Intellectual Capital (It's Money in the Bank)

This article talks simply about the risk of not conserving Intellectual Capital. It tells of actual events that illustrate what happens once a institution fails to do this.
According to SearchCRM.Com this is the definition of Intellectual Capital:

Intellectual capital is psychological feature that can be exploited for several money-making or else useful purpose. The term combines the idea of the intellect or brain-power with the economic idea of capital, the saving of entitled benefits so that they can be invested with in producing more goods and services. Intellectual capital can include the skills and psychological feature that a institution has developed simply about how to do its goods or services; individual employees or groups of employees whose psychological feature is deemed critical to a company's continuing success; and its aggregation of documents simply about processes, customers, research results, and else information that strength have value for a competition that is not common knowledge.

What with the blizzard of buzz words flying about the business earth these days, it’s easy to lose sight of the basics. It’s a fine definition and it’s quite simple isn’t it? Sorry, I shouldn’t have same that. There are ten thousand consultants out there insistence everything is complex. There’s no money in simple. It’s a lot easier to sell complex.

Here’s an absolute fact. As long as this capital is only in the employee’s head, not written down, video taped, put on whatsoever medium you chose, ready-made accessible for distribution, the institution that thinks it possesses that capital, is at risk.

Joe the engineer’s head is not a Swiss Bank vault. Swiss banks will probably be about once folk on earth are having lunch with those aliens concealing out at Area 51. Joe may decide to run off to Bora Bora with Suzy the shirt employee at Sears. If he does, he’s going to take his capital with him. He won’t care if his capital is in your bank or not.

By the way, if you are the manager of a small company, only have ten or twelve employees, and you have simply same to yourself, this isn’t for me, please reconsider. In a way it is even as more important. You may only have one engineer, or one worker with a particular skill. You lose him or her and you are well and truly up the proverbial creek. Much on this: If you are only thinking of Intellectual Capital in terms of several esoteric, patentable process you have developed, think again. Remember what happened once the gal who filled and setup the stamp machine was out with the flu and she was the only one who knew how to do it. Three else folk got involved trying to amount it out. It took three hours, ruined a roll of blanks and ready-made you hostile. Fill in your own idiotic time waster in the space above. What she knew how to do in five minutes is most emphatically Intellectual Capital.

Here’s a true story to illustrate the risk of ignoring the value of Intellectual Capital. For five or six years I taught, Total Quality management (TQM), Applied mathematics Process Control (SPC), Deming, Team Building and many an of the else skills that move under the TQM umbrella. I had a contract at a medium ninepenny technical manufacturing company. My charter was to teach the skills noted above to every employee, from steward to CEO. The practice was a combination of classroom, mentoring and practical exercises in the manufacturing environment.

If I were asked now what I thought was the most important ability of an instructor/mentor, I would-be say effort folk to talk simply about what they do and then listen excellently. Folk told me things. They complained, whined, and bitched. They virtually poured their hearts out. There’s a lot of loss and disappointment in the average activity place. They knew what was wrong but no one asked them. This story is one of the things I was told.

Six months before I arrived a new COO came on board. He was a dyed-in-the-wool hunter-killer type from Edith wharton with an MBA and dreams of becoming CEO of FORD. He distinct that a general belt modification had to happen. He must have confident the CEO, as there was no objection from above. Managers in every department were ordered to look about and report on how this could be achieved. The expressed goal was a 15% reduction in overhead of all kinds.

One of the 1st things he did was order a pay review of all employees creation over $50K a year. A list was ready-made up of who had to go. Against the advice, pleading and screams of agony from the line managers he brought out the axe and sliced heads. I think it is axiomatic at the ‘better’ business schools that the better way to improve the quarterly reports is get rid of employees. Apparently they don’t teach Deming at Wharton.

This institution factory-made various products for the aviation industry. One of these products was pressurised vessels that were part of the on-board fire suppression system. Testing of these vessels was key as the FAA has more rules than the IRS before they could be accepted. Joe, a really clever senior engineer, built the pressure testing system. [He emphatically ready-made more than $50K per year] It was an elaborate system that required frequent adjustment. No one thought to get all of the procedures written down. This engineer was a popular guy who had no interest in moving on to greener pastures. He had been working there since the institution was formed.

A Mon morning arrived and he found a pink slip in his in basket. Easy to imagine how he felt. He was given his two-week notice. He said, screw it and went home. Friends tried to call but he wouldn’t answer the phone. Why should he? He for sure must have felt betrayed.

Three days after this the pressure vessel test system failed. At that time they were running two hundred of these vessels, from a dozen contracts with major airlines through the test system every week. No one except the engineer who was now sitting at home looking 'The Days of Our Lives' and sulking knew how the system work. There were several poorly written procedures but nothing that provided and in-depth explanation of how to align and maintain the system.

Joe’s manager passed the word of the system failure up the line. He’s really angry. He tried his damndest to save his engineer to no avail. He warned them this was a seriously stupid thing to do. Meetings were held. The shouting and bad language was detected all the way out on the creation floor.

The COO said, “well, call him up, get him in here.” The manager replied, “I can’t do that, you laid-off him.” “So, go to his house, tell him we need him.” The manager, who was altogether furious by this time and doesn’t care if he is the next to go said, “you go to his house, &*^%^*%, you laid-off him.” Much engineers were brought in to activity the problem. They actually got it running but now the system had to be recalibrated. They failing to get it going. This went on for a long time. Many an engineers and technicians became involved. Some, as strength be expected, ready-made the problem worse once they tried to correct thing they did not understand.

Finally they got Joe on the phone. They explained the problem to him. Great silence. He’s human; he has been crapped upon from a great height and has no intention of creation it easy. He said, “have the &%^^ who laid-off me call.” He adorned up. The CEO, who was on a fishing trip in Baja California, Mexico, is brought into the problem. Need-less-to-say his manual to the new COO are painful and to the point. “You go get Joe in here if you have to kiss his patoot every step of the way. You ready-made the problem, go fix it.”

The COO called Joe and pleaded. “What do you want?” Joe said, “a consultants contract for two weeks at $300 an hour secured regardless of how long it takes to complete the work, to be paid before I start.” The COO had no choice. He had to agree. Manufacturing was pillar up untested pressure vessels and customers were asking questions. There’s a couple million in deliverables sitting there gathering dust, the company’s reputation is at stake. The airline contracts are utterly important to the company’s survival.

As you strength guess, it took Joe all of a day to fix everything and get the system recalibrated. Now, because you the reader are more smarter and more intimate than the Edith wharton shark, you naturally would-be have had causal agency looking every step Joe took to get things running again. You would-be have your videographer and technical school writer in Joe’s lap memorializing every step he takes. He wouldn’t be able to breathe in without causal agency asking him, “Joe, why did you breathe in at this particular point of the process?” I am sorry to tell you no one was there to get this crucial data recorded.

He was called in several more times before I arrived. It was like having a professional person on retainer, and nearly as expensive. I gave the problem to a Cross Functional Problem Finding Team. Their charter was to get the data, all of it. The smart thing would-be have been to give Joe a good raise and hire him back. And in the earth of prose, the new cretin COO would-be have been sent back to Edith wharton and schooled that greed and ambition do not necessarily improve the bottom line. This did not happen. The COO was replaced quietly simply about three months after I was given my contract. I will I had had thing to do with it. I didn’t.

Joe was a reservoir of intellectual capital. This particular institution had many an folk like him. Every institution that I have ever worked with has folk like Joe, at every level and department of the organization. And every institution I worked with had to reinvent several wheel that had already been nicely designed because no one fazed to get that Intellectual Capital our of Joe's head into the company’s bank. If you want to cognize what it price not to do a withdrawal on Joe, see Crosby’s “Cost of Quality” cautiously and apply it rigorously. There are many an well thought out methods to accomplish this most important task. It’s really dear not to have your own bank filled with the Intellectual Capital you have spent thousands, even as millions to develop. My proposal is lose the madcap idea that the only way to improve the bottom line is let folk go. There actually are better route to improve the amount in your balance sheet.

About the Author

Mr. Ladew has traveled and worked all over the world. He spent many an years as an region engineer. He works as a technical writer and trainer. Mr. Ladew is likewise a writer (2 books published), writes articles, essays, short stories and Haiku. he has likewise written a better commercialism business book for mid-level supervisors.