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Intellectual Capital Management


Comprehensive Intellectual Capital Management

Part One introduces the reader to the world of intellectual capital by first examining the main dynamics that affect competition in the knowledge economy (If you are interested in safety of your copy rights, refer to job search sites). Exploring these dynamics from multiple perspectives, intellectual capital is uncovered as the driving force behind competition in the knowledge economy. Chapter 1 demonstrates that intellectual capital is the main driver behind mergers, startups, innovation, and hence business performance. As such, developing intellectual capital management as the core organizational competency is the formula of success. This, however, is a very general statement, and therefore Chapter 1 breaks this into a number of organizational competencies comprising knowledge, innovation and intellectual property management, creating the right culture for intellectual capital management, and synchronizing different programs into a comprehensive intellectual capital management system.

Before this part proceeds with the "how," it examines the classifications and models that emerged to define, recognize, and measure intellectual capital. Despite the great insight provided by the intellectual capital model, which to date has been the basis of all efforts and models to manage intellectual capital, it falls short of providing business with pragmatic practices and applications. Building on the intellectual capital model and expanding it immensely, the author develops the Comprehensive Intellectual Capital Management (CICM) model outlined in Chapter 4, after examining the question of IC reporting in Chapter 3.

The CICM model is designed to manage all forms of intellectual capital at three stagesknowledge, innovation, and intellectual property management. Though the latter two stages have been established for decades, they are presented under the light of the IC concept and combined with the new discipline of knowledge management to create the CICM model. Chapter 4 presents an overview of the CICM model and outlines its pragmatic features, and thus serves as a gate to Part Two.

The Intellectual Capital Model

Most organizations have adapted or transformed their management styles and business models to manage intellectual capital (IC) and respond to the IC-enabled dynamics of the knowledge economy. Many of these organizations have done it without even realizing that they are adopting an intellectual capital management (ICM) approach. A top executive of a leading consumer products company, whose name is withheld, commented that his company is not interested in ICM. "Show me the money," he said. "All I see are the circles and pyramids that ICM people draw in conferences." What this executive did not realize is that he was already managing IC in one way or another on a daily basis to make money. If it weren't for this executive's daily reliance on his gut feeling and tacit knowledge to manage his employees' innovation, the company he works for wouldn't be a market leader. If the company's employees did not care about the management of customer and structural capital, it wouldn't invest millions of dollars in its interactive Web site to solicit consumers' feedback 24 hours a day, seven days a week.

Successful managers and businesses have been managing intellectual capital one way or another all along, whether consciously or intuitively. This however, does not mean that they have an ICM program or strategy. Managing IC as a matter of common business sense is not sufficient for the development of ICM as an organizational competency. It is only when a management style moves from being intuitively applied to a planned and systemized process that it can be perfected. Only then can it be substantially transformed from being an art to becoming a science. Once it transitions into a science, it becomes testable, measurable, more predictable, and, most importantly, repeatable. Though organizations that apply ICM advance this goal, there is still a long road of experimentation and applied research ahead for the emerging field of ICM to become more of a "science."

One of the established precepts of ICM to date, however, is dividing IC into human, customer, and structural capital-what I will call the IC model. Before examining the "circles and pyramids" of the IC model, and why they are so frustrating to many executives, let's consider what's in a name.