The nature of intellectual property

On those remote pages it is written that animals are divided into (a) those that belong to the Emperor, (b) embalmed ones, (c) those that are trained, (d) sucking pigs, (e) mermaids, (f) fabulous ones, (g) stray dogs, (h) those that are included in this classification, (i) those that tremble as if they are mad, (j) innumerable ones, (k) those drawn with a very fine camel’s hair brush, (1) others, (m) those that have just broken a flower vase, (n) those that resemble flies from a distance (p. 375).

In this section the relationship between intellectual assets, intellectual capital, intellectual property, and knowledge management will be explored. The quote from Borges, the great word game player, heads this section as a reminder that definitions are too much to hope for in an emerging field like knowledge management and intellectual property. All we can hope for is an indication of the penumbra of meaning that is being attached to various terms and the stories which people are telling about the relationships between the various terms.

Intellectual assets are frequently categorised (Allee, 1997; Edvinsson, 1997; Saint-Onge, 1996; Skyrme, 1999; Skyrme & Amidon, 1997) into the following groups:

Human capital - knowledge, experience, know-how of individuals Structural capital - processes, information systems, databases Customer capital - customer relationships, brands, trademarks.

By contrast, Leadbeater, 1999 identifies three sorts of capital - financial, knowledge and social. He sees the new right, who emphasise market financial capital as discredited because the invisible hand fails to regulate markets, because price is so tenuously connected to cost in the ‘thin air’ world. Then, he sees people who emphasise social capital - often called communitarians (Hutton, 1995; Etzioni, 1993) as backward looking and retreating to authoritarian localism. He explores knowledge capital using the example o f Delia Smith’s recipes. He contrasts how we currrently use Delia Smith’s recipes with how we used to leam at mother’s knee (the legitimate peripheral participation of Lave &

Wenger, 1991). Leadbeater highlights the difference between tacit knowledge and explicit. He suggests if you create a new cake, that ‘You have two options to exploit this invention. One is to make chocolate cakes using the recipe and to sell the cakes. You will need to buy extra ingredients for each cake you make. You would need to install ovens and refrigerators’ (p. 31). And still you would only produce a limited number. ‘The second way to exploit the value of your creation is to turn it into a recipe. The fixed cost o f developing a recipe can be large; it takes repeated attempts and many failures to find just the right combination of ingredients, in the right proportions, cooked in the right way.

Yet once the recipe is perfected and written up in an accessible easy to understand form, with glossy pictures, it costs very little to reproduce it’ (p. 31-32). We have to interrogate a recipe to understand it and when we consume the recipe - it is still Delia Smith’s. ‘The rub, however, is that know-how on its own is never enough to make money. What stands out about Delia Smith is not the quality of her recipes but how well she packages and communicates them. Delia Smith’s skill is to combine her know-how with the

complementary skills - marketing, branding and publishing - which she needs to make money from her ideas. We do not buy Delia Smith’s recipes; we buy her books’ (p.33- 34). In many ways the IPDs are the Delia Smiths o f management development - creating recipes and propagating them in purchasable packages.

It is widely held (Allee, 1997; Skyrme & Amidon, 1997, for example) that the value of an organisation’s intellectual capital is determined by calculating the difference between its book value (the value o f its tangible assets) and what people will pay for the company (the share price multiplied by the number o f shares issued). Edvinsson (1997) suggests,

this difference, expressed as a ratio, is between two and nine times in a range of industries. However, it is up to 100 times in some e-businesses. A Centre for European Policy Studies survey sees this ‘market-to-book’ ratio as 1.6 for GM; whereas Microsoft’s was 13.4 in May 1999. The average market-to-book ratio in Europe was 149% in 1990, and 202% in 1995; and in the US 194% in 1990, and 296% in 1995.

Sometimes intellectual property is separated out as a distinct category (Brooking, 1997). Intellectual capital, according to Brooking, includes assets giving power in the market (trademarks, customer loyalty), internal strengths (culture, processes, systems),

knowledge (competences, know-how, networks) and properties of mind or intellectual properties (patents and copyright). So, intellectual properties nest within the broader construct o f intellectual capital. This, in turn, can be located within the umbrella category o f intellectual assets.

The tactics o f managing these human intangibles is knowledge management, which can therefore be described as a process for optimising intellectual properties and other human aspects o f intellectual capital. Demarest (1997) argues that knowledge management is different from the narrowly defined information management of the IT specialist, and includes this element of managing intellectual assets. Nickerson and Silverman (1997) describe a process for the strategic management of these assets. In recent conference presentations, I have emphasised the impact of the metaphors used to describe knowledge management (Gladstone & Megginson, 1999) and I have offered a framework which

includes affirming the value o f knowledge producers as a crucial component, and one that is often omitted, of knowledge management (Megginson, 1999a).

Intellectual property is also defined in legal terms. Law firms specialising in this area, like Dibb Lupton Alsop, categorise intellectual property as being constituted of patents, copyrights, design right, trademarks and confidentiality. Having interviewed their senior partner in intellectual copyright in Yorkshire and attended one of their breakfast

workshops on ‘Keeping what’s yours, yours’ I came to the view that the most significant part of the legal definition of intellectual property, for this dissertation, was the issue of copyright.

O f course, lawyers and producers of IP do not necessarily share the same interests. Kay (1999) argues that those of us who produce IPs have 3 concerns: to propagate ideas as widely as possible; to get credit for these ideas; to be well paid for them. IP law does not necessarily serve all these interests because it ‘has been hijacked by producer interests that want to build commercial monopolies in books Journals, records and software on the back of exclusive access to original talent’ (p. 12). In my fieldwork I uncover the IPD’s attitude to copyright as part of my understanding of their approach to IP development.

A final dimension of non-financial capital that is used by some scholars is social capital (Leadbeater, 1999; Mulgan, 1997; Nahapiet & Ghoshal, 1998). Social capital is a term used to describe the bonds in society or in institutions that contribute to the effectiveness with which the society or institution can operate. All these sources emphasise the

importance of social capital in facilitating the generation of other forms of capital. Nahapiet & Ghoshal have the most fully worked out argument o f these sources, which they use to show how the high social capital in organisations makes them more effective in the creation of intellectual capital than markets are.

Reflection

A question that has hovered round my interest in IPDs is how to make lots of money from the IPs that I myself have produced. Any such similar avaricious impulses felt by my readers are doomed, I fear, to disappointment. I have not found the answer to this question. One o f the issues raised implicitly in this section is how my respondents in the interviews described the relationship between their IPs and their income.

3.2.3 The significance of intellectual property to organisations

Intellectual property is becoming a salient issue in organisations. The literatures relating to it include

the learning organisation

knowledge management, the knowledge-based business and intellectual capital

The learning organisation

Prange (1999) outlines the beginning o f the coming together of the strands of

organisational theorising embedded in the terms ‘organisational learning’ and ‘knowledge management’. She seems chary of this link and, having cited a number of sources that make it, she turns to explore the, for her, more congenial field o f learning. This approach may be due to the widely held perception within the organisational learning community, at least until recently, that ‘knowledge management’ was a term used by IT people for what was no more than ‘information management’, in order to make it sound more portentous and important. It is noticeable that the IT community is less fastidious about the intellectual company it keeps and some recent offerings on knowledge management have considerable sophistication in their treatment of organisational learning issues (e.g. Skyrme, 1999 and, particularly, Allee, 1997).

Knowledge management, the knowledge-based business and intellectual capital

One of the key papers initiating this stream of literature (Nonaka & Takeuchi, 1995) was the most cited source by Skyrme & Amidon’s (1997) respondents in their survey of the knowledge-based business. Since 1991 and in particular since 1997, the literature has burgeoned. Notable contributions having been made by Allee, 1997; Davenport & Prusak,

1998: Edvinsson, 1997; Skyrme, 1999; Skyrme & Amidon, 1997; and Stewart, 1997. The emergence of a Knowledge management yearbook (Cortada & Woods, 1999) is another sign of the fast maturing of the field.

Skyrme & Amidon (1997) have produced a substantial report filled with contemporary case studies derived from their research process. They argue that the business proposition which is attracting attention in the world’s biggest companies is ‘to understand and apply knowledge to create value’ (p. 5). They see this as having two subsidiary phases - (A) knowing what you know, and (B) creating new knowledge. The stories o f the effects o f giving these issues attention are many and compelling. To take just one example, Dow Chemical enhanced earnings by $125 million in the first three years of their active management of the patent portfolio that they already possessed. Knowledge has become the stuff of organisational life, and knowledge workers (or professionals as they were called in the earlier literature - e.g. Mintzberg, 1983) the most significant asset. The tendency to focus upon intellectual assets seems to have been crystallised by the remarkable success o f the Dow case (Davenport & Prusak, 1998; McConnachie, 1997).

Reflection

Scarbrough & Burrell (1996) discuss two basic epistemological positions - content theories and relational theories. Content theories argue that knowledge has some

technical substance and can be developed, possessed and traded. This is contrasted with relational theories where ‘knowledge needs understanding not as a free-floating entity, and certainly not as an approximation to scientific truth, but primarily in terms of social relations.’ (pp. 178-9). This bears upon the discussion of my findings about the

relationship between the creator and their creation for the guru and the IPD. I will explore

a tentative notion that researchers may treat their properties in a way that is consistent with a content view, whereas gurus will tend to connect with their knowledge in a way better accounted for by the relational perspective. IPDs may adopt an intermediate perspective, sometimes adopting one view sometimes the other. The majority o f the knowledge management authors are consistent in adopting a content view, although those influenced by notions o f community of practice (Lave & Wenger, 1991; Schon, 1991, and, with a practitioner’s perspective, Seeley Brown, 1995) tend towards a relational view.