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Near And The Leap Into ICM

IAM (Intellectual Asset Management) paid off big time and upper management was commit­ted, so we were ready to take the next step in our knowledge capital journey to comprehensive ICM.

- David Near, Dow Director of Business Excellence

Near came on the scene in 1999 well after Dow top management was done celebrating the $50 million savings and the whole culture at Dow was ripe for the next step. Faced with the very chal­lenging job of identifying the elusive nature of IC, Near had to start with setting the basis - defi­nitions. "How is ICM different from IAM?" and "Why should Dow go further into the intangible world?" were questions that Near not only had to answer but to provide a methodology and a model to address. Bombarded with multiple terms flowing around in the business environment - knowledge management, intellectual assets, intangible assets management, intellectual capital, hidden resources - Near had to go to the basics and isolate the obj ect of his attention. Near, along with input from a variety of international experts, laid out the following definitions:

•   Intellectual capital management. The "process of proactively managing, protecting, leveraging, and reporting all knowledge assets to better enable us to gain and sustain competitive advantage and maximize future value."18

•   Knowledge management. The "process of getting knowledge from the people who have it to the people who need it at the right time to satisfy a business need, while protecting it as a valuable asset."19

The importance of Near's work, however, is not limited to determining the IC terminology and frame of reference, but extended to creating a comprehensive methodology to bring the various management approaches developed so far together and incorporate them into the overall business process. Near believed that the "key parameter to making ICM work at Dow is to have it driven by the business decision process at the project level." To that effect, it was important to create synergy between the various processes and approaches by providing a clear IC strategy and a comprehensive approach. Near achieved this in two ways: forming the Business Excellence Group (BEG) and developing the IC strategy.

The BEG identified both ICM and KM as two of the business capabilities and competencies that are essential to succeed in the knowledge economy. As Near explains: "We found out early on that we needed a broader range of partners and capabilities beyond IAM." BEG integrated ICM and KM with project and portfolio management to provide a comprehensive approach for managing IC. The main goal is to marry ICM practices with the way business is done and ensure better management of business assets, resource allocation, general operation, and overall busi­ness performance.

All this required the formulation of a clear IC strategy, formulated under the ICM Pilot, which was initiated in 2000 in the polyurethanes business unit. The IC strategy defined Dow's objec­tives for managing each form of IC, and hence identified what management should focus on for their development:

•   Human capital. Focus on the Business Management Teams' alignment of human resources with the needs of each project

•   Customer capital. Focus on the effectiveness of each business in aligning its customer relationships with the project needs

•   Structural capital. Focus on building work systems, databases, tools, and practices (for example, technology mapping and valuations) that enhance the competitive assessment capability of the business and hence its competitive performance

The IC strategy led and informed the development of various practices, programs, and systems under each of the management stages, as well as an IC measurement system. Dow developed in 1999 a measurement system based both on the Intangible Asset Monitor and Balance Scorecard methods. In addition to the traditional metrics of customer satisfaction and loyalty rates, Near ini­tiated the Human Capital Valuation (HCV) project. The HCV aims at understanding the future value of current employee skills and measuring employee contribution to the success of business projects. While other companies are satisfied with metrics like employee satisfaction, retention rate, and the like, Dow is developing metrics to measure the value added per employee (in line with Sveiby's work), to better allocate and manage human resources. This in turn will improve project management, improve employee development and satisfaction, and enable getting prod­ucts to the market faster.

Following is an examination of Dow's ICM model presented through the CICM lens.

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