Being able to translate the ideas of intellectual capital into performance-enhancing actions and credibly gauging its value are what make an intellectual capital initiative worthwhile. Chapter 10 outlines key steps in developing a sustainable, value-adding intellectual capital program: think of your organization as a knowledged-based, intellectual capital supported enterprise find the hook map the organizational intellectual capital; s set up initial measurements; e make sure leadership buys in; s build an active communication system; s develop a supporting technology infrastructure; s create opportunity zones for people; e capitalize on created value; e build the future now.

"The organization no longer has to rely on the executive suite to do its knowledge work. People throughout the firm can be asked, encouraged, and even required to think like a CEO."

Peter Drucker, organizational thinker and writer

While there is no single formula for making intellectual capital work in an organization, there is a perspective, reference points, and set of behaviors that enterprises can use to begin an intellectual capital process or initiative. The case studies in Chapter 7 show a variety of starting points and places of emphasis for intellectual capital efforts. The lesson is that anyone considering creating an intellectual capital effort should start -with the particular needs of their organization.

Whether a company begins with an enterprise-wide view of its intellectual capital effort as a whole or it starts "where it feels the pain" or "can make the gain" can only to be determined on an organization-by-organization basis. Each company is different and operates with its own particular set of conditions. If there is an unprecedented strategic dilemma, as happened at Rockwell International, conditions may demand a laser-type focus on solving the specific critical issue. In other cases, a company with an extended history of dealing -with intellectual capital issues may decide that the time has come to redefine how it is operating and make a strategic change, as was the case targeting intellectual property at Dow Chemical.

Factors that can play a role in both the decision to undertake an intellectual capital initiative, and the scope and shape of that initiative, are: the background of the enterprise, any special conditions that have emerged, the capabilities of the people involved, immediate and long-term goals, and the readiness of the enterprise to take on an initiative.

An intellectual capital initiative can be started proactively by an individual inside the organization, or it may be forced on a company by a convergence of external conditions. Regardless of the beginning circumstances, the ten points below give a set of navigation points for framing and implementing an intellectual capital process. Each organization may emphasize one cluster of points more than some others, but all will have a common need to build a basic set of capabilities and action principles.

1. THINK OF YOUR ORGANIZATION ASA KNOWLEDGE-BASED, INTELLECTUAL CAPITAL SUPPORTED ENTERPRISE

Instead of looking at your organization solely in term of its physical or financial assets, see the enterprise as a knowledge-based firm with an array of intellectual capital resources.

Start to think in terms of how mobilizing intellectual capital will be the enterprise's competitive advantage. Identify intellectual capital inputs that allow the organization to operate and track the degree to which they are embedded inputs into the firm's goods and services. Observe what people know, how they relate, and how they have infused their know-how into the organization and its products. This focus will reveal how an organization is created, innovations take place, processes happen, and revenue is generated.

A strategic knowledge-based view will expose how pervasive the role of intangibles is in the company. Pay attention to how these capabilities allow the organization to generate value. Look for areas where intellectual capital development and sharing are underutilized, ignored, or even impeded. The biggest gains from an intellectual capital program may come from opening lines of communication, discovering trading opportunities, and in cost savings. Notice also what intellectual capital has been cultivated by the organization or acquired by it so that it can achieve its strategic goals.

2. FIND THE HOOK

Gain the sponsorship of a senior leader in the organization who sees the need for this new perspective. Then, find out what particular performance problems people are having in the enterprise that can be solved by leveraging the organization's intellectual capital, either by cutting costs, generating revenue, or changing key relationships. This -will enable buy-in and provide you -with a legitimacy and a license to operate.

Make sure that these are the types of problem solving that you can show to the rest of the organization so that everyone can see that taking intellectual capital seriously is significant to their operations and future.

Start a network of other individuals in the enterprise who also see the need for an intellectual capital effort. Begin a shared learning process with these colleagues about the different dimensions of the field of intellectual capital and its ongoing developments.

3. MAP THE ORGANIZATIONAL INTELLECTUAL CAPITAL

Building on what was learned by people identifying their performance issues, comprehensively map where the stocks of intellectual capital are in the organization and how they flow throughout the enterprise to support achieving strategic goals. This will show where people are being supplied with the intellectual capital inputs they need to do their jobs and how they, in turn, transform those inputs into new and greater value for their customers. This will involve mapping people and their skill sets, processes, structures, and relationships. Be sure to include and utilize any databases that have already been developed in the mapping scheme.

Mapping will reveal where the system seems to be operating satis­factorily and where problem areas are. See "hot spot" problem areas as opportunity zones and places to start pilot projects that show the value of intellectual capital to the organization.

A small core group of people can carry out the mapping process with the aid of a network of individuals in the different operations of the enterprise.

4. SET UP INITIAL MEASUREMENTS

A sizeable number of measures and indicators are already in use in most organizations. Review them and determine which ones can show changes in performance tied with intellectual capital initiatives. Use these as trial measures initially, but over time develop a tested set of measures that the organization and individuals can deploy to navigate theirfields and develop their capabilities.

These measures need to be revised and calibrated as needed to point out the extent of intellectual capital, and how it is being gener­ated and used to support internal operations or turned into profits externally.

Since intellectual capital is composed of intangibles it is inher­ently difficult to measure them easily and precisely. In many cases, measures can at best tell if the organization is going in the right direc­tion. Be careful to make sure that measurements are serviceable, that they warrant their cost, and that they do not take precedence over performance.

One reason for the demand for extensive measurements is that the concept of intellectual capital can be seen as hard to grasp. The more the concept is understood, the less the need to provide numerous measurementsasproof of value. Using simple equations that are easily communicated, such as Rockwell's Value =/(intellectual capital + financial capital), can go a long way to explaining the value of intellectual capital. As the organization comes to know how intel­lectual capital can be used, it is in a better position to choose an appropriate set of measures to guide and assess the organization's progress.

5. HAKE SURE LEADERSHIP BUYS IN

After the intellectual capital initiative is validated in pilot projects and its "better practices" begin to be shared with the different business units, the leadership of the enterprise needs to decide how, and to what extent, it will incorporate this new viewpoint into its strategies and navigation practices.

In one sense, as is shown in the Rockwell International and Clarica case studies, it may be best for leadership to have a limited, sponsoring role in the intellectual capital endeavor. However, they should be aware of its value and how they can nurture and best use the enterprise's intellectual capital for corporate advantage.

6. BUILD AN ACTIVE COMMUNICATION SYSTEM

Intellectual capital and its applications will be new to most organiza­tions. Since people will be more likely to try what they know works, make sure that stories of the successful changes in performance are widely shared throughout the enterprise and, as appropriate, with suppliers and customers. A good story, told by word of mouth, may be the most powerful communication tool.

Another reason for an active communication system is that in the world of intellectual capital, people co-create wealth. Xerox's Eureka project (see Chapter 4) demonstrates how a group of technicians were able to develop and share their growing body of knowledge with each other globally, with great benefit to their colleagues, the corporation, and their customers.

Finally, intellectual capital is cultural. It is a living thing, not an artifact. It can only thrive where there are shared values, extensive trust, and active communication that support and enhance its growth.

7. DEVELOP A SUPPORTING TECHNOLOGY INFRASTRUCTURE

In contrast -with financial or physical capital, intellectual capital can grow in value the more it is recycled. The more widely it is deployed, the greater the chances of it developing a critical mass of applications and user population. While a culture of collaboration enables the flow of knowledge in an enterprise, having appropriate technologies amplifies the speed, richness, and effectiveness with which intellectual capital can be accessed, used, and reused, as well as radically reducing costs of distribution. This facilitates the creation of a powerful intellectual capital capability.

An effective technology infrastructure supports all forms of commu­nications, relational databases, analysis, and decision-making. Dow Chemical had a major advantage by virtue of its enterprise-wide database of its intellectual property. The ability to access that database was crit­ical in deciding what intellectual property Dow would find it most advantageous to the company to retain, make available to the market, or let lapse.

Technology by itself is not the answer. People, not technology, create an organization's intellectual capital. Technologists and intellectual capital practitioners must, therefore, partner to design a people-centered infrastructure.

8. CREATE OPPORTUNITY ZONES FOR PEOPLE

Human capital is the core of intellectual capital. In the knowledge economy, with itsflatter and increasingly virtual organizations, the trend is for people to be more related to their projects than their company.

The extended enterprise will need to form communities of practice -with the broad mix of permanent employees, temporary employees, staff provided by suppliers, and even customers that come to make up its workforce. New levels of both leadership and management skills are extremely important to guide this hybrid workforce. Leadership must make sure to provide the context and create the opportunity zones so that its workforce will fully invest itself in achieving desired goals.

9. CAPITALIZE ON CREATED VALUE

Starting from the strategic vision of the firm and its stage of devel­opment, plan on how to grow, harvest, and extract value from the company's innovations, intellectual assets, and intellectual property. Determine how these intellectual capital resources will enhance the competitive position of the enterprise on a cost, revenue, or differenti­ation basis.

Chart the process steps for extracting value for the various forms of intellectual capital. Understand how conversion of human capital to structural capital can take place and be ongoingly leveraged by the organization. Identify the business units of the organization that are involved in generating intellectual capital and include key people from these as advisors on what and how its intellectual capital can be recycled across the organization, or marketed to the outside world.

The result will be an intellectual capital management system that the organization can use to capture, package, and leverage its critical know-how and convert it into structural capital for ongoing reuse. The organization will then have a reliable way to capitalize the value of its intellectual capital resources, ranging from its database management systems, manufacturing and sales automation tools, its array of intellec­tual property types (patents, trademarks, and copyrights), as well as other powerful intellectual assets, such as brand.

10. BUILD THE FUTURE NOW

Intellectual capital is the future of the organization. It must be nurtured systematically as a core competence so that the enterprise can continue to renew and develop itself. Companies need to start thinking 5-25 years into the future. The need is to visualize the kinds of skills, knowledge, process, communications, and technical competencies that will translate into the goods and services its customers will be seeking.

Think of the values, organizational structure, and relationships that have to be cultivated to support the development of those compe­tencies. Exploring the future will also encourage rethinking of the present and promote the reshaping of the enterprise so that it becomes malleable enough to allow responses in unexpectedly changed condi­tions.

The time to begin building those competencies for the future is now. While no one can predict the future, the deep capabilities that are necessary to cope take time to develop. When done intelligently, the capacities that are created -with an eye on future needs also give the enterprise a cutting edge advantage over its competitors in today's market, as well.

A RECIPE FOR SUCCESS

Starting an intellectual capital effort can be a scalable undertaking, in terms of both the numbers of its people and the amount of its budget dollars. If carefully defined and crafted, the initiative can accomplish a great deal. It needs to operate as if it were a recipe by bringing together the proper ingredients of an understanding of the field, committed people, the right skill sets, appropriate leadership support, and strong internal and external connections.

A good intellectual capital initiative, like a good recipe, does not happen in one swoop, but is shaped over time as the inputs are transformed. As the organization learns from its experiences and applies what it has learned in new experiments, it produces its next stage of capacities, structures, relationships, and directions. The steps outiined above are essential elements for an intellectual capital endeavor. Artfully include them for a successful outcome.