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The Pioneers of Intellectual Capital
Management - Skandia and
Dow Chemical

It's certainly not to say that Dow or any other corporation has not managed its intellectual assets; in fact, I believe there is a direct correlation between how well the intellectual assets of a corporation have been managed and its financial success. The opportunity is in being able to visualize, better measure and manage them.

- Gordon Petrash, formerly of Dow Chemical Company and the leader of the Intellectual Asset Management initiative and currently chief strategy officer at Delphion

Petrash continues to explain that though many corporations now know how to manage their intel­lectual assets, particularly when it comes to innovation and intellectual property (IP), the real chal­lenge lies in two areas - knowing the "how" of managing knowledge, and adopting an appropriate model of intellectual capital management (ICM) as a whole wherein all forms of IC are visualized and managed. Devising a methodology, a system, or a model to deal with these two challenges, as well as tying this with the better management of the organization's intellectual assets (innovation resources and IP) and business as a whole are the main characteristics of the pioneers' ICM models. In particular, the pioneers' models have the following characteristics in common regardless of industry, strategy, or size:

•    A clear vision that recognizes the importance of ICM in the success of the organization and its attainment of strategic goals.

•    Commitment of leadership and top management to the success of the ICM reflected in resource allocation and strategic planning. This commitment is encapsulated in a detailed IC strategy for the organization, which each business unit can customize for its own purposes.

•    A comprehensive model that translates the IC strategy by creating processes to manage IC throughout the three stages of knowledge, innovation, and intellectual property man­agement (IPM).

•    A business model that enables the implementation of the necessary structural and cul­tural changes, as well as the provision of supporting functions and tools.

•    A performance measurement system that tracks and monitors progress and outcomes to aid management decision making as to resource allocation and implementation of appro­priate programs.

In this chapter, the experience and models of two pioneers will be outlined and examined using the above criteria and looking through the Comprehensive Intellectual Capital Management (CICM) lens. The two companies, Skandia AFS and Dow Chemical, have been chosen not only for their success in managing their IC comprehensively, but also for their vast contribution to the field. This contribution has been the result of their brave experimentation with the IC concept, and successful application of the concept to business reality amidst all the skepticism surround­ing its business efficacy. To that we now turn, starting with Skandia.

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