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Managing your company's intellectual assets

Managing your company's intellectual assets

Most of today's middle-aged or older engineers grew up accepting the tradition of seniority-based employment security. This was the culture in which their parents worked.

According to this tradition, seniority was rewarded and hierarchy was respected. Younger, less-experienced employees were usually released first when occasional downturns occurred (last hired, first fired). Pay and various perks often increased with seniority, even when the employee's productivity leveled off, as long as their performance was accepted as "satisfactory." Seniority was considered an important retention factor.

However, constantly improving technology beginning in the late 1980s increased worldwide competition. To be competitive in such a dynamic environment, firms created flatter, more flexible organizations, and shorter product development cycles. Most importantly, they are now learning that they must effectively manage their intellectual assets. Here's where "the rubber meets the road." Managing a firm's intellectual assets is fast becoming the major source of competitive advantage.

Who has employment security? The importance of intellectual assets requires that companies put a high priority on attracting, developing, and retaining those associates who can and do enhance their competence and commitment with respect to the firm's strategies and goals. Now, employment security can only be assured to those who remain motivated and well-qualified in their chosen fields.

No single formula exists as a guide to manage intellectual assets. However, the following guidelines should help.

First, don't confuse Performance Evaluation or Employee Development with managing intellectual assets. These other measures were once treated as time-wasting, ritualistic chores disconnected from the firm's real work. Now, intellectual assets must be implemented as a major function, which is vital to the firm's present and future success. Managing these assets must have total organizational support, including that of top management.

Establish an environment which encourages, enables, rewards, and requires all employees to upgrade their knowledge, skills and motivation.

Providing such motivation should include the following steps:

Give employees some control over their work, opportunities to grow, and a sense of mutual reliance to keep them highly motivated and to improve their levels of productivity.

  • Prepare plans to close the gaps between existing individual/company knowledge and skills (both hard and soft), and the necessary knowledge and skills that are missing.

  • Give the highest priority to activities that close this gap.

  • Prepare compensation plans to pay employees for acquiring increased knowledge and skills, for proposing new ideas, and for participating in the achievement of the firm's goals.

As we move away from the traditional industrial economies and structures, we must be careful to not do too much thinking for our knowledge workers, or we will fail to take full advantage of the assets we value most the employee's ability to think and create.


Ask the Manager

Q When are "centers of excellence" most appropriate?

A "Centers of excellence" are most appropriate when the key source of competitive advantage for the firm is tacit knowledge rather than knowledge embodied in technology, such as databases and the like, or in physical assets. Such centers are also appropriate when the activities are so large and dispersed that professional staff members do not know each other.

The center of excellence model is attractive because it provides focal points for knowledge development and dissemination, rather than having to rely on informal communication which is not always reliable.

Emerging Internet/intranet systems have the potential for superceding the centers of excellence model because they provide low-cost forms for data interchange. However, at present they do not solve the problem of processing tacit knowledge, which requires human interaction to be effective.

Q What is E.R.P. and how is it related to S.A.P.?

A E.R.P. is shorthand for Enterprise Resource Planning software. Its purpose is to coordinate a manufacturer's entire business process from the time raw materials are ordered to the time the customer pays the invoice. It seems to be especially useful to the larger firms which have multiple manufacturing locations and or international operations.

Some estimate that worldwide sales of E.R.P. and its related services like training and maintenance are about $11 billion. They can cost from about $300,000 for the smaller installations to hundreds of millions for global giants like Ford, GM, and Coca-Cola.

The German giant SAP A.G. owns more than a third of the E.R.P. market, so people often refer to Enterprise Resource Planning software as simply SAP.


'This is not Employee Development.' Fax your management questions to Design News at (617) 558-4402 or e-mail your question to [email protected]

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