The missing link in understanding IC

I did a quick project last week with a professional services firm that had been approached about an acquisition. I sat with the president of the company over the course of a couple days to create a powerful presentation for their initial meeting.

The reason I was asked to help is our expertise in intangible capital. A professional services firm consists almost completely of IC. But most professional service managers (like managers everywhere) don’t have the vocabulary or models to describe their organization’s IC effectively.

In this case, the president was thinking that the potential acquirer was interested in the people and the customer lists of the firm. He was right. But he was saying it rather than showing it effectively with stories and data (research shows that specific data about IC can make a huge difference in how a company is understood and valued).

He was also missing the concept of structural capital. This is the knowledge, systems and processes that stay in the building when the people go home at night. We started out by just creating a list of their key processes. It was fun because by the end of it, he had created a few phrases that said it all: “Our organization has been crafted to turn out consistent, high quality results for our clients and profits for our firm.” and “We aim to create the infrastructure that enables our people to perform at the highest level possible–then we stay out of the way.” When I heard these, I knew that structural capital (and good knowledge era management practices) had become part of his mindset.

As we tried to sketch how this system fit together, he immediately grabbed a pen and created a diagram of how his management team provides the strategic and tactical support network for the firm’s operations. Showing how closely all the management members worked together was a powerful way for him to tell the story of a team that has been together for more than five years–and generated consistent, profitable growth in that period of time.

I am learning more and more that my role as an IC evangelist and consultant is to empower people with the key concepts they need to maximize the value and performance of their IC–and then get out of the way. When this particular client picked up his pen on Friday, I knew I was on the right track.