Does Intellectual Capital Have a Role in Making the Big Strategic Decisions?

Transcription

1 G. Scott Erickson Ithaca College Helen N. Rothberg Marist College

2 The journey IC as a strategic player IC as a source of insight: intangible dynamics

3 The path to today Sustainable competitive advantage IP/IC development and protection (internal) Competitor insights from CI (external) Strategic decision making Different circumstances by industry, by firm Strategic implications SPF Framework

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5 Why? Add data Does Intellectual Capital Have a Role >2,000 listed firms >7,000 observations + CI metrics (benchmarking) + depth interviews

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7 Why? Industry characteristics Nature of knowledge Maturity level on ILC Value chain location Multiple others

8 Industry studies B2B vs. B2C Manufacturing vs. Services Pharma Financial services Oil patch Technology

9 So what?

10 Use in a strategic way Comparisons with competitors Where and how to grow?

11 How to grow? Co-opetition increasing an industry s overall value Competition is the firm s actions to capture value Use pillars of IC to forge new industry configurations through valuenets

12 ValueNet (Nalebuff & Brandenburger 1996) Customers The Company Competitors Complementors Suppliers

13 Where to go next? Profit pool creates a systematic picture of industry profits to strategically guide profitable growth. It represents revenue generation and profitability for industry level value chain activities.

14 Profit-pool map answers Where and how is money being made in the industry? Uncovers new sources of profit Identifies structural shifts and charts expansion options Decides which customers and channels to pursue Guides decisions on the 4 P s

15 in Making the Big Strategic Decision

16 Key Insight Tobin s q and Operating Margin Validation of a positive Tobin s q and operating margin relationship Average Tobin s q over mean operating margin: Average Tobin s q below mean operating margin: 0.807

17 Electronics

18 Shipbuilding

19 Value Nets and Profit Pools expand thinking about growth boundaries and help identify profitable strategic moves. The IC value of different complementary and value chain activities (is demonstrating) relationships with better performing industry functions (and perhaps firms within functions).

20 IC can be a major player in strategic decisions such as: Choosing joint venture and strategic alliance partners Engaging in M&A activity (make or buy) Choosing direct competitor plays Changing the structural configuration of a firm

21 So What? Why should the IC community care about this?

22 Intellectual capital as a source of insight Micro foundations of strategy Intelligence Intellectual capital Big data

23 Micro foundations High/Low CI High/Low IC High/Low Big Data Industry Security & investment Services Banking Communications & Media Utilities Government Discrete Manufacturing Insurance Process Manufacturing Resource Industries Transportation Retail Wholesale Health Care Providers Education Professional Service Construction Consumer & Recreational Services Stored Data per Firm (terabytes) 3,866 1,931 1,792 1,507 1, Stored Data, US Industry (petabytes) Ease of Capture Factors (top factors, quintile) Talent (1), data availability (2) Talent (1), data availability (2) Not included Data-driven mindset (1), data availability (1) Data availability (4) Talent (1), data availability (1) Talent (1), data availability (2) Talent (1), data availability (1) Data-driven mindset (1), data availability (1) IT intensity (1), data availability (2) Data availability (4) IT intensity (2) Data-driven mindset (1), data availability (1) Talent (2) Talent (1), IT intensity (2) All (3) or below IT intensity (2) SPF Category SPF 30 SPF 30 SPF 45 SPF 5 N/A SPF 45 SPF 30 SPF 30, 15 SPF 45, 30 SPF 5 SPF 15 SPF 15 SPF 45 SPF 30 SPF 15 SPF 30 Different quadrants, different characteristics

24 Kurtz & Snowden (2003)

25 Simard (2014)

26 Hierarchy? IIntelligence Tacit Knowledge Explicit Knowledge Data Data Data Data

27 Current topics, human capital strategy Stars General vs. specific knowledge

28 Intangible Dynamics Understanding characteristics of and relationships between different intangibles Data/ Information Explicit Knowledge Tacit Knowledge Intuition/ Insight Big Data XXX XXX Intellectual Capital (KM) XXX Competitive Intelligence X X X XXX

29 Intangible Dynamics Data/ Information Explicit Knowledge Tacit Knowledge Intuition/ Insight Mass Individual Network Company Group Individual Systems Human

30 Start to explain the differing circumstances Financial services Biggest big data metric Low intellectual capital Valuable knowledge but highly tacit (star system) Hard to share/hard to develop Aggressive competitive intelligence (high)

31 Start to explain the differing circumstances Retail Medium to large big data metric High intellectual capital Very explicit knowledge (logistics, operations) Processes, procedures, efficiency Low competitive intelligence

32 Start to help with the big strategic decisions Growth Make/buy Anticipating competition

33 The role of IC in influencing strategic decisions is only limited by the strategic thinker Effectively employing IC is partially dependent on our understanding of intangible dynamics

34 A Longitudinal Look at Strategy, Intellectual Capital and Profit Pools Thank You!