Intellectual Capital
Management
General
| Terms & Definitions | More
Terms | Services & Products
General
The
confusion about intellectual capital management as a field is due to
a great extent to its multi-disciplinary nature. This is because intellectual
capital includes disparate types of resources and assets that are human
based (brainpower, competence and skills) information and data based
(databases, software & hardware), innovation based (R&D routines,
processes and practices) and legally defined property rights (patents,
trade secrets, trademarks/brands, and copyright). As such it is a field
of interest and application to human resources professionals, IT , R&D,
business and marketing managers, IP lawyers and business consultants.
Approaching
ICM from the different perspectives of the various professionals each
with their own perspective resulted in the emergence of a number of
terms where each deals with a specific aspect of managing organizational
intellectual capital. Human resources and IT professionals focus on
mining human and organizational knowledge contained in brainpower and
competence as well as organizational databases and routines. R&D
and technology managers on the other hand focus on innovation resources
(ideas and product concepts) and networks (relations with suppliers,
distributors and customers). Intellectual property lawyers on the other
hand focus on capitalizing on the orgnaization’s intellectual
property and are concerned with securing ownership rights and licensing.
Terms
and Definitions
The
disparate approaches and business objectives of each discipline gave
rise to various approaches, terms and definitions that are all used
in the context of intellectual capital management. These include:
Knowledge
Management
–
refers to the management of knowledge resources and networks but is
used by some practitioners to mean intellectual capital management.
This approach is prevalent in many service organizations where seemingly
their intellectual capital management needs are limited to management
of information and knowledge resources. Though this is true where the
organization offers no products (or services) but merely aspires to
achieve a specific mission. In such organizations knowledge management
is of prime importance as it enables effective decision making. Under
the comprehensive intellectual capital management (CICM™) approach,
knowledge management is regarded as the first stage where knowledge
resources are recognized and mined to support the organization’s
critical business processes and innovation. That role goes beyond information
technology into the management of the human and social aspect of knowledge
and value creation.
Intellectual
Asset Management –
is a term used to refer to the business approach to intellectual property
management which deals with intellectual property as commercial and
business tools hence as revenue generating assets, rather than legal
instruments. "IAM" is the term used by business consultants
and IP attorneys to refer to programs for the management of patent portfolios
in the major part, where both brand and copyright management programs
are treated separately. The main aim of these programs are to marry
intellectual property strategies with the overall business strategy
in order to fully capitalize on an organization’s IP portfolio
which may include tens of thousands of patents, hundreds of brands,
or huge libraries of copyrighted works. Though relevant to all organizations
the manufacturing and R&D intensive organizations have been the
ones that experimenting and developing intellectual property/asset management
programs. Under the CICM model intellectual property/asset management
is the last stage where value is maximized to the optimal level.
Intellectual
property management – a term that has been used
for decades as early as 1940s to refer to the management of the legal
processes involved in acquiring and protecting intellectual property:
registration, prosecution, enforcement, and litigation. In the last
two decades intellectual property management expanded to incorporate
licensing of intellectual property, including technology transfer, merchandizing,
franchising, software lisensing, and other transactions. Legal departments
in most major organizations create and administer programs for the proper
use and acquisition of intellectual property. In later years particularly
with the advent of new technical intelligence tools the legal department’s
role overlapped with the work of the R&D and marketing departments,
and extended to strategic planning functions.
Innovation
management -
a term used to refer to new practices and tools that boost an organization's
innovative ability by creating the right culture for innovation, soliciting
and encouraging employees' submission of ideas, and developing new products
and solutions. Under the CICM model innovation management is the intermediate
stage between the knowledge management and the intellectual property
management stages, where the resources are processed into marketable
products.
Intangible
assets management
– a term used to generally refer to any approach that purports
to manage one form or another of intellectual capital. Ove Granstrand
explains in his book - The Economics and Management of Intellectual
Property, (Edward Elgar, USA 1999) - that a great number
of management approaches and practices emerged in the past few decades
to respond to ‘intellectual capitalism’ where intellectual
capital is the basis of wealth generation. He mentions for example total
quality management (e.g. Six Sigma), lean enterprise management, R&D
management, Just-In-Time, Business Process Reengineering and the like.
Granstrand foresees that all these approaches including intellectual
property/asset management will become integrated under intellectual
capital management.
Intellectual
capital management
– a term used to refer to any and every approach that relates
to the management of a form of intellectual capital. Since 2000 the
term has been well connected with the intellectual capital theory and
model developed by Karl Erik Sveiby, Leif Edvinsson and others where
intellectual capital is classified into three main groups: human, customer
and structural capital.
Comprehensive
intellectual capital management
– a term advanced by Nermien Al-Ali to refer to a comprehensive
framework developed for the management of all forms of intellectual
capital an organization may have under three stages of knowledge management,
innovation management and intellectual property management.
More
Terms
It
is also important to be familiar with the use of the following terms
for the management of intellectual capital. Though all the terms mentioned
next refer to practically the same thing, they are preferred by different
groups of professionals:
Intangible
assets
– the term preferred by accountants and accounting standards setting
bodies e.g. FASB – the Financial Accounting Standard Board in
the US, IASB – International Accounting Standard Board, and the
SEC – the Securities and Exchange Commission in the US. The term
is preferred by accountants as it is in clear contrast to the term ‘tangible’
assets referring to physical and financial assets that an organization
has.
Intellectual
assets
– the term preferred by IP lawyers and professionals to refer
to intellectual property (particularly patents, trademarks and copyrights)
since their value can be more accurately perceived or evaluated - hence
the word "asset".
Intellectual
capital
– the term preferred by proponents of the intellectual capital
concept or theory as the word capital denotes a general pool of resources
and/or assets that can be used to create value and which are not maybe
formed as assets in their own right.
Services
and Products
Intellectual
capital management as a field brings together a number of multi-disciplined
providers each offering services/products under one or the other of
the sub-disciplines as follows:
Knowledge
Management
Estimated by the KMWorld magazine to be a 3 billion dollars industry
in 2000, the market for knowledge management is a growth business. This
prompted accounting and consulting firms not only to experiment and
develop their own management models of knowledge management to offer
it externally as a service. In addition to that many software companies,
particularly IBM in conjunction with its KM Institute, have developed
new, or repackaged their old, products under the banner of knowledge
management. Providers of KM services and products include the following:
• Business consultants providing services to organizations on
how to undertake knowledge audits and formulate knowledge strategies
• Software companies providing programs and tools for database
management (the information side of knowledge management) retrieval
and search tools (to enable location of knowledge resources), visualization
tools (to show patterns in information) and communication tools (to
connect knowledge workers together).
• IT consultants providing services on setting up and maintaining
IT systems. In many situations this service is combined with advice
on knowledge management as well, with growing appreciation of the role
of IT as a supporting and enabling system for knowledge management.
Innovation Management
and New Product Development
Relatively a mature market, but of considerable size, with a number
of providers including the following:
•
Non-profit and for-profit organizations e.g. the Product Development
Management Association (PDMA) providing studies and surveys on new product
development and innovation strategies, methods and tools.
• Business consultants specialized in the newest automated and
other methods to develop new products, solicit and evaluate ideas, design
and manage R&D.
• Independent R&D organizations offering their innovative
capability for other organizations to develop new innovative ideas in
considerably short time. An example is IDEO and its development of the
Visor for Palm Pilot.
Intellectual
Property/Asset Management
It
is always important to distinguish as to the services and products that
relate to the different forms of intellectual property. This is becasue
different forms of intellectual property have intrinsically different
characteristics. Patents are technological creatures, trademarks and
brands are commercial tools and copyright represents the authored work
itself. Providers and services are listed below under each of the various
forms of intellectual property.
Patents - The market for patent management
products and services is a growing market with various providers including:
•
Private and government research organizations working on developing
indicators based on patent information to assess companies, and economies.
In the US for example a number of indicators were developed by various
government and other organizations e.g. the
New Economy Index and the Department
of Commerce Science and Technology Indicators. Private organizations
e.g. CHI Research provides these indicators
in the form of products and reports for prospective investors to enable
them assess the strength and future potential of industries and of companies
in each industry.
• Software and consulting companies providing patent data search
and mining tools for companies that have huge patent portfolios. These
services are designed to enable companies fathom the depth and width
of their patent portfolios, mine patent data for competitive intelligence
purposes and to detect future market trends.
• Intellectual property attorneys and independent licensing specialists
providing advise and services on licensing of patents and technology
transfers.
• Online services provided by companies like PLx.com and Yet2.com
to create a market for the transfer and licensing of patents and to
a limited extent trademarks.
It
is interesting to note that a number of intellectual property law firms
have joined forces with software, research, and other companies to provide
a one-stop-shop services to companies – an example is INTX
a consortium of companies including Foley & Lardner law firm, CHI
research and other companies forming a team of consultants to suit the
needs of the client whenever needed.
Brands/Trademarks
- Though the market for brand management services is a mature market,
its size has been growing in the last decade with increasing appreciation
of manufacturing companies of the value of brand equity in influencing
the purchasing decision. With the erosion of product superiority, which
was the strongest mean of competition (the competing products are of
similar quality, price and functionality) brand loyalty plays an integral
part in securing a stronger competitive position and commanding a larger
market share. Added to that are the unlimited possibilities of branding
on the Internet and through the use of domain names. This again resulted
in proliferation of brand management related services provided by the
following:
•
Companies working on developing tools to measure the ROI of advertising
related to building brand equity and its effect on organizational performance
and market share.
• Consulting firms providing services on formulating branding
strategies and programs, choosing and adopting a branding personality,
maintaining and communicating a consistent brand identity through all
operations and constructing customer service and loyalty programs.
•
Accounting and brand management firms offering valuation services for
ascertaining the level of customer awareness of the brand, the strength
of the brand and the value of its equity.
Copyrights
-
Nothing impacted copyright management as the Internet. The ease of transferring
documents and thus of pirating copyrighted audio and written works,
gave rise to new technologies aimed at protecting the copyright owner
by tracing the use of copyrighted material. Closely linked to that is
cyber security and the ability to protect the organization’s databases
and other information protected by copyright and trade secrets from
hackers and sometimes employees. Copyright management and cyber security
are growth markets . Services include:
• Digital rights management software and tools to mark copyrighted
material online and trace its use.
• Software programs that enable the management of libraries of
copyrighted works whether composed of music (music producers), literary
works (publishing houses), software programs and codes (software companies),
audio-visual works (motion picture industry) and theatrical productions.
• Consulting services providing that provide advice to organizations
in the entertainment, software and other industries on strategies to
mine and develop their copyright asset base.
As
evident from the foregoing, intellectual capital management as a field
represents a crowded landscape that brings together approaches, practices
and tools from various disciplines and professions and specialties.
To focus on one discipline be that law, business or technology is to
limit the organization’s ability to adequately recognize, and
leverage its intellectual capital base. This will also impede the value
creation process to an extent that hampers the organization from reaching
its growth potential. Therefore the CICM approach brings the disciplines
of knowledge management, innovation management, and intellectual property
management together in a practical framework that shows not only how
the various disciplines interact, but also how and when to use certain
tools and practices in the design of a comprehensive
intellectual capital management program.
