Source: The AREOPA Group
Much is written about Intellectual Property. However, there is a broader concept, which includes Intellectual Property, and that is Intellectual Capital.
We have defined Intellectual Capital in a previous publication as that intellectual material (knowledge, information, intellectual property, experience) that can be used to create wealth.
In Figure 1, it is shown that if we add syntax to bits & bytes, they become data; if we add semantics, it becomes information; if we add context, it becomes knowledge; if we add use, it becomes know-how; if we add practice, it becomes experience; and if we add efficiency, it becomes expertise. From this transformation, Information and Knowledge are (or usually are) explicit. However, the know-how, the experience and the expertise are implicit or tacit. That is, they are in the people who perform the functions (key knowledge carriers), but they are rarely documented.
Figure 1
This means that if a person, who is a carrier of any of these components, leaves the company, that component is lost. And that is an important risk for the company, especially considering that 90% of the value of the companies is intangible or is generated by intangible elements (Source: Intellectual Capital Management - Bradley University SEI 330, based on the Fortune 100 ranking).
Therefore, managing Intellectual Capital becomes critical. That is, most of it is identified, made explicit, documented, stored and made reusable, so that this asset of the company continues to belong to the company.
In this sense, an inventory of intangible knowledge must first be assembled, considering the existing processes, plans and documentation, systems, clients, networks and contacts, business partners, strategic alliances, procedures, strategies and management, information on services and products, quality standards for services and products, culture.
Then, based on the AREOPA’s 4-Leaf Model® (Figure 2) *, the relevant points must be identified in each category; among them:
Within Human Capital: Know-How, Education, Work-related knowledge, Work-related skills, Innovation, Proactive and reactive skills, Attitude towards change, Social skills, Personality, etc.
Within the Structural Capital: Patents, Copyrights, Trademarks, Administrative philosophy, Corporate culture, Processes and procedures, Information systems, Financial relations, etc.
Within the Client Capital: Brands, Reputation, Clients, Client loyalty, Distribution channels, Contracts, Franchise agreements, etc.
Within the Capital of Strategic Alliances: Suppliers and partners, etc.
Figure 2
To continue searching for the points at the intersections of the 4 categories. That is, subjects that affect more than one category.
Once the bearers of intangible knowledge have been identified, such knowledge must be made explicit and documented.
But documenting it is not enough. It must be able to be stored and made reusable, so that it is useful, and accessible to everyone who needs it, within the company.
This process, which AREOPA carries out with a 10-step methodology, is essential to be able to move to the next level: assigning a monetary value to intangibles, also considering the costs incurred to maintain that Intellectual Capital.
And that will be the subject of another post.
* AREOPA was founded in 1987 as a management consulting firm. AREOPA has built up a strong reputation over the years in the development of methods, models and tools in such areas as “Change Management”, “Intellectual Capital” and “Knowledge Management and e-Learning” and the provision of consulting services making use of these methods, models and tools.
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