Intellectual Capital

By John Miller, Founder and CIO, Real-CIO Consulting

Intellectual Capital (IC) is the total amount of knowledge retained by an organization to perform its business functions.

IC is an asset. IC contains confidential information that could be detrimental to the organization if it was compromised. IC contains operational information that could reduce efficiencies if modified incorrectly, accidentally or maliciously. Some IC is obsolete or adds no value, taking up space and costing money to backup. IC needs to be managed. IC comes in three flavors.

Digital IC – Digital IC is data stored in a machine-readable format. Some Digital IC is structured: memos, status reports, emails, spreadsheets, PowerPoint presentations, PDF documents, and server/mainframe databases. They have easily extracted metadata and content. Other Digital IC is unstructured: pictures, scanned images, videos, music, etc. Metadata must be added to describe the content. Most organizational IC is digital. The cost to manage Digital is high and growing because Digital IC is growing uncontrolled. Companies keep Digital IC long past its useful life because no one has time to clean house (archive or purge) and because humans, by nature, are pack rats. We store and backup obsolete IC for years, making storage expensive and operationally inefficient. Actions for better Digital IC management:

  • Classify all Digital IC. IC is either personal (stuff on your C: drive), public (stuff on your website), operational (used to run your company), critical (stuff your company cannot survive without) or confidential (payroll, trade secrets, etc.). Manage each accordingly.
  • Invest in a data governance tool. There are great tools out there to help you manage your Digital IC. Pick a rules-based tool that allows you to automatically archive IC that was created [x] years ago and not accessed for [y] years. You fill in the parameters. It will pay for itself in the servers you won’t need to buy and data you no longer need to backup.
  • Force email archiving. The risk of legal discovery far outweighs the convenience of keeping 35,000 messages in your inbox. Seriously?

Paper IC – This type goes far beyond paper, although that is the most voluminous. This type also includes data on your monitor and smartphone. IC is only digital while it is stored on hard drives. Once you present it so humans can read it, Digital IC becomes Paper IC. Oh, and just to be complete, I also include the spoken word as Paper IC. What IC someone sees or hears can never be un-done. Here are some actions:

  • Clear all paper from conference room tables at the end of meetings. I have walked into conference rooms and found payroll reports, performance reviews, and executive strategy document strewn across the table from previous meetings. Please shred the paper.
  • Lock your monitor when you leave your desk. Anyone can see the last thing you worked on, or worse, sit down and do something under your ID. Log out and reboot at the end of each day.
  • Use passcodes on mobile devices. Yes, they are a pain. Yes, the pain is worth it.

Human IC – Human IC is the total information stored in the heads of all your employees. This includes years of experiences, skills and undocumented knowledge. 100% of your Human IC walks out the door every day and you can’t stop it. You can do this:

  • Managers should attempt to document the skillset for employees. They should also document departmental processes and standard operating procedures. Make documentation part of the annual performance review.
  • Enforce Non-Disclosure and Non-Compete Agreements with employees and contractors. Minimize the chances that Human IC will be used against you.
  • Most importantly, create an environment where Human IC and its owners want to stay. The threat of Human IC being compromised vanishes if it walks back in tomorrow morning.

Why is IC presented in a CIO Insight article? Because in most organizations, the CIO owns the responsibility to protect Digital IC and all methods of accessing it. Adding Paper and Human IC governance is a logical extension. It all starts with strong policies and procedures. Make the policies governing Paper and Human IC as strong as those for Digital IC. Someone needs to own this. It might as well be us.

Real CIO Consulting is a Professional Services organization founded to provide Technology Assessments or Interim CIO Consulting Services to companies requiring Strategic IT leadership. It provides mentoring services to those looking to advance in their technology careers. Most importantly, it is founded to “Pay IT Forward” for a career that has been so rewarding.