Management of Intangible Assets in Higher Education

1. Management of Intangible Assets in Higher Education ¡Think Academic – Act Business!

2. Internal Structure, Processes and IP Policies PILA Kick-off Meeting, 19-20 January 2009 2

3. Agenda University Structures and Processes Identification and Controlling of Intangible Assets Intellectual Capital Report – A Measurement and Controlling Tool Case Study – Intellectual Capital Management in Spanish Universities The Process of Research Commercialization Human Resource Management Improving IPR Output

4. University Structures and Processes

5. Internal Structure, Processes and IP Policies Subject matter: Based on the previous component this part deals with the formal organizational requirements and frameworks necessary to implement an effective IP management system. Good practice examples of measurement and management of intangible assets, as well as selected processes and internal structures will be discussed to develop suitable recommendations for LA universities. This session also briefly introduces into the research commercialization process as well as provides an insight into the internal HRM in institutions of higher education in order to overcome disparities of priorities, views and objectives of the various “players” (i.e. management units, researchers). Goals: The component aims at providing a sound overview of existing structures processes and policies that work in similar contexts and equip participants with the necessary understanding to select from an array of available options. Didactic methods: Presentation, group work, cases, discussion

6. Starting Point Presently, no common international framework for the identification, measurement and disclosure of information on the intangible determinants of corporate value are available; there are only scattered efforts around the world. Therefore, it seems appropriate to devote some effort to developing new measurements and management techniques to help universities to identify, measure and monitor their intangible sources of value to increase the efficiency and effectiveness of their management. Ramirez, et al. (2007)

7. From Vision to Action VISION GOALS & POLICIES MEASURES IMPLEMENTATION

8. University Processes Vision Goals & Policies Intangible Capital Mgmt. Proc. Quality Mgmt. Steering Controlling Teaching Graduates Continuing Education Core Processes Tangible Capital Research and Development IPR HRM Administration Financing Support Proc.

9. R&D in Particular Vision Goals & Policies Mgmt. Processes Intangible Capital Quality Mgmt. Steering Controlling IP Production / R&D Desk Research Prototype Development Testing Adaptation Core Processes Idea IPR & Innovation Tangible Capital IP Valuation IP Protection IP Exploitation HRM Administration Financing Support Processes IP Monitoring

10. Influencing Factors on IP Creation

11. Identification and Controlling of Intangible Assets

12. Balanced Scorecard … is a strategic planning and management system that is used extensively in business and industry, government, and non-profit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals. An effectively implemented balanced scorecard can help an organization in many ways Increase focus on strategy and results instead of tasks Break down communication silos between departments Better understand and react to customer needs Improve organizational performance by measuring what matters Help leaders make better decisions based on leading performance indicators instead of lagging financial data Help leaders budget time and resources more effectively Help leaders and employees prioritize the work they do Source: www.balancedscorecard.org

13. Intangible Assets in the Balanced Scorecard Model (1) Source: Chareonsuk and Chansa-ngavej (2008), Kaplan and Norton (1992)

14. Intangible Assets in the Balanced Scorecard Model Source: Chareonsuk and Chansa-ngavej (2008), Kaplan and Norton (1992)

15. Intangible Asset Identification – Step by Step Source: Chareonsuk and Chansa-ngavej (2008)

16. Intangible Assets - Cause and Effect Relations Source: Chareonsuk and Chansa-ngavej (2008)

17. Cause Effect Relations in Each Department Source: Chareonsuk and Chansa-ngavej (2008)

18. Case Study – Measuring Intellectual Capital @ University of Johannesburg Read p.188-190 of Kok, A (2007) “Intellectual Capital Management as Part of Knowledge Management Initiatives at Institutions of Higher Learning” Discuss in small teams of 3 persons (20 min) Which indicators used for measuring intangible assets are relevant for my university to capture? What indicators are missing for your university that you think are important or relevant? Is data on these indicators available, so are the indicators verifiable? Summarize your findings in the team and select one presenter to share insights with the audience! Kok, A (2007) “Intellectual Capital Management as Part of Knowledge Management Initiatives at Institutions of Higher Learning”v

19. Intellectual Capital Report – A Measurement and Controlling Tool Case of FH JOANNEUM

20. Background All universities in Austria have been legally obliged since 2006 to submit an annual Intellectual Capital Report, and 20% of the government funding given to universities is dependent on the successful development of their intellectual capital However, the Intellectual Capital Report is no longer limited to research facilities and universities. An increasing number of businesses are using Intellectual Capital Reports as an instrument of strategy planning and corporate policy development. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

21. Essential Prerequisites Processes clearly defined Intellectual capital report model developed Indicators defined Data sources and data availability given Goals for indicators defined based on vision and policies

22. Structure of Intellectual Capital (1) The legal environment, strategies and knowledge goals of FH JOANNEUM are the framework conditions essential in creating and developing intellectual capital. The intellectual capital is divided into three areas: human capital structural capital and relational capital Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

23. Structure of Intellectual Capital (2) Human capital describes the skills and expertise of FH JOANNEUM staff, as well as their motivation and learning ability. Structural capital assesses the environment that employees need to work productively. It includes structures, processes and procedures documented at FH JOANNEUM. Relational capital shows the extent to which FH JOANNEUM is networked with external partners and perceived by interested parties. The term “networking” refers to cooperation with other institutions such as research establishments or business enterprises. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

24. Core Processes The core processes are divided into the areas of teaching, research & development and continuing education. Teaching refers to postsecondary education and focuses on the degree programmes provided The area research & development includes the implementation of research projects and innovative services. The core process continuing education deals with symposia, seminars, lectures, continuing education events and the postgraduate courses The benefit of all these core processes is finally reflected in their output and impact. The success of the processes is measured by their impact on the relevant stakeholders, such as graduates or funding partners. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

25. Knowledge Goals - Teaching Human Capital FH JOANNEUM staff have a high standard of professional expertise, scientific qualification and didactic experience. FH JOANNEUM aims at promoting equal opportunities for men and women in all corporate sectors and welcomes students and lecturers from any ethnic or religious background. Structural Capital The professional and scientific qualification of students is ensured by a limited number of student places, by degree programmes based on a European university model and by applied research knowledge generated in research units and centres for research & development. Learner-centred work in small groups, university infrastructure (libraries, laboratories, communication and information technology) and the integration of e-learning scenarios provide an optimal learning environment. Relational Capital International cooperation as well as student and lecturer exchange with partner universities consolidate the international position of FH JOANNEUM. Close networks with partner companies and training models together with industry (project assignments, work placements and co-operative education) ensure the quality and practical focus of the courses. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

26. Knowledge Goals – R&D Human Capital FH JOANNEUM staff are active in a wide range of multifaceted projects of application-oriented research, continuously generating knowledge for the university, industry and society. The expertise gained from research & development (R&D) provides the basis for research-based teaching. Structural Capital The flexible structures of FH JOANNEUM form an effective basis for implementing sophisticated research tasks. State of the art laboratory and IT infrastructure and libraries support the centres of research and development and the research units in their projects. Relational Capital Partnerships with business enterprises and high quality standards are key success factors in solving challenging and innovative tasks in a joint effort. In this way, FH JOANNEUM actively contributes to strengthening the competitive capacity of Styria as a business location and centre of research. Partnerships with universities and universities of applied sciences both in the region and at the national and international level ensure exchange and advancement of research results. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

27. Knowledge Goals – Continuing Education Human Capital FH JOANNEUM staff offer their broad knowledge gained in teaching and application-oriented research projects to a wider public in the form of continuing education. FH JOANNEUM is a reliable partner in lifelong learning. Structural Capital FH JOANNEUM provides effective structures for targeted continuing education by organising regular lecture series, postgraduate courses, symposia, the SUMMER BUSINESS SCHOOL, and e-learning courses. Relational Capital The continuing education programme of FH JOANNEUM enables industry, the universities and society as well as its own graduates and employees to acquire knowledge on a regular basis and thus strengthen their competence. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

28. Intellectual Capital Report Model The intellectual capital reporting model of FH JOANNEUM consists of four areas: framework conditions, intellectual capital, core processes, and output and impact on the relevant stakeholders. Source: FH JOANNEUM Intellectual Capital Report (2007/2008)

29. ARCS Intellectual Capital Report Model Source: Koch et al (2000), Measuring and reporting intangible assets and results in a European Contract Research Organization

30. Data Collection The roughly 145 indicators for the FH JOANNEUM Intellectual Capital Report were determined on three different levels. Most of the figures are routinely gathered by central departments and were thus drawn from existing statistical data sources. A smaller proportion of the data was collected by the degree programmes, institutes and departments, while in a few cases, the data had to be gathered by every single employee of FH JOANNEUM.

31. Example Indicators – Human Capital

32. Example Indicators – Structural Capital

33. Example Indicators – Relational Capital

34. Example Indicators – Core Process R&D (1)

35. Example Indicators – Core Process R&D (2)

36. Example Output Indicators ARCS Source: Koch et al (2000), Measuring and reporting intangible assets and results in a European Contract Research Organization

37. Case Study – Intellectual Capital Management at Spanish Universities Apply your Knowledge! Connect Contents! Draw Conclusions!

38. Case Study – Work Description Read through the case carefully (40 min)Ramirez, et al. (2007), Intellectual capital management in Spanish universities Form groups of approx. 5 persons and discuss the following questions (20 min): What is the benefit of a structured intellectual capital management and reporting system for universities? Which of the three specific cases presented is most suitable to the situation in your country and/or your university What are Pro‘s and Con‘s of each system? Take some time (10 min) to summarize your findings on a piece of flipchart paper and post it to the wall

39. The Process of Research Commercialization

40. Starting Point Changing role (missions and functions) of universities in society from education as basic function to research as key objective to a more comprehensive understanding today Increased dependence of universities on third sources for financing This leads to the concept of the „Entrepreneurial University“ of which the core activities are research commercialization and technology transfer. Source: Farsi and Talebi (2009), Application of Knowledge Management for Research Commercialization

41. Types of entrepreneurial activity by universities Industry-university collaborations University-based venture funds University-based incubator firms Startup founding by academicians Double appointments of faculty members in firms and academic departments Technology transfer Source: Farsi and Talebi (2009), Application of Knowledge Management for Research Commercialization

42. Reasons for universities involving in research commercialization Protect and license university-owned intellectual property Enable and attract more sponsored research funding? Purely generate income by licensing and other IP commercialization Gain reputation and recognition for the institution, faculty or administration Attract new and more entrepreneurial faculty Create jobs for graduates, consulting and research opportunities for faculty Create new incentives for individual inventors Facilitate the creation of new or start-up businesses and jobs based on University intellectual property Stimulate cluster and regional economic growth Develop science parks and incubators Disseminate university expertise embodied in IP generation to society Source: Farsi and Talebi (2009), Application of Knowledge Management for Research Commercialization

43. Academic entrepreneurial capability University research commercialization is a process to commercialize new knowledge and technologies. This process transforms research results into new products, goods and services that create value. Systems and process capabilities such as knowledge management system, human resources management system, commercialization system, educational and research processes Structural capabilities units such as market research, technology transfer, incubator, venture financing, intellectual property protection, etc. Member's capabilities such as entrepreneurial skills, learning culture, and entrepreneurial culture Source: Farsi and Talebi (2009), Application of Knowledge Management for Research Commercialization

44. Research commercialization as process Market Research & Opportunity Recognition Opportunity Assessment & Selection Idea Processing Feasibility Study Prototyping Market Test Business Planning Start-Up or Tech Transfer Commercialization Feedback Source: Farsi and Talebi (2009), Application of Knowledge Management for Research Commercialization

45. Human Resource Management Improving IPR Output

46. Why do we need Incentives and Motivation? Staff and employees are the driving force in knowledge based organizations such as Higher Education, Research, IT, etc. Need for increased R&D as well as IPR Output Retaining key staff and avoiding institutional brain drain Principal – Agent problems Employees possess more knowledge than they might willingly share Asymmetric information between employees and organization Employees might not provide full effort in the development of intangible assets

47. What tools do we have available? Positive vs. negative incentives Reinforcing or preventing certain activities Monetary incentives Individual remuneration (e.g. extra pay, travel support, …) Organizational rewards (e.g. reward budget for dept., seed financing) Non-Monetary Empowerment Social recognition (e.g. promotion of success) Providing time (i.e. reduction of teaching load for R&D activities) Inclusion in (annual) performance appraisal Work Environment Providing necessary infrastructure and equipment Corporate Culture (allowing failure is essential for entrepreneurial activity) Ensuring Work-Life Balance Providing stimulating work environment supporting creativity and entrepreneurship

48. Providing a Stimulating Work Environment The Google Example http://www.youtube.com/watch?v=aOZhbOhEunY http://www.youtube.com/watch?v=9-RoxxBE2Zg One of the things that Google does to encourage innovation and provide an inclusive working environment is to actively encourage the "20% project". All Google engineers have 20% of their time to pursue projects that they're passionate about. This has lead to the creation of some well-known Google products, like Gmail, and Google News Source: Google (2010)

49. Discussion What can we learn from this in order to change our own work environment? What concrete things could we take from the video clips and try to implement in our institutions or departments? What change can I make personally and what aspects of the work environment can I influence directly? How can I influence my organization to make changes? Source: Google (2010)