Surprising Research on Corporate Intellectual Capital Management

IAM Magazine recently published an article that I wrote with Peder Hofman-Bang of Intellectual Capital Sweden entitled The Weakest Link in Corporate Intellectual Asset Management.

The article examined the combined results of over 430 intellectual capital ratings that have been performed using the IC Rating tool. It found that the ratings of the companies’ IC portfolios and the strength of their IC management shook out as follows (from strongest to weakest):

1. Human capital,
2. Relationship capital
3. Structural capital

Structural capital includes both process management and intellectual property (IP).  Of these, IP management was the weakest.

There are great lessons for companies in this. The strength of process capital is the most important determinant of a company’s ability to grow and scale. The marginal cost of human capital and relationship capital growth can be significant. However, the marginal cost of good processes (once developed) can be close to zero.

We have seen this multiplier effect of process capital in a number of recent cases. Getting this right can provide a huge boost to companies–even in these challenging times–because of the low cost of many fixes to structural capital management. So it is VERY IMPORTANT for companies to work on this aspect of their IC management.

The findings on IP management also have lots of lessons. If you want to read a great example of the need (and challenges) of good IP oversight, read this post by Scott Garrison at IP Asset Maximizer, A True Story of Wasted IP Assets and Why a Chief IP Officer Could Have Stopped the Loss and a related post by Jordan Hatcher at Tangible IP, Broken IP Business Structures.

The bottom line is that companies are just beginning to learn the power of intellectual capital management. The results of these 430 trail blazing companies hold great lessons for all.

If you want to hear more about the power of this kind of assessment, give me a call!