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What Is Intellectual Capital—and What Is Its Relationship to Intellectual Property?

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Wed Jul 15 2015

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What Is Intellectual Capital—and What Is Its Relationship to Intellectual Property?-086955aeb3e15126d96363859935496ed2ec7d9df6d6698987d070e721cb1f55

Our first blog in this series introduced why talent development leaders should be interested in learning more about intellectual capital. Now, let’s examine what intellectual capital (IC) is, as well as how it relates to intellectual property (IP).

This isn’t simply a matter of semantics. The easiest way to explain it is that all IP is IC, but not all IC is IP. In other words, IP is a subset of IC. Actually, this is a rather basic principle to comprehend, and makes loads of sense—even though the world often uses these terms interchangeably. One way to describe IC is that it is the difference between book value and market value. That is, everything that creates value but cannot be captured by traditional accounting. 

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With that explanation as a backdrop, there are five overall types of IC: 

  1. intellectual property

  2. organizational capital

  3. human capital

  4. relationship capital

  5. business model. 

All together, these components comprise the total wisdom of an organization. The table below provides examples of each type of IC. 

**Table 1: Types of Intellectual Capital

**

Intellectual Property

Organizational 

Capital

Human Capital

Relationship Capital

Business Model

Patents

Information systems and technology

Employee engagement

Company brand

Strategy and competitive environment

Copyrights and trademarks

Sales/service processes and practices

Selection and training

Client relationship management approaches

Go-to-market approach and industry focus

Program deliverables

Product development methodology

Succession planning

Vendor/partner networks

Operational excellence

Trade secrets

Project management processes

Performance management

Client and vendor contracts

Product/service leadership

A Closer Look at IP

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Intellectual property is the easiest to codify, and it’s the one component of IC that, in many ways, defines the learning and development industry. IP is typically comprised of physically tangible deliverables that learning professionals use. These will come in multiple forms, including:

  • off-the-shelf, tailored, or totally custom programs

  • facilitator guides

  • software programs

  • application tools

  • assessment inventories

  • models

  • participant workbooks

  • videos

  • PPT presentations.

In general, IP falls into four broad categories: patents, copyrights and trademarks, program deliverables, and trade secrets (see Table 1). The challenge, of course, is determining who actually “owns” each form, as well as the respective usage rights. These issues can be very complicated topics (that I will address in a future blog post). 

Meanwhile, the other four categories of IC—organizational capital, human capital, relationship capital, and business models— are more difficult to codify and successfully replicate than IP. Even so some will argue that the real competitive advantage of an organization revolves around how it leverages these components—its structure, systems and processes; the relationships it develops; the people it nurtures; and the business model it takes to market. In fact, they regularly provide the strategic levers that enable an organization to apply its intellectual property to successfully address its customers’ business needs.

Although that assumption is valid in many ways, for the purposes of this blog post, let’s focus on how they might apply to the learning enterprise. Indeed, it’s important to note that the four other types of IC often affect the efficacy of the intellectual property used in L&D.

Evaluating Your IC

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Take a moment to evaluate your intellectual capital—not just simply in place, but in well-oiled shape. How is your learning function using this intellectual capital to improve your business and compete in the marketplace? Do you have systems and processes that lend themselves to creating a positive--and even extraordinary--end-user (think: learner) experience?

What’s more, what about your own staff? Are you applying best practices when selecting, developing, evaluating, and engaging L&D staff? These are the folks responsible for not only developing and administering your internal customer experience, but they also may be the face of your group in delivering your services to the business.

How have you branded your group and its offer internally? How are you reaching out to your internal market? What is your core capability and how are you leveraging it? How effective are your relationships with your internal clients and external suppliers? Finally, how well is the L&D’s business model aligned with your organization’s overall strategy?

Keep in mind that these are but a few of the issues and challenges that learning enterprises face Again, while the five types of intellectual capital apply to your greater organization, they also pertain to the subset of your talent development function.

Hopefully, this series of blogs will shed some light on how to best leverage your current IC, while continuing to develop future strategic levers.

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