Relationship Capital Risks

Relationship Capital is not always immediately understood as a knowledge asset. But the growing interconnections facilitated by technology with customers, outsourcing partners, suppliers and many other kinds of partners have created a body of shared knowledge that is critical to the operation of most businesses.

Shared is a key word here because, while sharing is an important component of relationship capital, it also represents a source of risk to the organization. Many an American company has given away its IP in recent years as its knowledge has moved from the category of proprietary structural capital to the category of shared relationship capital with outsourcing partners.

There is another aspect to relationship capital that is embodied in brand and reputation. Reputation gets more and more attention because of the vulnerability created by social media and always-on communication systems; any mistake can be broadcast immediately and the price for it can become significant. In many ways, reputation has become the most important metric for business today; it’s your license to do business in the future. As important as profits are to a business, no one cares how much BP made before the oil spill. What counts is the confidence of their stakeholders going forward. While reputation can and should be managed through a marketing function, the real work comes from strategic and risk management of the entire organization’s intangible capital.

The key risks associated with relationship capital include the: Read more

Relationship Capital: Brands versus Reputation

The final category of relationship capital (after customers and partners) is brand and reputation capital.

Brand is how your customers see your products. Reputation is about how all your stakeholders view your entire operation. Each is important. Brand communication is generally thought to leave more room for definition by the holder. That is, I can influence how you see my brand through my marketing and management of the customer experience. But both brand and reputation are as much about your stakeholders’ knowledge of you as it is your knowledge of them. This shared knowledge is what make brand and reputation part of relationship capital. Read more

Relationship Capital and the Growing Importance of Partners

When thinking of relationship capital, most people default to customers, who obviously are fundamentally important to your business.

However, relationships with other kinds of partners are growing stronger and more important for the same reasons as those described yesterday for customers: increased outsourcing, increased linking of systems and the need for co-creation and innovation. I’ll talk about partnerships in value creation and those that provide support systems for your organization. Read more

Relationship Capital, Starting With Your Customers

As with human capital, relationship capital has always been a part of business.

Organizations have always had customers, vendors and financing partners, to name a few. But the nature of these relationships has been changing more dramatically in recent years. First of all, networking technology has made it easier to outsource pieces of a business that were formerly inside the corporation. The relationships with critical outsourcing partners are closer than that of arms-length client-vendor relationships.

You may find yourself on both sides of this dynamic, performing outsourced services for your customers but also outsourcing some of your internal processes to a vendor. Read more

Getting Paid for What You Know: Outsourcing and the Service Economy

It is common to hear our current economy referred to as a “service economy.” This is because the rise of the knowledge economy means that more and more value is packaged for customers in the form of services. Service companies include anyone doing work for you outside of your own organization. Another word for service companies are outsourcers. Most people tend to think of outsourcing in the context of outsourced manufacturing because of the increased use of production facilities in countries like China and India.

But we would invite you to define outsourcing more broadly. Read more

Intangibles and Airplane Security

Last night on NPR, I listened to a report on the heightened security measures that are being put in place in airports around the world.

Listening to the report, I couldn’t help but think that our leaders are getting the balance between tangible and intangible efforts wrong. Read more

Shedding Light on the Value and Performance of Intangible Capital

The first thing that most people ask when discussing intangibles is value. My answer is, “how can you value something for which you have no data?”

I do not mean to imply that it is impossible to develop data on your intangible capital. It’s just that most companies have not taken the necessary steps to accomplish this. How can you create a sound data set on your intangibles? Read more

The Growing Importance of Community and Relationship Capital

Two of my recent Tweets @maryadamsica told stories about the growing importance of relationship capital:

What is Buddhist Economics – Showed the incredible difference in the growth of Business Week’s print edition versus their BW Exchange, where  readers choose the topics. Read more

Strengthening Relationship Capital by Automating the Supply Chain

Our monthly call for the Intangible Asset Finance Society last Friday was great. Bob Rittereiser shared with us his view of the need for greater automation and control of global supply chains.

It’s no news that companies have done an increasing amount of outsourcing in recent years. That trend and the increased visibility of everything that companies do means that errors or inappropriate operations by a supplier (think lead paint and child labor) often come back to bite the corporations selling the goods. This is why relationship capital (one of the three core components of intellectual capital) needs to get careful attention in today’s corporation. Read more

Intangible Definitions

One of the most frustrating parts of working in the “intangibles” management business is the lack of accepted definitions and (more importantly) shared understanding of what we mean.

Just the name is challenging. Here are a few of the most common: Read more

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