The Nordica Project:The Nordica Project:

Measuring and Reporting Measuring and Reporting Intellectual CapitalIntellectual Capital

Sigurður HelgasonSigurður HelgasonPwCIcelandIceland

The Nordica The Nordica ProjectProject

Started in 1999 by the Nordic Industrial Fund.

The aim is to facilitate cooperation between Nordic companies in exchanging information about reporting on Intellectual Capital.

Whom is it forWhom is it for

The organization

Customers

Investors

Analysts

The Nordica ProjectThe Nordica Project

5 Icelandic companies participating

Started in November 2000

First IC reports in the spring of 2001

If you canIf you can VISUALIZEVISUALIZE itit

you canyou can MEASUREMEASURE itit

you canyou can MANAGEMANAGE it it for continuous for continuous improvementimprovement

and if you can and if you can measure itmeasure it

“The wonderful thing about knowledge, is that it is relatively inexpensive to replicate if you can capture it. Most activities are not one time events. Our philosophy is fairly simple: Every time we do something again, we should do it better than the last time”

John Browne BP

There are two types of knowledge: tacit and explicit

Knowledge guides actions and informs decisions

Skills,Craftsmanship

Mentalmodels,Patterns

Beliefs,Values

Experiences

Know-how

Proceduresand policies

Books,Databases,

Texts

Perceptions,Formulae,Equations,

Rules

Designs,Blueprints

Insights,

TacitTacitknowledgeknowledge

Bestpractice

Products,Machines

• Personal• Context-specific• Difficult to formalize• Difficult to

communicate• More difficult to

transfer

• Packaged• Easily codified• Communicable• Transferable• Can be

expressed in formal, shared language

Documented information that can

facilitate action

Know-how and learning embedded within the

minds of the people in the organization

ExplicitExplicitknowledgeknowledge

CustomerCapital

HumanCapital

Organizational Capital

CustomerCapital

HumanCapital

Organizational Capital

Human CapitalHuman Capital

• Employee competencies

• How does the company contribute to employee development

• Working procedures

Organizational CapitalOrganizational Capital

• Quality standards

• Operating proceedures

• Information processes

Customer CapitalCustomer Capital

• Image

• The way they do business

• Networks

HumanCapital

Human CapitalHuman Capital

• Employee competencies

• How does the company contribute to employee development

• Working procedures

Employee competencies:

Intellectual Asset What is the value How do we measure it

Level of Education The ability to learn and share knowledge % with a universityThe ability to handle demanding projects degree

How does the company contribute to employee development:

Intellectual Asset What is the value How do we measure it

Training Increased knowledge and skills, % of employees receivingemployee satisfaction, training, average # of recruitment benefits seminars per employee

Image:

Intellectual Asset What is the value How do we measure it

Image of products Makes it easier to market Survey customers/public

Image of company Loyalty Survey customers/public

CustomerCapital

Customer CapitalCustomer Capital

• Image

• The way they do business

• Networks

The way they do business:

Intellectual Asset What is the value How do we measure it

Honesty Loyalty, image Number of customers whofind the company honest.

Belief in the company Loyalty, image, reputation % of customers whobecause of their quality selected the companystandards. because of their quality

standards.

OrganizationalCapital

Quality standards:

Intellectual Asset What is the value How do we measure it

Quality system Professional, uniform and # of quality standardsorganized procedures How often are they updated

Organizational CapitalOrganizational Capital

• Quality standards

• Operating proceedures

• Information processess

Information processess:

Intellectual Asset What is the value How do we measure it

Systematic tracking Knowledge sharing, access to Number of entries, % of re. customers information, marketing advantages employees actually using it

You don’t have

to get it right

the first time.

What stops us from sharing knowledge more than we do?

The challenge of each company is to facilitate knowledge sharing

How did you solve that problem?

How can we put that knowledge into our

organizational structure?

It is important to share knowledge with everyone, to makeit available for all within the organization.

What are the main challenges to corporate success?

92% communications88% sharing knowledge78% team work70% adapting to technology

Source: Corporate Agility Conference October 1997

”An individual without information cannot take responsibility; an individual who is given information cannot help but take responsibility”Jan Carlsson, CEO SASJan Carlsson, CEO SAS

”Communication is human nature;Knowledge sharing is human nurture”Alison Tucker, Buckman Alison Tucker, Buckman LaboratoriesLaboratories

pwc