recognizing a firm’s intellectual assets

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RECOGNIZING A FIRM’S INTELLECTUAL ASSETSRECOGNIZING A FIRM’S INTELLECTUAL ASSETS

STRATEGIC MANAGEMENT BUAD 4980

STRATEGIC MANAGEMENT BUAD 4980

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The Role of Knowledge in Today’s Economy

The Role of Knowledge in Today’s Economy

The growth and management of knowledge is becoming an increasing component of economic value of the firm

Becoming equally important as efficient control of physical and financial assets

STRATEGIC MANAGEMENT – BUAD 4980STRATEGIC MANAGEMENT – BUAD 4980

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The Components of a Firm’s Intellectual Assets


Intellectual capital can be defined as:

The value of a firm’s intangible assets

A contributing part of the difference between a firm’s market value and book value


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Human capital can be defined as:

The sum of individual capabilities, knowledge, skills, and experience of the company’s employees and managers




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Social capital can be defined as:

The network of relationships that individuals have throughout the organization and the firm’s external stakeholders




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Knowledge within a firm consists of:

Explicit knowledge

Tacit Knowledge




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Explicit Knowledge consists of:

Knowledge that is codified, documented, easily reproduced, and widely distributed




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Tacit Knowledge consists of:

Knowledge that is in the minds of employees and is based on the collection of their own experiences and backgrounds




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Human CapitalHuman Capital


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Hire for organizational compatibility and attitude, combined with functional skills or knowledge

Train to develop specific skill and proprietary knowledge

Attracting Human CapitalAttracting Human Capital


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Focus on prospective employee’s:

General knowledge and experience

Social skills

Values

Beliefs

Attitudes

Attracting Human CapitalAttracting Human Capital


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Traditional Recruitment Approach

Scan applicant pools, job boards for required functional skills

Weed out applicants whose experience or skills aren’t a close enough fit

Interview to confirm skills and capabilities, values and potential organizational fit

Talent RecruitmentTalent Recruitment


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Networking Recruitment Approach

Rely on existing employees or stakeholders to suggest potential candidates for recruitment

Use existing employees’ knowledge of the firm’s required skills, values and organizational culture to “pre-screen” referral candidates they know

Most often, these referrals will already be employed and may appear to be satisfied with their existing work situation

Talent RecruitmentTalent Recruitment


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Train and develop functional skills, as they are to be applied within the organization

Educate about the cultural aspects and procedural requirements of the firm

Provide broad exposure to the organization and its functions through participatory involvement

Transfer proprietary knowledge, as necessary

Monitor performance, organizational socialization and cultural integration

Rely on managers, peers and mentors for feedback

Talent DevelopmentTalent Development


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Seek alignment with an organization’s values, mission and culture

People who identify with, and are more committed to, the core values and mission of the organization are less likely to actively seek other employment, or be hired away by competitors

People who fit in with the organization’s culture will be happier in their work and more likely to make positive contributions

Talent RetentionTalent Retention


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Provide challenging and stimulating work in a supportive environment

Understand the personal employment and advancement goals of high-potential employees

Formulate personal development plans and alternative career paths consistent with employee goals

Offer advancement opportunities and lower barriers to mobility within the company at appropriate times



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Use financial and non-financial rewards and incentives – and personal recognition – to motivate

Keeping high-potential employees motivated is a vital organizational retention practice

Structure rewards and recognition according to the values of the individual – personal recognition may be more important to some than financial rewards

Employees may leave a firm because they are unhappy or don’t feel stimulated in their jobs – not solely because of compensation issues

Loss of talent can significantly reduce a firm’s competitive advantage



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Organizational diversity, beside being socially-desirable, can bring positive benefits to firms

Organizations that become flexible in their ability to absorb diversity will become more cost-effective in recruitment and talent retention than competitors who don’t

Firms with good reputations for diversity will attract individuals from a broader base of potential talent

For multi-national firms, diversity brings perspective and cultural knowledge that may provide competitive advantage

Greater diversity fosters group creativity and problem-solving through multiple perspectives, personal experiences and problem-solving approaches

DiversityDiversity


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Social networks within and outside companies often affect competitive advantage

High-talent individuals often have significant collegial and professional affiliations that may be equally important to them as the company for which they work

Internal and external networking ability may enhance problem-solving capabilities and innovation

Social networks among high-talent individuals may provide recruitment opportunities for other prospective talent

Social networks may facilitate abilities to obtain critical information from outside sources

Risk of social networks is that high-talent individuals may be lured into other ventures with colleagues

Social CapitalSocial Capital


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Social network analysis

Depicts patterns of relationships between individuals and groups to help diagnose the effectiveness of social networks

Identifies linkages between individuals and groups in social networks

Diagnoses communication patterns and effectiveness between individuals or groups within the network

Understanding Social NetworksUnderstanding Social Networks


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Understanding Social NetworksUnderstanding Social Networks


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Understanding Social NetworksUnderstanding Social Networks Closure

The degree to which all members of within a social network have direct access to the other members and can form relationships with them

Bridging Relationships

Relationships in a social network that connect otherwise

disconnected people


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Understanding Social NetworksUnderstanding Social Networks Groupthink

Tendency to protect and not challenge the shared beliefs of a group

Hoarding

Tendency to develop dysfunctional resource strategies for people and other resources that support group activity

“Stove-piping” or organizational silos

The tendency for groups to prefer to develop limiting relationships with those of similar backgrounds, work function or discipline

Engineers only networked to other engineers


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Technology in Social NetworksTechnology in Social Networks

Electronic team communication benefits

Enables social networks to communicate by e-mail, online meetings, or other means to enhance communication freedom and frequency

Easy to “add on” or include new members to broaden the social network

Fast response, not dependent on actual physical meetings


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Technology in Social NetworksTechnology in Social Networks Electronic team communication disadvantages

Potential risk of internal information loss to inappropriate end sources

Team members don’t develop the same kind of social bonds they would make by face-to-face communication and socialization

Trust

Loyalty

Understanding of differing organizational roles


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Preserving the Competitive Advantage of Intellectual Assets

Preserving the Competitive Advantage of Intellectual Assets

Dynamic Capabilities

Firms must develop strategies and means to identify, protect and increase competitive advantages derived from intellectual capital in its various forms

Laws that govern property rights and intellectual property may not be sufficient to prevent infringements or theft

Explicit knowledge can be documented and codified relatively easily

Tacit knowledge can only be documented and codified with permission or voluntary sharing by an individual possessing that knowledge


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Case Analysis: “Going Green” Helps Attract Talent

Case Analysis: “Going Green” Helps Attract Talent

Some companies are focusing on environmental platforms to recruit talent

Surveys have shown a large preference among new job entrants to work for companies with a socially responsible environmental culture

There are now online recruitment services and job boards specifically targeting “green company” job opportunities


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Case Analysis: Insights on Mentoring

Case Analysis: Insights on Mentoring

Many senior managers have had help getting to the top through the advise and counsel of mentors

Mentors may come and go at various stages of a career – often they need to be sought out

Mentors can provide valuable information, help expand networks, share their own hard-earned lessons or just provide support and encouragement

Sometimes a mentor must be cultivated – identify a mentor as a potential resource and ask for advise


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Case Analysis: Solving the Challenges of Flexible Work Arrangements


Employees who desire flexible work arrangements pose many challenges to employers

Some companies conduct a personality test of employees to determine if they have the discipline to work unsupervised

Some businesses rely on team interaction for problem-solving and project management

Allowing flexible hours with required meeting days

Conducting group meetings online


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Suggested best practices for flexible work arrangements:

Establish a performance base-line before unplugging workers from a formal office work environment / schedule

Allow employees to tailor their work habits to what they believe will be the most productive

Trust employees’ work ethics - if in doubt, measure performance against base-line metrics

Educate managers and co-workers on benefits and requirements of flexible work arrangements

Require regular meetings to reinforce team dynamics


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Case Analysis: MTV – Benefitting From a Diverse Workforce

Case Analysis: MTV – Benefitting From a Diverse Workforce

MTV Networks established a new position in 2006: Exec. VP and Chief Diversity Officer

Benefits MTV has attributed to its focus on diversity:

Greater focus on cross-cultural marketing and programming

Increased innovation, willingness to experiment

Better understanding of audience demographics


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Case Analysis: Alumni Programs – A Great Way to Stay in Touch

Case Analysis: Alumni Programs – A Great Way to Stay in Touch

Many companies keep in touch with their corporate “alumni” after they leave for other jobs

Leads to business referrals

Source of new talent through referrals

May attract some former employees back when their circumstances change


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Case Analysis: The Value (and Limitations) of Informal Friendships in

Organizations

Case Analysis: The Value (and Limitations) of Informal Friendships in

Organizations

Studies have shown that teams largely composed of “friends” are less productive than less friendly groups

Friend-dominated teams tend to be insular and totally self-reliant, less effective at brainstorming

Friendships most benefitting teams are with outsiders – those that extend the social network across a company

Arranging opportunities for cross-company interaction to expand the social network is desirable


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Case Analysis: Developing Social Capital – Do Women and Men DifferCase Analysis: Developing Social

Capital – Do Women and Men Differ Women tend to develop extensive, portable, external

social networks - including clients and business associates

Men tend to develop more internal team relationships, but not as many external relationships

Women tend to look for work situations that will allow them to leverage their external network relationships

Women’s previous inability to penetrate male-dominated team work cultures seems to drive their focus to broader external social networks


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Case Analysis: E-mail Faux PasCase Analysis: E-mail Faux Pas

Countrywide Financial Corp.’s CEO created a social networking firestorm when he inadvertently replied to a customer that his practice of repeatedly sending a series of “form e-mails” requesting foreclosure relief was “disgusting”.

The CEO had intended to forward the e-mail in-house instead of posting his reply directly to the customer

The customer posted the CEO’s reply on Countrywide’s customer forum and it went viral over the internet

The CEO lost his job, bonus and status as a result of customer dissatisfaction and the company’s performance in handling foreclosures.


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Case Analysis: E-mail Faux PasCase Analysis: E-mail Faux Pas

A prospect for the position of CEO in a company traded e-mails with a friend inside the company about the current retiring CEO, calling him an “idiot”

The friend replied back with a joke, that the CEO wannabe thought he would pass on to the current CEO

Unfortunately the e-mail with the joke forwarded all previous e-mail exchanges between the two, including the reference to the current CEO as an “idiot”.

The wannabe CEO never attained the position he sought


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Case Analysis: How 3M Retains Knowledge

Case Analysis: How 3M Retains Knowledge

3M uses several methods to attempt to retain knowledge, particularly in light of a large wave of expected retirements in their technical service area

3M has created its own searchable, proprietary database compiled by technical service engineers, with information gathered over years of service issues

3M also uses a low-tech storytelling approach to capture scenarios of issues or problems that have happened in the past or could happen

The scenarios are then brainstormed by teams of employees with technical skill in different function areas and procedural solutions worked out


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Case Analysis: Research in Motion, Maker of the Blackberry Loses an Intellectual

Property Lawsuit

Case Analysis: Research in Motion, Maker of the Blackberry Loses an Intellectual

Property Lawsuit Research in Motion (RIM), creator of the Blackberry,

experienced huge success, but was sued by a patent holder for patent infringements on five patents pertaining to Blackberry technology

At first RIM felt the patent infringements were without merit and the suits would be dismissed

Later, an appeals court indicated it might rule in favor of the claimant

RIM ended up settling out of court for over $600 million


recognizing a firm’s intellectual assets

Documents

firms intellectual assetsfocus

firms intellectual assets

management of knowledge

firms market value

firms intangible assetsa

general knowledge

knowledge train

managersthe components