9th March 2006

Intellectual Capital

Yes, it indeed is true that the real assets of a company are it’s intellectual capital. Not being tangible in the conventional manner, this is not analysed to the extent it merits.

Increasing your market share without upsetting your profit margin ; and all this while not letting your intellectual capital diminish is indeed a juggling act. While globalization pushes companies to compete internationally against lower paying work forces, it also throws open the option of getting work done not only cost effectively but also Qualitatively.

We start with a lean organization with the core people – the identified and nurtured intellectual capital. Identify all the work/activities which can be outsourced. Give it to smaller companies which focus on that specific activity. Tap on the freelancers specializing in niche areas. We do see this in the present scenario too e.g. design houses, foundries, testing, distributors etc. However, the synergy here needs to be channeled and optimized. With global work forces, anyhow geographical barriers are falling. It’s pay per usage. The core employees formulate the strategies, give directions for the company’s growth and manage this knowledge bank of smaller companies and free lance professionals.

There are quite a few challenges to this approach but I do not think they are unmanageable. The biggest one would be IP protection. But then, that hasn’t deterred much the design activities or technology development/transfer to places like China. The recent panel on IP in China moderated by the president of SIA and as reported in Electronics News by Suzanne Deffree (dt. 3/3/2006) cites - China has the intellectual capability and the numbers. Barriers are not going to work. We have to try to safely enable them.

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