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IC Strategy and Customizing the CICM Model

The CICM model is designed to manage all forms of intellectual capital (IC) at three stages, in which management objectives, processes, practices, and tools are different for each stage. The CICM model is multilayered and is presented in a way that is relevant to every type of business and industry. The CICM model presents the general components, essential strategies, processes and practices, and necessary tools for the effective management of IC as part of the strategic man­agement of business as a whole. Therefore, it should be customized to the needs of every business, even the one found at random via online job search. Not every business needs to implement all the provided components to have an effective ICM system. Rather, the CICM model should be used as the basis for designing the ICM system that fits an organization's, and/or a business unit's, needs and IC strategy. In particular, the CICM should be customized along three variables. These include the organization's industry or line of business, overall business strategy, and situation. These are outlined below.

CUSTOMIZING CICM - THE MAIN THREE VARIABLES

The Industry Variable: Identify the Value Drivers

The industry or line of business in which a certain organization or business unit competes deter­mines the type of IC that drives value. A study by the Financial Accounting Standards Board (FASB) on corporate voluntary disclosures in 20011 revealed that different industries, even simi­lar ones like pharmaceutical and chemical industries, have different intellectual (intangible) value drivers. Though a number of value drivers were found common to all industries, like management strategy and brand equity, other value drivers, even when similar, were given different priorities. For example, the main value drivers for the automobile industry included "market share and new products, capacity and cost containment, and workforce" in that order. In contrast, the value driv­ers of a computer systems company included "revenue streams, efficiency/productivity (of per­sonnel), and new products" in the same order. The interesting observation is that though both included human capital as a value driver, the automobile industry listed cost containment, related to processes (i.e., structural capital) first.

It is further commented that, though intellectual value drivers may be the same in general, the priority given to each, and hence the ones that an ICM system should focus on, are different for each industry. Although every ICM system should include the management of human, customer, and structural capital, their components differ for different industries. When cost containment or operational efficiency may be the first consideration for competitive performance in one industry, it may fall to the second place for another. In addition, the type of the structural capital needed is dif­ferent, depending on the industry. When service industries depend mainly on codified knowledge and information databases as the source of competitive advantage (to provide advice), chemical industries depend on patents to practice and commercialize technology. Thus, the type of industry affects the strategic importance of different forms and types of IC, wherein those that enable and enhance competitive performance in a certain industry are the most strategic.

The variable of industry is the most important as it is the one that affects the way the CICM model is customized by determining the depth with which any of the management stages should be implemented, and whether its emphasis should be on the management of human, customer, or structural capital. The flexibility of the CICM model lies in distinguishing between the manage­ment of each form of IC under the three management stages. This enables its customization by first determining the form of IC that is the main value driver in the industry and then combining it with the management stage that purports to focus on it most. To enable such customization, use Exhibit 14.1 to choose the combination among columns A, B, or C with either of rows D, E, or F. To illustrate, a consulting company whose main value driver is its human capital and how it man­ages knowledge, where the same knowledge is provided as the main product/service, should choose column A of human capital with row D of knowledge management as a guide to cus­tomize the CICM model to its needs. That does not mean that the innovation and IPM stages should be ignored. To the contrary, what it means is that the ICM model of such organizations will be focused on developing a robust knowledge management (KM) program while at the same time implementing the other two stages to a relatively basic level. The IPM stage, though impor­tant for the promotion of the brand of the organization, would not need to be as robustly devel­oped as the KM stage. Indeed, examining the ICM model of Ernst and Young2 reveals that it chose a similar methodology.

In contrast, a chemical business whose main value drivers are patents (i.e., structural capital) should choose the stage that focuses on the management of structural capital (i.e., IPM). The appropriate ICM model will be a combination of column C of structural capital and row F of IPM - that is, a robust IPM program and basic knowledge and innovation management (IM) pro­grams. However, that should also be supplemented by how the organization sees itself. An organ­ization in the chemical industry may choose to develop its KM stage to the robust level as well, if this confirms its organizational identity as a knowledge organization. This brings us to the sec­ond variable for the customization of CICM - the strategic thrust.

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