Business Leaders are Failing to Exploit their Company’s Intellectual Capital
Even the best of companies are only effectively exploiting a handful of 20 categories of intellectual capital according to investigations by Prof. Colin Coulson-Thomas of the University of Lincoln. New approaches and better ways of handling intellectual property in a variety of different formats are required.
(PRWEB) October 8, 2006 -- Business leaders are letting down both shareholders and customers by failing to properly manage and exploit the intellectual capital of their companies, according to Prof. Colin Coulson-Thomas. Of 60 companies visited within the last year only a handful were making effective use of particular types of intellectual capital, and even these entrepreneurs were ignoring most of the available know-how within their businesses.
Coulson-Thomas has found that “The sale of specialized knowledge, or the licensing of intellectual capital such as particular approaches or techniques, can contribute additional income streams. Yet companies continue to miss opportunities that in some cases could be more significant than current operations”.
The report ‘Managing Intellectual Capital to Grow Shareholder Value’* suggests a deep rooted problem. Most of the 51 companies surveyed fail to properly manage and fully exploit the 20 categories of intellectual capital examined by a team led by Prof. Coulson-Thomas. The companies studied generate some £10bn in revenues from their corporate know-how.
According to the University of Lincoln Professor: “The term ‘intellectual capital’ encompasses all forms of corporate knowledge that can be converted into profit, including know-how and processes, patents and copyrights, as well as the skills and experience of employees and relationships with customers and suppliers.”
Coulson-Thomas’ team compared ‘leaders’ who expected the contribution of know-how to product or service value to rise substantially or significantly with ‘laggards’ who expected it to increase only slightly, remain the same or decline. He explains: “We found the ‘leaders’ already generated significantly more income from intellectual capital than ‘laggards’. ‘Leaders’ understand key management of intellectual property issues, while ‘laggards’ fail to make ‘know-how’ an important driver of shareholder value.”
Coulson-Thomas finds: “‘Leaders’ are much more motivated than ‘laggards’ to exploit their intellectual capital. Developing new revenue streams, enhancing profits and growing existing revenues are given a higher priority. Leaders recognize that intellectual capital can be used to create new opportunities and attack and penetrate new markets. They are also more likely to measure their performance at managing and exploiting ‘know-how’.”
Customer information, design rights and R&D know-how have been the three most significant income generators. Both ‘leaders’ and ‘laggards’ expected all 20 categories of know-how examined in the ‘Managing Intellectual Capital to Grow Shareholder Value’ report to become increasingly important.
Coulson-Thomas explains: “The greatest growth in revenue earnings was expected to result from exploitation of websites and the internet, management methodologies, customer information, brands, distribution networks, licences, market intelligence and management tools and techniques. The least growth was expected to result from copyrights, goodwill, patents, royalties, design rights, proprietary technologies, software and R&D know-how – the areas many companies concentrate upon.”
The Professor finds there is much to be done: “Many companies fail to mention the contribution of Know-how in their accounts, give a balance sheet value for intellectual capital, or report intellectual property developments to the board. The majority of companies fail to properly manage most types of intellectual property.”
Approaching 47% of companies in the ‘Managing Intellectual Capital to Grow Shareholder Value’ study* considered better ways of archiving and accessing knowledge to be either important or very important. Coulson-Thomas explains: “Many companies are only exploiting know-how that happens to be in formats that can be easily stored, accessed and worked with. The rest is ignored.”
Coulson-Thomas believes: “Because there are many different forms of intellectual capital, staff responsible for recording, protecting and exploiting knowledge assets increasingly need knowledge management frameworks and repositories that can handle a diversity of formats. The various categories of know-how range from electronic databases, printed documents and slides through designs and other visual images, to audio and video material and animation.”
One knowledge management framework designed to address the problem Prof. Coulson-Thomas identifies is K-Frame (www.k-frame.com), winner of eBusiness Innovations Award for Knowledge Management. K-Frame allows intellectual capital from text and spreadsheets to multimedia and information off the Internet to be captured and stored within a single portable framework. Fuzzy searches can be undertaken, including on audio and video material. The search function can cope with spelling mistakes and even look for words in audio files and voice-overs. Knowledge creation tools and report and presentation generators can be included.
Such a knowledge management framework can support various activities that members of the board are involved with, such as the production of corporate credentials or annual reports. Thus multimedia content could be issued to interested parties by means of a CD-ROM disc. Laptop computer based sales support applications developed by Cotoco (www.Cotoco.com) for companies like call centre technology supplier Eyretel incorporate a pricing engine and proposal generator.
Coulson-Thomas concludes: “Boards should undertake formal reviews of corporate approaches to the management of intellectual capital, and formulate pro-active strategies for harvesting more value from it. Incentives should be put in place to encourage this. The focus should be upon areas where knowledge management activities can have most impact upon the critical success factors for achieving key corporate objectives.”
*‘Managing Intellectual Capital to Grow Shareholder Value’ and a related report ‘Developing a Corporate Learning Strategy’ are available from Policy Publications Tel: 00 44 (0)1733 361 149; Fax: 00 44 (0) 1733 361 459; or from www.ntwkfirm.com/policy-publications/
Prof. Colin Coulson-Thomas, an active consultant, an experienced chairman of award winning companies, and author of ‘The Knowledge Entrepreneur’ and ‘Developing a Corporate Learning Strategy’, led the ‘Managing Intellectual Capital to Grow Shareholder Value’ research project. He has reviewed the processes and practices of over 100 companies, helped over 100 boards to improve board and/or corporate performance, and spoken at over 200 national, international and corporate conferences in approaching 30 countries. He can be contacted by Tel: +44 (0) 1733 361 149; Fax: +44 (0) 1733 361 459; or via www.coulson-thomas.com
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