THE STAGES OF BUSINESS MANAGEMENT AND THE CICM APPROACH
To develop ICM as a business management approach for the IC-intensive organization, it is important to understand the business cycle of IC and to tie it to the elementary stages (or functions) of business management. These include:
• Managing resources
• Managing the production process
• Maximizing value to stakeholders (be it defined in terms of bottom line, meeting a mission, or simply success)
These stages (or functions) are the basis of business management in every organization. The first stage ensures having the raw resources for operation or production, while the second stage converts these resources through various processes into valuable assets, and the last stage leverages this value to maximize return to stakeholders. In an economy where 80 percent of business value is made of IC, ICM should be engrained at each of these stages. That is the gist of the CICM approach (see also about capital management).
The business cycle of IC follows the same stages as those enumerated above. Under this business cycle, IC progresses from being a resource with a potential value to an asset with a perceived value, to becoming a product with a market value. As a resource, the value of IC is latent; hence, the task of management at this stage is to create value from intellectual resources. Once value is realized, it then can be extracted through business processes where the intellectual resource is transformed into an intellectual asset with perceived value that can be estimated. The intellectual asset is ready at this stage to be packaged as a product1 and launched into the market. At this last stage of development, the value of IC is maximized through legal protection, allowing the further commercialization and promotion of the underlying IC to related markets. This expands the definition of IC to comprise raw knowledge resources that are processed into innovation resources, the basis of a marketable product, and then to a legally identifiable and protectable bundle of rights—intellectual property (IP) (see also about invest money).
To demonstrate, brainpower, expertise, and the body of knowledge in a certain area represent the raw resources required for production. The value of these resources is in the potential of their development through business processes into a certain application; for example, applying knowl-edge resources and people's skills and brainpower to develop a software program. Once a specific application is developed, a product concept is formed, or a prototype made, the value of IC crystallizes to a degree that it can be perceived and measured (see also about real estate investing). The NPV method is often used at this stage to measure the revenue stream that such IC may generate in the future after being transformed to a marketable product. At this stage the software program is developed further into its marketable form by being passed through the various business and innovation processes. That, however, still does not ensure that the extracted value has been fully exploited. The latter happens only when the organization acquires all forms of intellectual property possible to protect the IC in question, and thus enhances its competitive power. In the software program example, the organization at this stage should protect the program with a trademark/brand, copyright and trade secrets, and possibly a patent. Later, the various intellectual property rights can be exploited independently of the program through various licenses and transactions maximizing the realized value of the IC. The progress of IC from a knowledge resource, to an innovation (or intellectual) asset, and finally to intellectual property represents the IC business cycle.