Capital, capital, and more capital. You could be forgiven for thinking that there’s a type of capital for everything in existence. It seems that way, doesn’t it? Financial capital. Human capital. Social capital. Physical capital. Information capital. The list goes on and on…
And there’s intellectual capital, which refers to the sum of knowledge or skill set of a particular individual or company. It can be utilized for some money-making enterprise or other useful endeavour, and it includes all the intangibles that make up a person or business. In fact, while separate from physical and financial capital, the three of them together make up the true value of a company.
Before it can truly be called intellectual capital, it most likely exists as intellectual property. We’ve all heard about intellectual property, usually in regards to some artistic or literary work (music, film, literature). An artistic creation - whether a book, song, painting, film, etc. - belongs to the person who made it, even if they can’t physically hold it in their hand (like a musical composition, or a character in a story). It’s intangible, but it is the intellectual property of that person or corporation (like a movie studio). Harry Potter, for example, belongs to and is the intellectual property of his creator, J.K. Rowling. IP (intellectual property) can include more than just artistic creations...discoveries, inventions, words, phrases, symbols, designs, and procedures can all fall into this category.
But, IP is not automatically intellectual capital (IC). It needs to be used in a business or money-making endeavour before it can be called that.
Intellectual Property to Intellectual Capital
In order for intellectual property to be intellectual capital, it needs to:
- drive and increase profits
- provide a competitive advantage over the competition
- help to gain new customers
- assist in the creation of new products or services
- improve the overall business in some capacity
There are many, many ways it could do that, depending on the kind of intellectual property you have, and it need not accomplish all of them. Just one is sufficient. If it can be converted into money, either directly or indirectly, then you have intellectual capital.
A simple example might be Nike and their “Just Do It” or “Impossible is Nothing” slogans. They are the IP of the company, but they indirectly help drive profits and gain new customers because they are memorable and create a positive image that people want to be a part of. This turns them into intellectual capital as well.
Increasing Your Intellectual Capital
So, having creations, ideas, and procedures or methodologies are all examples of intellectual property that could be utilized as intellectual capital. Therefore, you need to increase your IP if you want to increase your IC.
Companies spend a great deal of money on employee training. Maintaining skills, and adding new skills to their workforce means a greater chance of new intellectual properties. Any investment in the skill level of your employees will undoubtedly be returned. Understanding new technology and trends leads directly to advances in procedure and methodology, which can increase profit, customer acquisition, efficiency, and market share. An ample employee training budget is crucial. Provide training in areas and skills that might not seem to support or lend themselves to your industry directly...those skills and ideas may prove the catalyst to seeing new connections and better ways of doing things.
Encourage Out-of-the-box Thinking
Companies that ACTIVELY encourage their employees to think outside the box usually benefit from that corporate idea. Google is an excellent example of this. From a simple search engine, they have diversified and monetized many other niches, from content creation and business applications, to Adsense and Google Glass. And all because they encouraged their employees to explore other avenues and new ideas. Alternatively, businesses that are too strict and slavish to the way things have always been done generally become stagnant, and eventually obsolete (especially in the modern world). Just because you’ve always done something in a particular way doesn’t mean it’s the best way to do it. Encourage your employees to ask “why?” and “what if…?”
Too often, we think of the competition within an industry as the enemy. And while that may be true to a certain degree, the benefits of the occasional collaboration could be great. It introduces new ideas, new ways of doing things, new obstacles, and new solutions. It may not be possible in all industries, but it’s certainly worth a close look.
Write Something. Anything.
Content marketing is (or was, at least) a buzzword in the business world because it works. Creating and distributing useful and relevant information for free is something that virtually every business should be doing. Articles, white papers, ebooks, and blog posts are most definitely IP, and they can quickly and easily be converted into IC when used properly. Writing a weekly (or daily) blog for your customers establishes you and your company as an expert or authority in your industry. People trust you. They recommend you. New clients end up at your portal via social media and search engines. They like what they see, and decide to purchase your product or service as a result. Blogging is the single most cost-effective method for new customer acquisition according to Hubspot. The individual blog post may not be worth anything by itself, but it helps to drive profit and customer acquisition, and that is definitely worth the investment.
New ideas. New techniques. New thinking. Those are the things you need. They drive business. They increase your competitiveness and market share. And you get them by taking intellectual property and using it in some way to improve your company. Invest in your employees. Cultivate a corporate culture that encourages creative thinking. Collaborate with others whenever possible. And blog (or guest blog, or have a newsletter, or an annual white paper giveaway…). Intellectual capital may be hard to measure, but you’ll most definitely know if you lack it.
Photo by Pixabay