British knowledge management consultancy, have identified six areas of intellectual capital use your company should be addressing, either internally or with outside consultants:
- Validating Your Ability to Achieve Your Goals: “It is easy to tell if a business plan will fail due to lack of tangible assets like cash, machinery and so on,” TTB says. “But determining if the intangible assets are in place is currently difficult for the strategist to determine.” Are the people in your company today the right ones to carry you through to achieving your goals? Do you have the processes and technology in place for maximizing your intellectual capital? Managers must be able to identify the gap between their strategy and the resources to carry it out.
- Planning Research and Development: It’s unclear from practice why many companies bother to maintain R&D departments. Many use them to generate new products and services, and build a collection of expensive patents, and all but ignore the potentially greater use of collecting the know-how created during the process. “If know-how reflects competitive advantage,” TTB warns, “then organizations need to understand the nature of know-how in their possession and how to protect and grow it to competitive advantage.”
- Re-engineering and Downsizing Programs: When organizations downsize or re-structure, they must decide which employees to retain, and which jobs or functions to merge in the new organization. These decisions are often made in a vacuum, as human assets are evaluated in an ad-hoc fashion. A careful inventory of intellectual capital could prevent inadvertent loss of valuable capability and know-how.
- Rationale for Organizational Education and Training Programs: Many companies forget to take into account the importance of training as a means of meeting corporate goals. Training and education are a method of improving know-how and the value of your human resources – and should be used as such.
- Assessing the Value of the Enterprise: In many organizations, book value may be low while actual value may be high. This is usually the case with software companies, where the know-how to build software is often the company’s most critical asset. Counting people’s track records as intangible assets makes sense when determining your company’s overall worth.
- Growing an Organizational Memory: “Organizations spend huge sums of money paying for employees to reinvent the wheel,” TTB points out, saying “skills possessed by individuals remain a mystery to others who have to develop them in order to do their job.” Recent studies done by the Gottlieb Duttweiler Foundation estimate that organizations use only 20 percent of available intellectual capacity on a day to day basis. Increasing that figure could have a profound impact on the efficiency and profitability of the organization.
Article Copyright 1998 Enterprise Interactive
