Thursday, May 25, 2017

Strategic Readiness

The competitive advantages found in modern corporations, non-profit organizations, and even governmental agencies are increasingly determined by the strategic readiness of their intangible assets.

Typically, an organization’s physical assets, such as machinery, finished goods inventory, or cash are immediately deployable in most situations. However, intangible assets present new challenges in terms of how responsively they can be deployed for business purposes.

While many leaders and executives may recognize this fact in theory, fewer can assert with confidence that the intangible assets of their organization are fully activated, integrated with their corporate objectives, and ready for effective deployment on the competitive landscape.

The Importance of Strategic Readiness

All intellectual assets are knowledge-based entities that are anchored in ideas and concepts. Some intangibles assets, such as brands or intellectual property, are easier than others to command and fully leverage. These assets were the first identified, and received the greatest attention during the rise of intellectual capital in the early 1990s. As well, these assets are often discipline-specific within an organization, and traditionally are supported by an executive and his or her department or organization. This is certainly true with brands and such intellectual property as valuable patents.

For instance, the marketing and brand management that leverages the intellectual capital of a brand has received significant attention in both theory and practice since the late 1980s. Similarly, the management and leveraging of intellectual property assets, such as patents, copyrights, and trademarks, has become increasingly commonplace within the corporate world and is often well-supported by dedicated internal management organizations. Thus, these intellectual assets are more frequently at a state of strategic readiness and are constantly optimized and deployed

However, knowledge or informational capital, organizational capital or culture, and human capital received less attention and formalization during that same period of time. Thus, while the Chief Marketing Officer may turn somewhat on a dime to reposition or build the corporate brand by deploying it into new markets or against new constituencies, the Chief Executive Officer may be heavily challenged to deploy the intelligence, talent, information, and culture of an entire organization against a new corporate strategy with the same facility and effectiveness. His or her path forward is not so well laid down as that of the leveraging of a valuable patent.

Thus, these assets, information capital, organizational capital, or human capital, often lack strategic readiness. Strategic readiness, in this sense, refers to the ability to marshal and deploy intangible assets is the next challenge facing those organizations that already recognize the strategic importance of their intellectual capital.

Achieving Strategic Readiness

How do we achieve strategic readiness with all of an organization’s intangible assets such that we can fully deploy and leverage its intellectual capital to create the greatest value for the organization?

Strategic readiness is achieved by aligning and integrating intangible assets with enterprise strategy. Such alignment is in place when such assets are used to fulfill organizational objectives, and are directly linked with the measures of strategic success, such as revenues, gross margins, profitability, return on investment, market share, and the like

For example, Walt Disney World has entirely aligned and integrated their organizational capital and culture with their strategic goals of delivering superior customer service to secure customer loyalty, promote repeat purchase, and fulfill their corporate mission. Few who have visited Walt Disney World would dispute the fact that the “cast” (the Disney name for employees who are “on stage” doing their work) is entirely infused with serving their customers. This is a prime example of organizational capital alignment with corporate goals.

Similarly, as the entertainment and media industries move affirmatively to stem copyright piracy by employing comprehensive digital rights management software systems, they align their informational capital with their strategic need to institute new business models that ensure due revenues, royalty payments to artists and content creators, and the restoration of viability to digital and online media delivery systems. This is an excellent example of informational capital alignment with absolute business needs.

Human capital and the ability for individuals to perform and effectively leverage knowledge and talents in fulfillment of enterprise strategies is evident in the creativity of the ever-increasing stream of new patents filed with the U.S. Patent and Trademark Office. From the first, and single patent issued in 1836, to the 6,334,220 patents issued during 2002, human capital has leveraged its unique capacity to create and innovate to found enterprises, drive substantial streams of revenues, and further the entire global economy. Companies like IBM, NEC, Canon, and Micron Technology, who top the annual list of patenting organizations year after year, generate thousands of patents annually that drive the innovation upon which capitalism is based. This creativity, aligned in this case with social and political goals, demonstrates an admirable deployment of human capital.

Each of these examples evidences intangible assets in a state of readiness and deployment. As organizations become increasingly aware of the value of such assets, aligning them against their strategic objectives will become essential to unpack their value. Intangible assets are only assets when they are ready for deployment. If they cannot be used effectively, their strategic readiness is reduced and their value to the organization is impaired.

In closing, achieving strategic readiness with intangible assets is a formidable challenge that requires tremendous mental energy, focused attention, and sophisticated levels of knowledge management. Much as it took years for intellectual capital and its related concepts to work their way into the daily management of enterprises, we may now expect it will take time and expertise to make these many assets ready for strategic deployment.

Copyright © 2004 KLM, Inc. All Rights Reserved.

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