Overview
What drives an economy is what enables business or industry to generate revenue and to secure a competitive position in the market. What did a company like Disney do to grow from a $2 billion company to a $22 billion empire in ten years. Why is the market value of IBM, Intel and Microsoft 2.3 times greater than that of automakers despite the fact that the sales of the latter are 2.4 times greater than the sales of the former. How did Dow Chemical move from generating $25 million a year in technology licensing revenue in 1994 to $61 million in 2002. These examples are not isolated phenomena, but are success stories of some organizations that capitalized on intellectual capital - the asset of the knowledge economy.
An economy where the value of intellectual capital has grown to 78% of the total value of the Fortune 500 corporations in the United States. Where over 70% of workers in developed economies are 'knowledge workers' that use 'their heads more than their hands'. It is an economy, simply stated, that is based on 'what is in your head' as an organization or a business. An economy where knowledge and technology has the highest value as a business asset. Knowledge and technology that an organization owns, determine its commercial success and maybe survival - hence the emergence and development of the filed of Intellectual Capital Management (ICM).
Simply stated, ICM is the art and science of managing intellectual capital in a way that achieves maximum value extraction. ICM is concerned with the management of employee brainpower, ideas, knowledge, innovation and practices, in addition to inventions, patents, trademarks, copyrights, and other intellectual property rights. ICM emerged as a field in the early nineties with the growing concern about how to succeed in a knowledge economy, where organizational learning plays a vital part, and the majority of the organizaitonal wealth is made of intellectual capital.
The management of knowledge resources and other intellectual capital is essential for the survival of the knowledge organization, let alone success. The need for new styles and models for business management to accommodate the unique aspects of managing intellectual capital for value maximization gave rise to a number of theories, practices and tools aimed at recognizing, developing and leveraging an organization's intellectual capital.
One prominent theory that has not only gained great attention but which holds great promise for enhancing an organization's future performance is the intellectual capital theory. Basically, the IC Concept is based on the contention that an organization's asset base or wealth is made of human capital, customer capital, and structural capital. Value creation occurs when one form of capital is transferred into another. For example value is created whenever employee' competence (human capital) is mined to create new business processes (strucutural capital) that result in better service to customers, and increase customer loyalty (customer capital).
Traditional business management models - designed for the management of tangible and financial assets for the major part - are ineffective for the management of the intellectual capital of an organization where such assets are human-, knowledge-, and innovation- based. The traditional organizational structure also gave way to new structures that enable knowledge, ideas, and personell to move freely across the organization for the main purpose of discovering, developing and leveraging intellectual capital.
Looking at what is offered under the banner of "intellectual capital management" as a business management approach one cannot but be overwhelmed by the confusion of terms and definitions, the myriad of services and products on offer, and the various practices and tools developed todate. Many terms have emerged to refer to the same or different ways of manageing intellectual capital like knowledge management, intellectual asset management, intangible asset management, and intellectual property management. Added to that are the hundreds of services offered by business consultants, software companies, private research institutes and organizations to help organizations convert intellectual capital to success.
To aid the business manager, strategist, consultant and general business reader, understand what the theory and practice of intellectual capital management the author of Comprehensive Intellectual Capital Management - A Step-by-Step developed the CICM model. The CICM model presents a framework which the practitioner can use to implement a comprehensive model to manage intellectual capital from A to Z whether it is comprised in a human-based or organziational knowledge resource, an innovation or business process or an intellectual property.
Most importantly, the CICM model provides a practical framework that management can use to design and implement programs, and choose the approprirate tools and practices, for intellectual capital management. Before that is possible however it is important to understand what intellectual capital management is all about.
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