IT Equals IC: Networks in the Organization

In my past couple posts, I have been talking about mapping networks as the new organization chart.

The concept of networks in the organization is not new. Human beings have always found ways to connect with each other through tribes, associations, work groups and many other types of networks. What is new is the speed and ease with which networks can be formed thanks to information technology (IT). It can be hard to separate the history of the technologies that have enabled the growth and capture of knowledge from the knowledge itself. Nowhere is this relationship more clear than with networks. IT helps us create powerful connections between people and organizations. And these connections, these relationships take on a life of their own. Read more

Networks Are the New Organization Charts

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Organization chart
In the tangible economy, power and knowledge flowed primarily from the top down. An organization chart was used to explain how resources and authority were distributed. To show who reports to whom. What is the extent of the control of an individual manager? How are resources allocated? Just about every organization had and needed an organization chart.
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Our understanding of organizations continues to be influenced by the organization chart (org chart for short). It is a rare company that does not have one. And they are still used as a basic tool to understand the organization and to manage personnel. Every person in every organization needs to “report” to someone to, at a minimum, facilitate communication and personal development. But the org chart is losing its value along with a company’s financial statements—neither does a very good job at explaining how value is being created in the knowledge era. The task of putting knowledge to work does not fit inside the neat models that we have used in the past. Read more

The New Management: Finding the right balance

As you probably know by now, we see the modern business as a knowledge factory. This means that all managers need to become expert in the management of a knowledge factory. There are three critical management concepts that you will need to add to your toolkit in order to get the best results possible from your knowledge factory: networks, orchestration, and innovation. Read more

6 principles of management in the knowledge era

We often use the image of a “knowledge factory” to talk about the infrastructure of the today’s business. A huge percentage of this infrastructure is in intangible knowledge assets that work together as a system, the knowledge factory. Once you begin to understand the power of the combination of your knowledge assets, you are on your way to becoming building a smarter company–and you are ready to think about what this model means.

What are the business implications of the knowledge factory? These principles explain why management of a knowledge factory is different than management of a physical factory. Here are the main points, followed by an explanation of each:

1. The KF is greater than the sum of its parts
2. Ownership of the KF is dispersed
3. Power in the KF flows down…and up
4. The KF is held together by reputation, not control
5. The KF runs on information technology
6. The KF is a business

Read more

A Lego Model of a Medical Device Company

Here’s one more example of a Lego model of the knowledge factory of a company. This one is for a medical device company that sells a physical product that is supported by a service. The product is used by consumers in their home. But the company does not have direct contact with the consumers until they call to order the product. Instead the company relies on referral sources. Read more

Intangible Capital is the New Factory

The core of the tangible economy is the factory. Simply put, a factory is a building where production equipment converts raw material into finished goods. Companies make their money by selling these finished goods. The story of the tangible economy is the story of organizing and running these factories.

The modern knowledge business can also be understood as a factory, a place where the knowledge raw materials get put to work. This factory is where you create value for customers and make money. The story of the intangible economy is the story of organizing and running the knowledge factory in combination with physical processes.
Read more

IC and KM - Building from the Bottom Up

Yesterday, I talked about how process can give your organization superpowers. These include processes that support value creation for customers and those that support the internal operations of the company. This list is pretty standard includes infrastructure, human resources, information technology and finance. Each of these functions has its own body of knowledge, competencies and processes. While they are part of the intangible capital of your organization, we won’t spend a lot of time on the details of these classic support systems because these functions are pretty mature.

One support process that is newer and therefore less standardized is knowledge management (KM). This was actually one of the earliest solutions offered by the market in response to the rise of the knowledge economy. The message was simple: If we live in a knowledge economy, we need to manage knowledge. Software and consulting companies sold a lot of people on the concept of KM driven by a faith that if people in an organization could just have access to all the knowledge of their peers, everyone would be smarter and more effective. As often happens with new trends (which always walk the line of fads…) a lot of people thought that this single business function would provide the answer to management in the knowledge era. Check the box and you are a modern company. Of course, this faith was misplaced. This book is a testament to the fact that knowledge and the management of knowledge is about more than a software program.

But that does not mean that KM is irrelevant. Read more

IP and IC — the same thing or not?

Intellectual property (IP) is a term that is usually used to refer to specific types of structural capital that enjoy special legal status. These include patents, trademarks, copyrights, and trade secrets. Each of these categories has a specific body of law associated with it. Patents have to be approved by a national authority. Other categories do not require registration but are still protected under the law.

Legal protection can create a significant competitive advantage, depending on the circumstances. This legal definition and protection can also create opportunities for licensing IP rights outside the corporation. This strategy is getting a lot more attention today from organizations, consultants and software companies.

However, legal protection processes can be expensive and legal protection in itself is not a guarantee of competitive advantage. So, while you want to consult a good attorney to get the intricacies of the law correct, you should also try to also seek the advice of someone that has a good grasp of the strategic role of IP. You want to make sure that you file for protection when it makes sense. This decision involves a cost-benefit analysis. Some of the factors to consider include the cost of filing, the risk of disclosing your invention (disclosure is the only way to identify the idea that your want to protect), the competitive benefit of having a protected idea and the monetary benefit of being able to enforce and/or license your rights to other. Once you win a right, there are the practical and logistical challenges of managing the rights you obtain.

But these special legal systems are not the only way to “protect” your intangible capital. Our friend, Jackie Hutter (she calls herself a “recovering patent attorney”), pointed out to us that contracts are actually one of the most important ways of protecting your intangible capital. Good management of contractual relationships can have a big influence in customer and partner relationships (relationship capital) as well as key employee relationships (human capital) and acquired knowledge (structural capital).

One of the main ways that intangible capital gets protected is through its association with a strong business model. This goes for IP as much as for other kinds of intangibles.
In fact, the power of each of the components of your intangible capital is increased when they are combined with other knowledge components. Intangibles are a great example of the saying that “the value of the whole is greater than the sum of the parts.”

While someone could steal or imitate specific aspects of your business, it is hard to duplicate the whole system. This is a major way that most companies attain and retain competitive advantage—and protect their IP. This is important to keep in mind because many in the IP community will try to tell you that the only intangibles of any value are IP assets. We strongly disagree, which is why we have taken so much time to explain all the elements of intangible capital.

We actually created a pretty big controversy when we drafted this content for our book. When we started out, we intended to define all structural knowledge as intellectual property. When we consulted colleagues in the business and legal communities on the draft, we got some strong support and some equally strong pushback. The conversation spilled over to Twitter and Mary’s blog which had a record number of comments on a post called, “What’s the right definition of intellectual property?”  The message that we wanted to communicate is that all intangibles are important and legal protection is just one of the strategies to protect your intangibles. However, it became clear to us that insistence on this definition was going to distract a lot of people from the core messages of this book. So we backed down.

So our advice is to leave the term intellectual property to the lawyers. But do not leave the protection of you intangible capital to just a legal strategy. Come to understand   and protect your intangible capital as a system. Remember the lesson of knowledge economics. The highest value knowledge is knowledge that has been operationalized, put to work. The way that this usually occurs is actually through the creation of processes.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak

Five Steps to Building a Regional Innovation Ecosystem

Our firm recently participated in the Regional Innovation & Jobs Summit hosted by the Washington Economic Development Commission. Kudos to Egils Milberg and Noreen Hobin for a very full day of content and conversation. The full day was webcast, including the intro to our session.  Also thanks to our colleague from the WA-based Ingenesist Project, Dan Robles, who took great photos of our session.

Our session came at the end of the day. After a day of talking, our role was to get people engaged and active in improving specific ecosystems for the state.  Read more

Call for Participants: Crossing the Chasm - Moving IC into the Business Mainstream, Hong Kong, November, 2010

I have been invited to lead a mini-track on moving IC into the business mainstream at the ICICKM 2010 in Hong Kong.  This is the 7th annual International Conference on Intellectual Capital, Knowledge Management and Organizational Learning and will be held on the 11th and 12th of November in Hong Kong.

There are a lot of good reasons to go: meet IC/KM professionals from all over the world, get a closer look at the very ambitious work being done in IC in China and, of course, participate in this conversation about mainstream adoption.

The track that I am organizing Crossing the Chasm: Moving IC into the Business Mainstream is going to focus on:

The move toward a global knowledge economy continues to accelerate. Yet, today, the average businessperson has only a vague understanding of IC, one of the key fields concerned with the business implications of this knowledge economy. Even those who have tried to apply the concepts struggle to make the connection between intangibles and their financial bottom line.

Although the field of IC continues to grow and develop, almost everyone in our community would agree that we labor in obscurity. This track seeks to explore how the IC community can move our field into the business mainstream. Case studies of successful IC projects are especially welcome.

Research issues as follows are of special interest:

• What are the barriers to mainstream adoption of IC concepts?
• What will it take to move IC concepts into the mainstream?
• What are the core concepts upon which mainstream adoption should be built?
• What are the benefits a businessperson can expect from an IC project?
• What is working in current IC practice?
• In this effort, are there lessons the IC world learn from the developments in web and enterprise 2.0?
• What is the right balance between top-down and bottom-up solutions to IC?
• What is the role of the “expert” in adoption of IC concepts in the mainstream?

Although this is an academic conference, you don’t need to write an academic paper:

The conference committee welcomes contributions on a wide range of topics using a range of scholarly approaches including theoretical and empirical papers employing qualitative, quantitative and critical methods. Case studies and work-in-progress/posters are welcomed approaches. PhD Research, proposals for roundtable discussions, non-academic contributions and product demonstrations based on the main themes are also invited.

I would love to have lots of case studies, work-in-progress posters and practitioner contributions. Here’s the call for contributions download.

Have an idea? Not sure how to get started? Please give me a call at 781-729-9650 or email me to talk it through.

I hope you will come and participate in our conversation and this great conference!

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