Managing Intellectual Capital / Property for Services Firms

March 2016

by Tom Esposito, Chairman & Managing Partner, The Insight Group

Introduction

Intellectual capital is the combination of the Intellectual property (IP) held by a business and the people in that business that can exploit and increase it. An early (1994) use of the term defined the complement to IP as "what walks out of door at the end of the day". The term became more widely known in the context of assessing the wealth of organizations. A metric for its value is the amount by which the market value of a firm exceeds its tangible (physical and financial) assets minus liabilities. This contrasts with physical and financial forms of capital; all three make up the value of an enterprise. Measuring the real value and the total performance of intellectual capital's components is a critical part of running a company in the Knowledge Economy and Information Age. Understanding the intellectual capital in an enterprise allows leveraging of its intellectual assets. For a corporation, the result will optimize its stock price. Managing IC in the “services” business is essential to improving quality outcomes as well as increasing operating profits.

The Services Intellectual Capital (IC) Management Process

The Customer Engagement and Delivery Processes are where most innovation and creation of Intellectual Property / Capital occurs. Having a disciplined process to mine the results of the engagement (i.e. End-of-Engagement Process) is essential to capturing, evaluating, pricing and reusing IP/IC. The overall process is depicted below:

Types of Intellectual Capital/Property (Assets) for the Services Business

Reusable offering delivery methodologies
Pricing methodologies
Proposals linked to practices & offerings
Proprietary tools (i.e. custom software, excel spread sheets, etc.)
Benchmarks / Industry data
Processes / Templates / Frameworks
Relationships and Awards

The Role of the IC/IP Management Leader

Reusable Intellectual Capital development and management is a key driver for success in the services business; with the right people, processes, and technology, an organization can manage IC Assets and add strategic and economic value to its services portfolio. The reuse of continuously improved IC assets such as offerings, delivery methodologies, and assessment tools can be a major driver of both profits and quality outcomes. This is where the role of an effective IC/IP Management Leader comes in.

Major Responsibilities

Oversees/Assesses the overall effectiveness of the IC/IP Management process wherever it is executed
Works with Practice / Competency Leaders and Business Process Owners, defining the IC asset management process so that it is unambiguous and can easily be subjected to audit.
Assumes overall responsibility for the risks associated with the process irrespective of the local of execution.
Ensures a consistency of experience for managers and professionals across the whole company.
Works with the IT Leader, acquire and deploy tools to effectively run / manage the process

Accountability and Authority

While the IC/IP Management Leader does not have to have line control over the people executing a process, He/she does have an overall responsibility for the standards and quality of work in the process. He/she has a significant role to play in the definition of the process and the overall management and education of the people that deploy and use the process.

Business Impact

High quality reusable IC/IP is an essential element to drive profitability, high customer satisfaction, and growth. For more information on running a successful services business and IC Management, check out our web site www.insight-group.com .

If you would like more information on this topic, contact Tom Esposito (esposr@insight-group.com)

Tom Esposito is Chairman and Founder of The Insight Group. Prior to INSIGHT, Tom had a distinguished career at IBM with a broad range of responsibilities, including senior executive positions in organization and management systems, marketing, and services where he was Vice President of Global Consulting and Services and Chairman of the Services Executive Council. Tom is credited as one of the key architects of IBM’s Global Services business, which today is IBM’s largest & fastest growing business.