RECOGNIZING A FIRM’S INTELLECTUAL ASSETS

1. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS STRATEGIC MANAGEMENT BUAD 4980

2. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 4980 2

3. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets • Intellectual capitalcan 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 STRATEGIC MANAGEMENT – BUAD 4980 3

4. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets STRATEGIC MANAGEMENT – BUAD 4980 4

5. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets • Human capitalcan be defined as: • The sum of individual capabilities, knowledge, skills, and experience of the company’s employees and managers STRATEGIC MANAGEMENT – BUAD 4980 5

6. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets • Social capitalcan be defined as: • The network of relationships that individuals have throughout the organization and the firm’s external stakeholders STRATEGIC MANAGEMENT – BUAD 4980 6

7. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets • Knowledge within a firm consists of: • Explicit knowledge • TacitKnowledge STRATEGIC MANAGEMENT – BUAD 4980 7

8. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets • Explicit Knowledge consists of: • Knowledge that is codified, documented, easily reproduced, and widely distributed STRATEGIC MANAGEMENT – BUAD 4980 8

9. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS The Components of a Firm’s Intellectual Assets • Tacit Knowledge consists of: • Knowledge that is in the minds of employees and is based on the collection of their own experiences and backgrounds STRATEGIC MANAGEMENT – BUAD 4980 9

10. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Human Capital STRATEGIC MANAGEMENT – BUAD 4980 10

11. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Attracting Human Capital • Hirefor organizational compatibility and attitude, combined with functional skills or knowledge • Trainto develop specific skill and proprietary knowledge STRATEGIC MANAGEMENT – BUAD 4980 11

12. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Attracting Human Capital • Focus on prospective employee’s: • General knowledge and experience • Social skills • Values • Beliefs • Attitudes STRATEGIC MANAGEMENT – BUAD 4980 12

13. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Talent Recruitment • 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 STRATEGIC MANAGEMENT – BUAD 4980 13

14. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Talent Recruitment • 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 STRATEGIC MANAGEMENT – BUAD 4980 14

15. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Talent Development • 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 STRATEGIC MANAGEMENT – BUAD 4980 15

16. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Talent Retention • 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 STRATEGIC MANAGEMENT – BUAD 4980 16

17. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Talent Retention • 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 pathsconsistent with employee goals • Offer advancement opportunities and lower barriers to mobility within the company at appropriate times STRATEGIC MANAGEMENT – BUAD 4980 17

18. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Talent Retention • 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 STRATEGIC MANAGEMENT – BUAD 4980 18

19. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Diversity • 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 STRATEGIC MANAGEMENT – BUAD 4980 19

20. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Social Capital • 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 STRATEGIC MANAGEMENT – BUAD 4980 20

21. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Understanding Social Networks • 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 STRATEGIC MANAGEMENT – BUAD 4980 21

22. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Understanding Social Networks STRATEGIC MANAGEMENT – BUAD 4980 22

23. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Understanding 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 STRATEGIC MANAGEMENT – BUAD 4980 23

24. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Understanding 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 STRATEGIC MANAGEMENT – BUAD 4980 24

25. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Technology 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 STRATEGIC MANAGEMENT – BUAD 4980 25

26. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Technology 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 STRATEGIC MANAGEMENT – BUAD 4980 26

27. RECOGNIZING A FIRM’S 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 STRATEGIC MANAGEMENT – BUAD 4980 27

28. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 28

29. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 29

30. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 30

31. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Case Analysis: Solving the Challenges of Flexible Work Arrangements • 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 STRATEGIC MANAGEMENT – BUAD 4980 31

32. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 32

33. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 33

34. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 34

35. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Case 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 STRATEGIC MANAGEMENT – BUAD 4980 35

36. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Case 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. STRATEGIC MANAGEMENT – BUAD 4980 36

37. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS Case 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 STRATEGIC MANAGEMENT – BUAD 4980 37

38. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 38

39. RECOGNIZING A FIRM’S INTELLECTUAL ASSETS 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 STRATEGIC MANAGEMENT – BUAD 4980 39