Three Ways to Look at IC
February 4, 2010 by Mary Adams
Intangible capital is still a very abstract concept to most people. As we begin to do more and more work that is explicitly related to IC optimization and corporate growth, we are finding three approaches to visualization that are especially helpful.
Inventory - The first one is to look at a simple inventory of the key intangibles that drive an organization. This is usually focused on the revenue generation side of business. This is a high-level list but a good starting point for a discussion of the basic assets driving the organization’s operations.
This is the one we used to help a company recently focus in on structural capital as a prime opportunity for more effective scaling of its organization. Scaling isn’t as sexy a word as growth or innovation. But it is the practical side of these goals. If you figure out how to support your people and partners (human and relationship capital) by capturing and operationalizing processes and knowledge, then growth becomes easier and more profitable.
Modelling - The next stage after an inventory is a model. This is where the inventory is converted into something people can touch and play with. One of the most successful ways we have been doing this is using Lego’s. In our book, we call this systemic view the “knowledge factory.” An explanation of this approach is in our YouTube video You Can Grow Like Google.
We recently used this in an exercise for a company to get a better understanding of their IC as a system. Previously, they saw human, structural and relationship capital as three different silos. They had separate conversations and separate strategies for each. While there clearly are specific plans for each of these kinds of capital in all companies, missing the systemic view can be very limiting. Because weaknesses in one area end up limiting the success of other areas. As discussed above, great people without great systems will hold you back. On the other hand, great systems won’t last long without great people.
The first two approaches are what I would call “asset-based.” They focus on intangibles as knowledge assets. This perspective is very important for developing a strategic view of IC and also for creating measurement systems.
Mapping - The third approach is helpful in getting to an operational view of how the knowledge factory works. You often need this level to get to work fixing things. For this, we have been using network mapping techniques. We especially like the Value Network approach created by Verna Allee. Here, the model gets people right in the middle of process analysis. We help the group identify the key roles in the process or business area. Then we identify both tangible and intangible exchanges that occur to get the work done. (This illustration comes from a case study from the VNA folks).
We are actually using this approach to take the next step with the structural capital project mentioned above. We have identified the key tasks/networks of the group. Mapping the work will help us identify opportunities to develop structural capital to optimize their work. Structural capital includes databases, training materials, marketing documents, software, processes–anything that makes knowledge re-usable. We’ll share more on this as time goes on.
Do you have another way that you like for visualizing and analyzing IC? Share it here or join us at the IC Knowledge Center for a broad discussion of IC.