Maximizing the intellectual capital of the organization

Table of contents
1. Introduction.3 2. Definition of the concept.4 3. Ways of maximization and important aspects IC....4 4. Conclusions..5 5. Bibliography.9

1. Introduction With their practical and organizational experiences, working habits, interpersonal relations and motivation, people influence a companys business performance and activities. It is very difficult though to measure the influence of knowledge, i. e. to quantify and express it in figures. The thought that knowledge and work, that is the skills of workers in the work process, are the most important factors of development, is widespread. The aim of intellectual capital is to explain the difference be- tween the books and the market value of a company. So, a com- panys value can be determined more precisely, and that could be important for investors. Measuring intellectual capital has an- other very significant dimension that enables a better business management. Only if we know the basic values of a company, we will be able to manage them and to maximize their growth as the greatest values of the business activities are not always visible in financial reports. Intellectual capital can be considered as a lia- bilities item in the balance sheet showing the origin of some in- tangible property items such as goodwill, competence, expertise, wisdom, skills, talent, ability, technology, etc. In the world, the research on intellectual capital began while Serbia and Montenegro is at the very beginning. Managing in the global economy is generally known today and it is the most important phenomenon that influences both business flows and business activities. Such trend has changed the market and competition forces, requesting from managers changes in the way they react and solve problems. Todays managers are more and more aware of the fact that a companys advantage mainly depends on what does a company know, how will that knowledge be used, and how quickly can a company learn something new. The uncertainty of the environment becomes larger every day, and un- adapting means lagging behind the developing process, stagnating and collapsing. Todays changes will bring not just new challenges and new knowledge, but also new people who will answer these challenges. Usually, a market value of a company is much higher than its book value. There is a debit entry, goodwill, that sometimes exists in financial reports and describes the difference between these values, but does not speak about its nature. The mission of the concept of intellectual capital is to provide a systematic description and evaluation of the difference between market and book values of a company, and has a significant role in intellectually intense industrial branches. Our Intellectual Capital can be leveraged only if it has been captured, defined and named. Start with worldview: Deep inside of you lives a core set of beliefs that inform the choices you are making on a daily basis (hiring people, winning
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business, managing staff, managing time, setting goals, etc.) whether you are aware of it or not. But once you know, you have a power most other firms dont. 2. Definition of the concepts An empirical knowl- edge is often transmitted in a direct face-to-face communication. In that way, a huge part of knowledge is being lost (quiet or hidden, or the so called latent knowledge), and that loss could be harmful for the whole company. And modern companies cannot bear such of loss. A human potential surpasses all other manufacturing factors such as natural resources, investments, technical progress and technology trans- fer. It is known and has been confirmed throughout the years that peo- ple with their knowledge and education, professional and organising ex- perience, working habits, interpersonal relations and motivation mostly influence a companys success. The biggest problem is how to measure the influence of knowledge, that is how to quantify it and numerically express it. There is a viewpoint of great significance that knowledge and work, that is a skill of people in the work processes, are the most essential development factors. There are estimates that companies use only % of their total organi- zational knowledge. Companies must know how to discover that knowl- edge and transform it into intellectual capital. A systematic collection and use of knowledge can be attained only by making the appropriate surrounding that will induce its distribution and transfer. It is necessary to provide knowledge collection and make it attainable for the media. It is very important that companies create a synergy between informa- tion technology capabilities and creative and innovative abbilities of its staff, and of all other employees working in organizations which make the value chain. 3. 10 ways to leverage IC 1. Your Client Experience How do your beliefs drive the choices you make when taking care of clients? 2. Your Right-Fit Client Profile Who are the people you serve and what sets them apart from other people? 3. Your Branding How is your worldview a part of your market positioning? 4. Your Elevator Pitch When it comes to explaining what you do, knowing your why is critical 5. Your Ideal Candidate Profile Who should work for you? Knowing your wisdom can help define your next team member.
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6. Your Internal Systems There is a method to the madness and its usually based on your outlook and wisdom 7. Your Team Culture Whats the glue at your firm? What are the unspoken rules? Define them and scale what works. 8. Your Licensing Play If you define it, you take what you know, package it and monetize it 9. Your Training Program - When you are on boarding new team members, your wisdom is critical for their success 10. Your Exit Strategy Ready to sell the firm? Its time to define the Secret Sauce Understanding your own Intellectual Capital requires effort. Wisdom isnt always immediately apparent but rather takes commitment to define, refine and leverage. Start with our Wisdom Harvest Tool to begin the process (see below) and initiate a plan for the year to attack some portion each quarter. 4. Maximizing Value from Intellectual Capital It is not enough simply to put a policy in place and then forget about it. Intellectual capital management must become part of management objectives, the organizations mission and performance metrics. After the various forms of intellectual capital have been identified, winning companies will maximize value creation and value capture by optimizing the innovation, operations, and strategic levers dis- cussed. Business Innovation Optimizing the business innovation levers involves balancing creativity, legal protection, and product development. Some useful strategies include: # Assess R&D resource allocation. Many companies invest 80 percent towards product improve- ments versus 20 percent for new products. Is this appropriate? Monitor innovation time to market: Does the R&D approach match the length of product life- cycles? Create incentives for fruitful innovation (e.g., JVC pays inventors over $800,000 for new patents). Experiment with different team-based approaches, corporate incubators, and knowl- edge management tools. Woo superstar innovators from competitors. Look at patent filings to find the most prolific inventors. Leverage talents of non-employees through col- laboration (unbundled
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innovation). Operating Performance There also are some useful strategies employed to optimize operating performance levers. Businesses focused on buying, selling, and sharing intellectual property can take advantage of new online tools. A recent survey of Internet sites turned up the following incomplete list of exchange sites: Patex.com, Uventures.com, PLX.com, TechEx.com, Biostreet.com, ActiveCyte.com, Yet2.com, Pharmalicensing.com, Ipex.net, Freeipx.org, and PatentAuc- tion.com. Even PricewaterhouseCoopers has an IP exchange service. ( These services enable businesses to make their IP available to the public in an electronic marketplace where people seeking to buy IP can go to find it, and people seeking to sell IP can go to sell it. These mar- ketplaces dramatically reduce the cost of finding buy- ers and sellers of potentially valuable IP. These sites and the electronic marketplace concept are not with- out their challenges: there are too many of them still providing largely undifferentiated, unfocused ser- vices; they dont yet have the necessary critical mass of users really to be active exchanges. Nevertheless, the effective exchanges will survive the coming shake- out, and they do represent a new strategy for buying, selling, and sharing IP. This online exchange approach is a good place to start, but it may be too passive to generate the neces- sary buyers. Companies should develop a proactive licensing and partnering program that involves: Identifying likely licensees or partners based on their technologies, markets, and customers (e.g.,who is citing your patents?). Preempting infringement with compelling licensing deals. Bundling patents into license packages when pos- sible; acquire and relicense complementary patents currently owned by others. Aggressively collect royalties. Make strategic alliances that offer new capabilities in new markets. Another interesting online tool worth noting is bountyquest.com. This site allows a business or indi- vidual to offer financial rewards in exchange for information demonstrating the existence of prior art. In effect, a bounty of $10,000, for example, is offered for a publication that disputes the novelty or nonob- viousness of a claim. Students or researchers or bored techies do the investigation, and they are paid only if they succeed. This site, or one like it, might be used to prove the invalidity of a competitors patent or to help ensure the novelty of the businesss or indi- viduals own claim. These are useful tactics of proac- tive partnering.
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Licensing In-licensing and out-licensing are tools for achiev- ing various value objectives, rather than ends in themselves. Although the licensing process helps to refine the business objectives of the deal, the deal making process should begin only after the overall innovation, operational, and strategic objectives (tak- ing into account pre-existing obligations and institu- tional constraints) have been determined. It is important to focus on value capture in addition to value creation. In licensing a companys technologies, the key ele- ments of the deal will include answers to the follow- ing: What can be done with the technology by the licensee (e.g., field of use restrictions)? What level of exclusivity does the licensor grant to the licensee? What is the duration of the rights? Who owns and controls the intellectual capital created as part of the deal? Is there a right to public relations regarding the deal, and credit in publications? How are risks and responsibilities allocated(including indemnification, regulatory compliance, patent prosecution)? What is the compensation schedule (up-front vs.milestone, minimum/maximum royalties, reimbursements, etc.)? What are the monitoring and reporting obligations? Is there a plan for transferability of rights (subli-censing)? What are the performance benchmarks? What triggers termination (term, breach, convenience, consent)? How are conflicts to be resolved? How will collective decisions be made and crosscompany teams be managed? The relative significance of these elements will change over time as the business matures and as the market conditions evolve. Companies with desirable technology may have greater leverage over some terms than over others. Moreover, these elements will vary in importance depending on the businesss oper- ational and strategic objectives. Strategic Position Optimizing the strategic positioning levers is how winning companies can truly distinguish themselves. The key considerations for companies seeking to defend their intellectual capital value are: Are the patents valid? Are the procedures in place to avoid infringing the patents of others? Is there a portfolio of alternative or related patents that constrain competitors?
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Are strategic lawsuits called for to stop infringement by others? The key considerations for companies seeking to leverage their intellectual capital value are: Should the company acquire another company or be acquired? Who? Is there a patent that can be acquired to open new markets? Should the company outsource the licensing function for greater scale benefits? Are capital markets sufficiently aware of the companys intellectual capital? The key considerations for companies seeking to expand their intellectual capital value are: Does the company have a breakthrough technology? How much access should the company allow? Are there strategic patenting opportunities? Are there benefits from joining research consortia? Most importantly, maximizing value from intellectual capital requires figuring out the strategic objectives and integrating intellectual capital assets into a coherent strategy. 4.Conclusion With their practical and organizational experiences, working habits, interpersonal relations and motivation, people influence a companys busi - ness performance and activities. It is very difficult though to measure the influence of knowledge, i. e. to quantify and express it in figures. The thought that knowledge and work, that is the skills of workers in the work process, are the most important factors of development, is widespread. The aim of intellectual capital is to explain the difference between the book and market value of a company. In that way, a companys value can be determined more precisely, that could be important for investors. The measurement of intellectual capital has the another very significant di- mension that enables better business managing. Only if we know a com- panys basic values, we will be able to manage them and to maximize their growth as the greatest values of the business activities are not al- ways visible in financial reports. Intellectual capital can be considered as a liabilities balance sheet item showing the origin of some intangible.

5. Bibliography http://socialbusinesssandy.com/2012/04/09/social-business-coffee-breakmaximizing-intellectual-capital-through-social-socbiz-ibmsocialbiz-ls12/ http://www.thewisdomlink.com/blog/ http://www.burtonjones.com/Templates/Maximizing%20ROI%20in%20Human%20Capital %20latest%2012%20June.pdf http://www.rosternetwork.com/articles/intellectual_capital.htm http://intronetworks.com/the-collaborative-economy-maximize-theintellectual-capital-of-your-workforce/