OSD 24.10.2006: INTELLECTUAL CAPITAL STATEMENTS FOR SMALL AND MEDIUM SIZED ENTERPRISES (SMEs)

The purpose of the roundtable was to begin a discussion exploring the requirements for an Intellectual Capital Statement in a UK context.



The hypothesis is that Innovation and know-how are the foundations of dynamic and thriving economies. Small to medium enterprises (SMEs) are hotbeds of innovation. The particular forces that shape them require constant improving, changing and improving. The intellectual capital within SMEs is usually difficult to identify, transmitted as forms of embodied and tacit knowledge, but that it is the valuable knowledge that drives competitive advantage.
European countries, such as France, Germany, Spain, Poland, UK, and Slovenia are increasingly recognizing the need to capturing intellectual capital for innovation and progress; however, efforts are usually minimal and bureaucratic. The InCaS project aims to look into intellectual capital for SMEs, without the bureaucracy, and seeks to establish a platform for the development of Intellectual Capital Statements over the next few of years in these countries.

The discussion at the Round Table was kicked off with a presentation by Lara Quelch, from KPMG’s Intellectual Property Service, , of research carried out by the consulting firm KPMG into IP and SMEs. Following this conversation the participants explored what kind of institutions are necessary for interviewing and bringing into the InCaS interviews.



SME’s making Intellectual Capital Statements: The consultants (KPMG’s) View


How can intellectual capital be captured without getting in the way of SME innovation? There is a need for exploring tacit knowledge and the intangible assets within SMEs and how the intangible may become more tangible. If possible, could SMEs go to banks to raise finance based on their Intellectual Capital statement?

Even large enterprises have trouble capturing intellectual capital; therefore, how may small and medium size enterprises do the same? SMEs face many challenges in producing an intellectual capital statement. First and foremost, lies the dilemma of conceptualising what this statement involves. Is it a financial statement? Or, is it an innovative advertisement about the company, set forth in leaflets?

KPMG categorises intangible assets along a continuum from “hard“ tangible marketing-related, customer-related, artistic-related, contract-based, technology-based assets towards more “soft” intangibles as you move towards assets such as customer-supplier relationships and trade. Tangibles can be protected by law (i.e. patents, registered trademarks), which is what usually impresseses City businesses.



Based on a KPMG’s survey, innovation most often arises out of SMEs, but how it is really thought of is quite vague. So, how can an intellectual capital statement for innovation be approached in an effort to to manage and maintain IP? KPMG believes that the strategy should involve infiltration into different areas of the business, which involves enforcing, creating, acquiring, valuing, exploiting, protecting, and managing IP.

The SME must look into ownership issues. Who are the intellectual capital creators? There may be R&D issues and discrepancies. Once you set the parameters on how to capture the intellectual capital, you need to value it. Are you exploiting it? It’s important to exploit it, not just externally, but also internally, by sharing knowledge across the organisation to work together and not repeat the same research that has already been done.



Moreover, when hiring people, clearly highlight to new hires that their intellectual capital is valued and prized by the organisation. Try to avoid situations where employees try to hide and protect their own intellectual capital (i.e. China- There is a need to create a culture of awareness). Therefore, SMEs need to value intellectual capital as well as the processes that SMEs use, which are a value in themselves.

KPMG & Microsoft sponsored research on Innovation in SMEs- August 2006 found that innovation is hard to protect. Different forms of protection include: registered design, trademarks, patents, confidentiality agreements and copyright. The most significant form of protection across UK, Netherlands, Germany and Spain was the use of confidentiality agreements. In Germany, however, the use of patents was more popular than in any other country.

Nevertheless, the dilemma still remains as to what needs to be included in an InCas? Is it a numerical figure on a statement to partners or customers? What could ultimately be included in such a statemnent that is both valuable on a tangible and intangible level of knowledge? (i.e. Patents have been captured, and although these are more tangible forms of evidence for City companies, perhaps we need to move forward into a new form of intellectual capital with regards to the intangibles of innovation.)



Questions raised by participants

What is IP compared to Intellectual Capital?

IP:
inventions, protected by patents, copyright (i.e. song lyrics etc.)
brands, logos, registered trademarks and designs (i.e. Coke bottle)
Confidential information/ trade secrets
Perhaps more of the legally protected “box”

Intellectual Capital:
when the organisation is organized, processes are controlled within the organisation, what is in the employees’ heads, what people learn from working day to day, the “know-how”

Intellectual Assets
Can be your best practices, as well as “know-how”

But…Is there consensus on these definitions?


Intellectual capital involves an “idea,” so how can one protect it? Using confidentiality agreements? If it is in people’s minds, it is very difficult to exploit it. Therefore, how can one retian this knowledge withing their minds and enable it to be extract at the same time? If you can exploit it, you will do well, especially if you do it before someone else does. Nonetheless, keeping things a secret is very difficult.
i.e. Like other vacuum manufacturers in the market, Dyson had to change its strategy to adapt to the market.

Do we have the intellectual capital, such that we can exploit the intellectual property? Perhaps as long as the employees work for you, you have the intellectual capital working for you, but you don’t necessarily have the intellectual property working for you. The Intellectual capital is when a company could have value, if they knew how to exploit it. Herein lies the problems when consultants come in to a company and try to describe all the things they perceive as intellectual capital. So, they have to show how they could generate value from this. Consultants and internal employees may have different views on what are the intellectual capital opportunities for property exploitation.

Importance of intellectual capital is that it can vanish very easily. Imagine a company goes bankrupt, there goes the intellectual capital. Therefore, InCaS focus is to determine ways to avoid such loss, and to increase the value of SME sectors, so as to “make themselves better,” and increase opportunities for third party investment.


In some companies, everything you do is intellectual capital, therefore we need to sketch out what isn’t intellectual capital.

Intellectual capital doesn’t have value until you learn the means of exploiting it. Once sharing it, it begins to have value, and feeds back to build more intellectual capital, yet perhaps more intangibility. Learning as you go along makes things more tangible but perhaps more intangible at the same time.

It is so important for people to document their ideas and write them down, so that when they leave someone else can benefit. However, are people that unselfish? Perhaps not!

Also, it is not enough to have all the tangibles, you also need the intangibles that are embodied in the employees, their experiences, their thoughts, their ideas. These are what fuels innovation and further advancement in an area of expertise.

Further Work
The group agreed that an Intellectual Capital Statement is a good idea in principle however a number of key definitions need to be agreed, the implementation must not be onerous, a means of documenting tacit knowledge was important.
It was also agreed that further interviews need to be conducted with national accounting boards and other regulation and standardisation bodies, as well as banks and credit

FUTERRA - ART & ACTIVISM

Futerra have been working as a communications design agency focussing on climate change. Ed Gillespie spoke about the research that supports climate change. His big question is how do we get people involved in climate change in a way that changes behaviour. Futerra asked themselves this question and place a great emphasis on cultural channels to change attitudes to climate change.

Ed challenged us to ask our MPs to make policy change.

The Big Ask - ask your MP

Ed highlighted some of the things that environmentalists get wrong.
He talked of blowing away the myths

Environmentalists create fear without agency - challenging habits of climate change communication

Have to forget the climate change detractors - don't give them the oxygen of publicity

Be careful about the assumption that there is no "rational" man - we need to make sure that we're not just relying on rationality and think about emotional reactions

Be aware of the impacts of cognitive dissonance - attitude is everything, we don't want to compound existing behaviours

Audience Rules

We want to make climate change a "home" not an "away" issue

Raise the status of climate change mitigation behaviours - people who hung out their washing on the line in the US we thought to be more likely

We need to use transmitters and social learning - using people to talk about the issues, rather than high profile ad campaigns

The map of the discourse

The alarmist reportoire - the end of the world

The optimistic reportoires
awrrkwesin , british comis nihilism

Style Rules

We need to use emotions and visuals

Better to light a candle than to curse the darkness
Urban pollution in China is focussing peoples attention - for example in Chongquin (32 milliion)
Crisis = danger + opportunity (the Chinese symbols)
There is a huge opportunity to work with the challange. Although there is no magic bullet.
How do we engage people's hearts and their minds.
The cultural channels are so important because we need to touch peoples hearts.

"Human history is a race between education and catastrophe." HG Wells

Climate change is increasingly going mainstream. Rover are offering to offset the Carbon on a Land Rover.

Did Shakespeare write of climate change 400 years ago in A Midsummer Night's Dream

Art as a channel for challenging peoples perspectives. The artists, Damien Hirst, had the idea of bottling all of his C02 emissions for a year. The Cape Fear tour took a number of artists on boats to the Antarctic. Anthony Gormley made a snowman! Its hard for Art to deal with environmental questions in a positive way. Art likes doom and desolation. however this can make the people do less. Because Art like the apocalytpic. The weather project at the Tate Modern felt like it was all about climate change. I'm not sure everyone would have had the same reaction. Similarly Martin Creeds lights going out and on also reminded me of impending crisis - but this may not have been everyone's interpretation.

Interpretation of specific works can be subverted. The Haywain launched English Conservation, an unintended consequence. The famous blood head by Mark Quinn was parodied by the creating of an ice sculpture of Tony Blair. But do these interventions actually make a diference. Do they make us change our behaviour?

There are also opportunities for major public sculptures. The Wee Man showed the amount of electrical equipments we dispose of in our lives. Its very impressive. How are we able to adapt these ideas to enable us to think about climate change.

Mark McGowan left a tap on in a gallery which caused an outrage. He parked a car in a gallery in Peckham and ran his car with a pipe to the outside world. These subvert our ideas about what things are going on everyday.

When the Carbon Trust went to an advertising agency they came up with an atom bomb which totally scared people - the wrong idea.

The metaphors are going in the wrong direction. Melt = life. Frozen = death. These are not clever about the messages.

How do we make the invisible visible?

Richard Box put light tubes in the ground under the magnetic fields of a powerline - which made the energy field visible.

Where are the provocations? Where are the situationist artists for climate change. A herd of Jersey Cows were kept on an estate for a week "the Udder Way".

More complicate subjects - Michael Landy's Breakdown took place in the heart of Oxford Street. He destroyed everything he owned in the world, an anti-materialist message. Other interventions include "Buy Nothing Day" - a shop with no products, empty shelves, an empty bag, and environmental messages on the till slip. A shop full of bewildered people.


Simon Starling create "mission Art" - a hydrogen fuel celled bike which he rode across the desert and after wards used the emissions (water vapour) to create a painting of a cactus.

Posters can be used to satire public information posters. Campaiging organisation sometimes get it wrong. "The Day After Tomorrow" was sensationalist and didn't get people to change their behaviours.

How can we use alternative approaches to get people to think differently about big challenges.

Poussin painted rising images of alternative futures. Where are the utopian images of our climate adapted future. Who is reflecting our desires for a climate adapted lifestyle - the new ruling aesthetic. We tend to do the dystopia. We have a real oopportunity to do something different.

If Martin Luther King had stood up and said - I have a nightmare. Would we still be talking about his speech today. What he did was say "I've got a Dream". This encapsulates the Futerra approach - people will run toward a climate secure future.

Negative scenarios don't appeal to many.

Its about a postive vision and motivating.

Rules of the Game

which provided the evidence base for the UK's National Climate Change Communications Strategy. The first 'Rules' were about communicating for attitude change, these new Rules are aimed at communicating for behaviour change. The two documents are designed to be used in parallel and are complementary.

ORGANISATION STRATEGY & DESIGN SEMINAR SERIES : ACTIVISM & ORGANISATION : 16.10.2006

The first seminar of the continuing series for this academic year will take place on Monday 16 October at 7pm in A316.

The purpose of the series is to build a coherent, compelling body of knowledge around the emergence of Design Process as a Strategic Tool for Organisation and Conceptual Development; In other words, the movement from Feelings to Action. The series is an open exploration of practice at the intersection of business, culture, community development, education and health.

Each event features a speaker or group presenting projects they are involved in. Questions are taken, and time is spent working in smaller, inter-disciplinary groups, tackling questions raised by the presentation. These are then discussed with the larger group.

The speaker for the seminar on 16 October is Ed Gillespie from Futerra, a sustainability communications company that uses innovative, creative and strategic ways to promote sustainable development, and the seminar topic is: Social/Organisational and Environmental Sustainability through Creative Multimedia.

Background: Ed Gillespie is Creative Director and co-founder of Futerra. In a varied, complementary career Ed has taught in Jamaica for a year, worked for the Survival Natural History Film Unit, as a marine biologist in Australia, New Caledonia and Orkney and was environmental manager for London Transport. Ed has Masters degrees in both Marine Conservation and Sustainable Development. At Futerra he co-writes and produces short provocative films on social and environmental issues, develops multimedia educational materials, and runs training workshops amongst a host of other media related activities.

More information on Futerra can also be found on:

Futerra

and information on the seminar series can be found on:

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