ATD Blog
What Is Intellectual Capital—and What Is Its Relationship to Intellectual Property?
Wed Jul 15 2015
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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).
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).
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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.
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:
With that explanation as a backdrop, there are five overall types of IC:
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intellectual property
intellectual property
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organizational capital
organizational capital
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human capital
human capital
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relationship capital
relationship capital
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business model.
business model.
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All together, these components comprise the total wisdom of an organization. The table below provides examples of each type of IC.
All together, these components comprise the total wisdom of an organization. The table below provides examples of each type of IC.
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**Table 1: Types of Intellectual Capital
**Table 1: Types of Intellectual Capital
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Content | Content | Content | Content | Content |
Content Intellectual Property Intellectual Property | Content Organizational Organizational Content Capital Capital | Content Human Capital Human Capital | Content Relationship Capital Relationship Capital | Content Business Model Business Model |
Content Patents Patents | Content Information systems and technology Information systems and technology | Content Employee engagement Employee engagement | Content Company brand Company brand | Content Strategy and competitive environment Strategy and competitive environment |
Content Copyrights and trademarks Copyrights and trademarks | Content Sales/service processes and practices Sales/service processes and practices | Content Selection and training Selection and training | Content Client relationship management approaches Client relationship management approaches | Content Go-to-market approach and industry focus Go-to-market approach and industry focus |
Content Program deliverables Program deliverables | Content Product development methodology Product development methodology | Content Succession planning Succession planning | Content Vendor/partner networks Vendor/partner networks | Content Operational excellence Operational excellence |
Content Trade secrets Trade secrets | Content Project management processes Project management processes | Content Performance management Performance management | Content Client and vendor contracts Client and vendor contracts | Content Product/service leadership Product/service leadership |
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A Closer Look at IP
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:
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:
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off-the-shelf, tailored, or totally custom programs
off-the-shelf, tailored, or totally custom programs
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facilitator guides
facilitator guides
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software programs
software programs
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application tools
application tools
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assessment inventories
assessment inventories
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models
models
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participant workbooks
participant workbooks
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videos
videos
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PPT presentations.
PPT presentations.
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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).
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).
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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.
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.
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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.
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.
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Evaluating Your IC
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?
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?
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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.
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.
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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?
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?
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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.
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.
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Hopefully, this series of blogs will shed some light on how to best leverage your current IC, while continuing to develop future strategic levers.
Hopefully, this series of blogs will shed some light on how to best leverage your current IC, while continuing to develop future strategic levers.