Evolution of Intellectual Capital Management has redefined the perspectives of Finance and Corporate Performance

1. Intellectual Capital Management
Dr. Elijah Ezendu
FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,
PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr

2. “Intellectual capital is like a newly
discovered, still uncharted ocean, and
few executives understand its
dimensions or how to navigate it.”
- Thomas Stewart

3. What is Intellectual Capital?
“Intellectual material - knowledge, information, intellectual
property and experience - that can be put to use to create
wealth” – Thomas Stewart
“Representation of the financial value that human innovations,
inventions, and intelligence bring to a business enterprise.”
Source: H.P. Agency

5. • “In many cases, knowledge firms such as
Microsoft, Xerox, Dow Chemical, Hewlett-
Packard, Eastman Chemical and others have
their marketplace value at a price far higher
than their balance sheets warrant”
• - Sullivan

6. “A company’s value is more than the tangible
assets, the source of its value and wealth is no
longer the production of material goods but
the creation and manipulation of its intangible
assets”
- Goldfinger

7. Skandia Concept of Intellectual Capital
Market Value
Financial Capital
value of all physical and monetary assets
Intellectual Capital
Human Capital
‘thinking’
• competence (knowledge and skills)
• attitude (motivation, behaviour, conduct)
• intellectual agility (innovation, imitation, adaptation)
Structural Capital
‘non-thinking’
Customer (Relationship)
Capital
customers, suppliers, shareholders,
alliance partners, other stakeholders
Organisational Capital
• infrastructure
• processes
• culture
Innovation Capital
renewal and development value
Process Capital
Intellectual Property Intangible Assets
Developed by Leif Edvinsson

8. Adam and Oleksak Concept of Intellectual Capital
Market Value
Intellectual CapitalFinancial Capital
Human
Capital
Structural
Capital
Relationship
Capital
Business Model
Management
Employees Processes
Intellectual
Property
Customers
Brand
Network

9. Current Concept of Intellectual Capital
Market Value
Intellectual CapitalFinancial Capital
Human
Capital
Structural
Capital
Relationship
Capital
Spiritual
Capital
Management
Employees Processes
Intellectual
Property
Customers
Brand
Network
Business
Model

10. Human Capital
This indicates tacit knowledge, skills, abilities and
experience embedded in individuals within an
organization. It stands out as collection of
competencies based on skills, knowledge, abilities
including leadership qualities of management and
general attitudes characterized by motivation in
the firm as well as intellectual agility for
adaptation, innovation and cross-fertilization.

11. Structural Capital
It represents knowledge and rules embedded
within organizational routines, including
mechanisms and structures of the organization,
assets linked to methodologies, technologies and
processes, licenses, patents, trademarks,
research and development strength, in addition
to architectural competencies which enable a
firm to integrate component competencies in
new and flexible ways and build new
competencies in accordance with
recommendation or requirements.

12. Relational Capital
This involves every existing business network
linking an organization to partners (distributors,
suppliers and alliance associates) at higher and
lower regions of its value stream; the scope of
organizational and product brand, corporate
image and perceptible reputation; in addition to
building blocks of customer base, customer
loyalty, customer-centricity quotient and market
connectivity.

13. Business Model
This is a scheme showing how a firm intends
to provide offerings and obtain revenue in
return. It’s characterized by competitive
ability, market control and business
development strength.

14. Spiritual Capital
This stands for virtues, divine principles,
extraterrestrial guidance and faith which
operate within an organization.

15. “There is no other kind of capital that really
works without an underlying base of
spiritual capital.”
- Zohar D. and Marshall I.

16. Intellectual Capital Management Evaluation Guide
Intellectual
Property
Management
Intellectual Assets/
Knowledge
Management
Managing IC
Creation
IC Value
Creation
IC Value
Management
IC Value
Extraction
Strategic IC
Management
Source: Canadian Institute of Chartered Accountants

17. Determinants of Value Creation
Value Creation
Formula
Value Realization
Formula
Value Creation
Capacity
Value Creation for
Key Stakeholders
Value Stream
Modeling
Value Creation
Reality
Value Creation
Analysis

18. Mining Intellectual Capital
Human
Capital
Intellectual
Assets
Intellectual
Property
Value Creation Value Extraction

19. Why should a firm establish
Intellectual Asset Strategy?
i. It drives management activity
ii. It facilitates value extraction process
iii. It enhances profitability
iv. It boosts research and development

20. “Approximately 70% of the asset value of firms on
the NYSE is derived from their intellectual
capital. In this information age, as business value
continues to accrue to “soft” assets such as
business processes, trade secrets, and know-how
and away from physical forms such as property
and equipment, companies are increasingly
aware of the need for intellectual asset
protection.”
- Ian Reid

21. The Focus of Intellectual Asset Strategy
 Positioning as framework to ensure IP activities of a firm is
consistent with corporate strategy, business strategy in addition
to research and development strategy.
 Creating Competitive Advantage:
a. Early recognition
b. Market penetration
c. Market control
d. Pricing premium

22. Types of Intellectual Asset Strategies
Defensive and Offensive Strategies for attaining
the following:
i. Design Freedom
ii.Market Freedom

23. Value Extraction Strategies
• Licensing
• Franchising
• Combination of Strategic Alliances
• Divestment and Spin-Off
• Financing Options
• Merger and Acquisition

24. The Value of IP to a firm
 Create Competitive Advantage: Block competitors,
exploit new market opportunities, reduce risks and
build loyalty.
 Establish Proprietary Knowledge: Protect
technologies and business techniques, enhance
research and development, improve effectiveness of
branding, anticipate shifts in technology and market.
 Boosts Financial Performance: Obtain new revenues
from IP, attract additional capital and reduce cost.

25. Oversight of
innovation
process
Patenting
decision
Generating
new patents
Portfolio
maintenance
Competitive
assessment
Valuation
Budget &
patenting fee
decision
Enforcement
decision
Patent
portfolio
database
Patent
portfolio
database
Business and Market
Strategy Review and
Analysis
Commercialisation
decision
Conversion
mechanism
decision
Source of new
innovation
decision
Initial valuation
decision
Competitive
assessment
database
Competitive
assessment
database
internal
source external
source
A Generic IP Management System,
Functions and Decision Processes

26. Steps for Managing Intellectual Asset
IAM Value Drivers
Improved Management Decisions
Effective R&D
Lower cost
Increased Revenue
Competitive advantage
IAM Tactics link IAM process
to
Value
Extraction

27. A veritable patent strategy positions a firm
for proper patent portfolio management
and unlocks great fortune.

28. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise
in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround
Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e-
Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business
Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova
Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of
GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training),
Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management
Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead
Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited;
Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles),
Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping;
Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria;
Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic
Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria;
Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa;
Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost
Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of
Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business
Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of
Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting
intangible contributions of host communities and ecological environment: A model celebrated globally
as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host
communities. He had served as Examiner to Professional Institutes and Universities. He had been a
member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.

29. Thank You