The current issue and full text archive of this journal is available at http://www.emerald-library.com Profiting from intellectual capital Learning from leading companies Suzanne Harrison and Patrick H. Sullivan Sr Profiting from intellectual capital 33 The ICM Group, LLC, Palo Alto, California, USA Keywords Intellectual capital management, Intellectual asset management, Intellectual property management, Value extraction Abstract Over the course of the 1990s the level of interest as well as the sophistication of best practices in the management of intangible assets have increased dramatically. This article is intended to provide information on the current state of best practices in the management of intellectual capital. In addition, the article will discuss the evolution of best practices in ICM, concepts underlying the activities of companies sophisticated in the management of their intangibles, factors affecting the measurement of intellectual capital, and the ways in which companies tailor their ICM activities to match the needs of their different business strategies. A brief history The management of intellectual capital has a history that began in the early 1980s as managers, academics and consultants around the world slowly became aware that a firm's intangible assets, its intellectual capital, were often a major determinant of the corporation's profits. For example, in Japan, circa 1980, Hiroyuki Itami noticed the difference in performance among Japanese companies and after some study attributed it to differences in the firm's intangible assets. His published analysis concluded that intangible assets are ``unattainable with money alone, are capable of multiple, simultaneous use, and yield multiple simultaneous benefits''. In Sweden, Karl-Eric Sveiby, the manager of a small publishing company, published a book in 1986, in Swedish, The Know-How Company, on how to manage these intangible assets. In 1986 University of California Berkeley Business School Professor David Teece wrote ``Profiting from technological innovation'', an article in which he identified the steps necessary for the extraction of value from innovation. The explication of these steps had major implications for innovation-rich companies. It meant that for the first time managers could learn, and subsequently teach their employees, how to maximize the value of the firms' innovations. After reading Teece's article, Patrick Sullivan, an independent business consultant specializing in the extraction of profits from technology, became interested with the idea that there could be a systematic set of decisions and rules that companies might use to extract profits from their innovations. He refined and expanded on Teece's ideas and was one of the first to establish a viable consulting practice focused on advising clients on the extraction of value from innovation from a business perspective. Journal of Intellectual Capital, Vol. 1 No. 1, 2000, pp. 33-46. # MCB University Press, 1469-1930 JIC 1,1 34 In 1991 and 1994, Tom Stewart, a staff writer at Fortune magazine, wrote two articles on ``brainpower'' in which he discussed the idea that the company's intellectual capital ± in other words, its employees ± had much to do with its profitability or success. Also in 1991, Skandia AFS organized the first corporate intellectual capital office and named Leif Edvinsson as its vicepresident for intellectual capital. In 1993, The Dow Chemical Company, interested in developing new profits from its intellectual capital, began trying to identify ideas or innovations that might have been previously overlooked and to select and develop those ideas with the greatest profit-making potential. Dow named Gordon Petrash as its first director of intellectual assets. By the mid-1990s it was becoming clear that there were two separate but related paths for thinking about intellectual capital. One path, the knowledge and brainpower path, focused on creating and expanding the firm's knowledge (as espoused by Stewart, Edvinsson, Sveiby and others). The other path, the resources-based perspective, was concerned with how to create profits from a firm's unique combinations of intellectual and tangible resources (Itami, Sullivan, Teece and others). The ICM Gathering Companies interested in profiting from the intellectual assets they already owned spurred the evolution of intellectual capital management. In Skandia's case, intellectual capital included both its employees and its network of insurance brokers. In Dow's case, intellectual capital comprised the ideas and innovations stuffed into the file drawers and folders of its scientists and engineers. Intellectual capital management became the vehicle by which companies began to learn more about their intellectual capital. By 1994 there were perhaps a dozen companies around the world engaged in the active extraction of profits from their intellectual capital. In an effort to learn more about the variety of perspectives and methods in use for extracting value, Patrick Sullivan, Gordon Petrash and Leif Edvinsson agreed that it would be interesting and instructive to convene a meeting of representatives of all of the companies who were actively extracting value from their intangible assets. This would reveal each company's perspective on both intellectual capital (i.e. what it is) and how to profit from it (i.e. how to manage it). Eight of 12 companies in the world which were known to be actively engaged in value extraction gathered together in January 1995 to share their learnings. At this first meeting of what was to become the ICM Gathering, participants determined that they needed to agree on a definition of the term ``intellectual capital'' (``IC''), as well as to understand its major elements. The members first created a definition of IC that was consistent with their collective responsibilities to their companies. Each of the original participants had been asked to find ways to extract value from the firm's intellectual capital. Thus it is not surprising that the Gathering defined intellectual capital as ``knowledge that can be converted into profit''. A graphical representation of intellectual capital was created to depict the components of intellectual capital and their relationships. This graphic, shown in Figure 1, shows the major elements of IC: humans (with their embedded tacit knowledge) and codified knowledge. Codified knowledge has come to be called the firm's ``intellectual assets'' (IA). When someone's tacit knowledge is committed to article (it could also be canvas, electronic media, or any other medium), it becomes a codified asset of the firm. Some of these codified assets (intellectual assets) are legally protected as patents, copyrights, trademarks, trade secrets, or semiconductor masks. Intellectual assets that are legally protected are referred to by the legal term ``intellectual property''. Profiting from intellectual capital 35 How does IC bring value to a firm? Once a firm comes to the understanding that it has intellectual capital, how does it convert it into something of value? The answer is that it depends! It depends, at least in part, on the kind of value the firm wishes to extract from its IC. At a recent meeting of the ICM Gathering, member companies, all sophisticated in extracting value from their intellectual capital, were asked to describe how their firms had actually received value from their intellectual assets. The following list shows the diversity of the kinds of value firms are obtaining from their IC: (1) Profit generation: . income from products or services, through: ± sale; ± licensing royalties; ± joint venture income; ± strategic alliance income. Intellectual Capital Value Creation Value Extraction Intellectual Assets Human Capital Intellectual Property Figure 1. Intellectual capital and its major components JIC 1,1 income from the IP itself, through: ± sale; ± licensing royalties; ± joint venture income donations (tax write-offs); ± price premiums; ± increased sales, through: convoyed sales; repeat sales. Strategic positioning: . market share; . leadership (innovation, technology, etc.); . standard-setting; . name recognition, through: ± branding; ± trademarking; ± reputation. Acquiring the innovations of others. Customer loyalty. Cost reductions. Improved productivity. . 36 (2) (3) (4) (5) (6) The value many of these firms receive from their IC (and most were receiving four or five kinds of value from the above list) is the result of a well-reasoned, well-planned, and well-executed set of management initiatives. These firms design these initiatives to ensure that specific forms of value deemed important to their business strategy are routinely extracted from the firm's intellectual capital. The importance of context One of the major lessons the Gathering members have learned is that the value of a firm's intellectual capital depends not only upon the kind of value desired but also upon the company's context. In fact, we have learned that the company's context provides a new kind and very useful measuring stick which can be used to determine the relative importance of innovations to the firm or to calculate the value of the firm's intangibles. The value companies place on their innovative ideas largely depends on the firm's view of itself, and on the reality of its marketplace. Put another way, each firm exists within a context that shapes its view of what is or is not of value. Context may be defined as the firm's internal and external realities. Internal realities concern direction, resources, and constraints. They define the firm's strengths and weaknesses as well as its capabilities for competing in its external world. The external realities concern opportunities and threats and focus on the fundamental forces affecting the long-term viability of the industry as well as the immediate opportunities available to the firm. For most firms, their context is expressed through the firm's vision of what it wishes to become and the strategy it selects for achieving that vision. Companies that have defined a vision and outlined the strategy for achieving it are in a position to determine the roles their intellectual capital could play in leveraging the strategy and in achieving the vision. Different companies will determine different roles for their intellectual capital. Indeed, it is unusual to find two companies with exactly the same roles for their intellectual capital simply because no two companies have exactly the same context (vision and strategy). For example, for some product design and manufacturing companies the role for intellectual capital may be to create the innovations that will become the firm's products and services of the future. In other manufacturing companies, where the firm's value added involves assembly and integration of components to create products and services, the intellectual capital may focus on integrating the innovations of others and adding value through low-cost manufacturing or distribution. In still other companies, the intellectual capital may be integral to creating a reputation or image that the company uses to differentiate itself in its marketplace. The set of roles any one company selects for its intellectual capital depends largely on the kind of firm it is, its vision for itself, and the strategy it has chosen. The flow of thought for aligning the vision, strategy and intellectual capital is displayed in Figure 2. Profiting from intellectual capital 37 Roles for intellectual capital Companies ascribe a range of roles for value extraction from their intellectual capital. While most people tend to think quickly of the revenue-generating role, there is a range of others that are employed. The following represent some of the most often mentioned ones: Corporate Vision IA Strategic Framework IP Objectives/ Roles: Corporate Strategies Intellectual Asset Management Strategies Value Creation Value Extraction How Should I Manage My Intellectual Assets? Figure 2. Determining the roles for intellectual capital JIC 1,1 38 (1) Defensive roles: . protection of the products and services resulting from the innovations of the company's IC; . design freedom; . litigation avoidance. (2) Offensive roles: . revenue generation: ± from the products and services resulting from the firm's innovations; ± from the intellectual properties of the firm; ± from the intellectual assets of the firm; ± from the knowledge and know-how of the firm; . creating standards in new markets or for new products and services; . obtaining access to the technology of others; . obtaining access to new markets; . as the basis for new business alliances; . support the business activities of the firm's SBUs; . creating barriers to entry for new competitors. The importance of time in determining the value of IC When firms differentiate their IC activities as being either tactical or strategic, they are also differentiating them in terms of their impact in a current time or a future time dimension. For example, for companies whose intellectual properties are a source of current revenue, much of what is in the portfolio protects current products in the marketplace. Intellectual properties usually represent current value and the value extraction activities are rife with tactical considerations. Intellectual assets, the next ``tier'' of intellectual capital, are the assets with less current definition, and often more promise for the future. Extracting value from these assets usually involves thinking into the future, and discussing positioning and strategies for value extraction rather than near-term tactics. Intellectual assets, then, are usually considered as assets that bridge the transition from the present to the future (also from the tactical to the strategic) value extraction. The firm's innovation-focused human capital operates almost entirely in the future time dimension and at the strategic level, but uses the same fundamental decision processes as those found in the decision systems firms employ for extracting value from their well-defined intellectual property. Intellectual capital may be the source for either one-time transaction value or ongoing, cash-flow-producing value. Although Gathering companies are focused on managing the ongoing cash-producing value of their intellectual capital, it must be recognized that IC assets are often sold individually or as packaged bundles of intellectual assets. One-time value. Typically realized by a sale, one-time value may be determined for the market conditions existing at the time of the sale. Ongoing value. This value arises largely out of the firm's ability to produce a sustainable cash flow. In IC terms, it comprises the value of the tacit knowledge of the firm's workforce carrying out the operational functions of the business, thereby making it a going concern. Calculating a firm's ongoing value assumes that the ongoing concern will continue its business functions on the day after the valuation in much the same way that they were conducted the days before. This article focuses on the management activities mounted by firms operating as a going concern. In that sense, the article is concerned with the ongoing management activities and processes that firms use to maximize the value of their intangible assets in both the short and long term. Profiting from intellectual capital 39 A decision system for optimizing the value of the firm's IC Over the course of several years of meetings, the Gathering companies discovered that there was a generic set of activities and decisions involved with extracting the optimum value from their firms' intellectual capital. When organized into a common-sense flow or process, these activities (decisions, decision processes, information-gathering, and work processes) allow companies to systematically evaluate and extract value from their intellectual assets. This generic system is known as the Intellectual Asset Management System (IAMS). Because it reflects the collective learning from some two dozen companies, there is no one company that uses the system exactly as it is defined by the Gathering. Yet if they were able to begin all over again, each would probably choose a system with the following components (see Figure 3). Coarse Valuation of the Opportunity Patenting Criteria and Decision Process Innovation Process Obtain Technology Internally Business Strategy And Tactics Product Market Matrix Intellectual Asset Portfolios Obtain External Technology Simple Competitive Assessment Need for New Innovation Decision Process Commercialization Decision Process Store Commercialize $ Figure 3. The intellectual asset management system JIC 1,1 40 The innovation process All firms have their own approach and method for developing new or innovative ideas that create value. For many technology companies the innovation process is an R&D activity; service companies, on the other hand, often have a creativity department; still others rely on their employees in the field to produce innovative ideas. Whatever the firm's source of new innovations, the generic system calls this the innovation process. Portfolio inclusion: the go/no-go decision Most firms have a method for evaluating the innovative ideas that emerge from the innovation process. Innovations that pass the screening ± those that are deemed likely to be useful to the company in pursuit of its strategy ± are selected for inclusion in the company's portfolio of intellectual assets. Some companies use the screening process to determine which innovations will be patented; the decision to patent requires an investment of up to $200,000 to obtain and maintain legal protection for an innovation for its 20-year life. This decision is important for all companies because it separates ideas that are of particular interest to the firm from ideas that, though they may be good and interesting, are not aligned with the firm's strategy. (Where a firm decides to not patent, it often maintains an innovation in the know-how of its employees; sometimes formally protecting this knowledge as a trade secret.) The intellectual asset portfolio The portfolio is in fact a series of portfolios containing the firm's different kinds of intellectual assets. Some of the portfolios may contain intellectual properties; others may contain documents of potential business interest (e.g. customer lists, price lists, business practices and internal processes); and others may contain ideas or innovations that are in the portfolio because of their potential to create profits. Coarse valuation of opportunity Each innovation of potential interest should be ``valued'' before it is reviewed for use. ``Valuation'' in this sense is a bifurcated process. The first part of the valuation process is to narratively describe how the intellectual asset is expected to bring value to the firm. Following this qualitative valuation, and where it is possible to do so, the firm should attempt to quantify the amount of value it expects the innovation to provide. A simple competitive assessment While competitive assessments in business are commonplace, the competitive assessment contemplated here is one that is focused on the intellectual assets of the competition. In the case of technology companies, that focus might be on a competitor's technology as well as on its portfolio of patents. Business strategy/tactics/product-market mix This portion of the intellectual asset management system involves a review of intellectual assets of interest matched with the firm's business strategy, tactics, and product/market mix. The outcome of this review is an assessment of the fit between this asset and the organization's strategy, and a decision about how to use or dispose of the intellectual asset under review. The disposition decision process The decision concerning the disposition of reviewed intellectual assets may have several possible outcomes. The intellectual asset may be commercialized or stored until another innovation is developed that makes the first one more marketable. The commercialization decision process This process results in a decision about which mechanism(s) will be used to convert the innovation to cash. Deciding where to seek innovation This decision process is invoked where it has been decided that a new innovation should be sought to add to an existing innovation to make the first more marketable. In this case, the question is whether to seek the new innovation from inside or outside the company (through, for example, inlicensing, acquisition of a company, etc.). Each firm involved in extracting value from its intangible assets inevitably uses a set of activities and decisions similar to that described above. Each such firm tailors the activities and decisions to suit its individual context. In addition to tailoring the activities and decisions involved in the management of the firm's intangible assets, there are also significant issues surrounding how a firm will organize itself to operate and manage this set of decisions and activities. Organizing to manage intellectual capital There are several factors that affect the way in which companies organize and manage their intellectual capital activities. These factors include considerations such as: . . . . What objectives do we wish to achieve with our intellectual capital? What is the degree to which our intellectual capital activities integrate with our business strategy? What intellectual capital activities are appropriate for us? What kind of staff people should be involved with these activities? (Attorneys? Technology people? Business people?) Profiting from intellectual capital 41 JIC 1,1 . . 42 . . . . Who is to be responsible for extracting value from the firm's intellectual capital? (The chief IP counsel? The vice-president of R&D? The business development officer?) What portion of the firm's intellectual capital will be the focus of our management attention? (IP, intellectual assets? Human capital and its knowledge and knowhow?) Where in the organization will our intellectual capital value-extraction person report? (In which function? Legal, R&D, Finance? At what level? Chief executive officer, senior vice-president, vice-president, director?) Is it our intention to be an active user of our intellectual capital (i.e. offensive) or a passive user of our intellectual capital (i.e. defensive)? To what degree will our ICM activities be centralized or decentralized? What will be the level of resources we will commit to the management of our intellectual capital? Companies currently managing their intellectual capital have each developed their own answers to the basic questions outlined above. In each case they have arrived at a focus, a set of objectives, a set of activities and an organizational structure that is appropriate for their context. Experience has shown that companies usually take either an offensive or a defensive posture when considering the management of their IC. In fact, there is a high degree of correlation as follows: (1) For companies with an offensive perspective on the use of their IC: . strategic; . active; . centralized; . core as well as non-core innovations involved; . reports to business development, R&D, or other. (2) For companies with a defensive perspective on the use of their IC: . non-strategic; . passive; . decentralized; . non-core innovations; . reports to legal or to SBUs. Measuring intellectual capital Before reviewing what and how firms measure relating to their intellectual capital, it may be useful to define some of the most often used terms: . . . Measures ± the dimensions to be used in the act of measuring. Measuring ± the act of comparing the thing to be measured against the standard dimensions prescribed. Measurements ± the numerical results of measuring. Of perhaps paramount importance in any discussion about measuring intangibles is the determination of the measures to be used. Measures, as briefly defined above, are the dimensions within which measurements are made. Most people, when thinking about measuring business assets, think of dollar-based measures, such as the amount of revenue generated, or the amount of profits created. But dollar-based measures are only one of a potentially wide range of dimensions and measures which might be used to accurately measure intellectual capital. Quantitative vs. qualitative measures of value Measures may be either qualitative or quantitative. Qualitative measures are typically judgment-based and often are used when the item to be measured or the attribute of interest does not lend itself to precise or quantifiable measurement. One of the most striking examples of this phenomenon may be best exemplified by using a non-business intangible: love. Parents are often asked by their child, ``How much do you love me?'' The answer, of course, defies quantification. As respondents to that question we tend to fall back on answers like ``A lot!'' The point is that some things, even very important ones like love, do not lend themselves to accurate or quantifiable measurement. Sometimes, when it is difficult to measure an IC activity directly, companies have found that they can use indicators rather than measures. Because direct measurement often requires that something be completed before it can be counted, there are times when we need to measure work-in-progress. Indicators are helpful under these circumstances because they are less definitive than measures. Although they also provide information on amount, they are often fuzzy, using terms like ``a lot'' or ``more than''. Indicators are often defined in terms that are not as black and white as normal quantitative measures. This means that companies managing their intellectual capital can define measures that are gray instead of black and white. Vectors are another form of measurement that works well when measuring intellectual capital activities. Vectors are helpful because they provide information on direction as well as on amount. When most of us think of measurement, we immediately think of quantitative measures such as feet, time, weight, dollars, and so on. These measures allow us to determine where we have been, where we are going (in terms of distance and time), and where we are today in a physical sense. For companies, in the past largely concerned with physical assets, measurement has traditionally centered on quantitative outputs ± in particular amounts of product, dollars, and sometimes time. Quantitative measures provide a precise Profiting from intellectual capital 43 JIC 1,1 Measures Qualitative 44 Figure 4. Example measures for intellectual capital Value Based – Value Category – Alignment with Vision & Strategy – Satisfaction – Quality of IAs Vector Based – Rate of Addition – Rate of Deletion – Backlog – Market Share Forecast – Coverage – Comprehensiveness – Stock Price Quantitative Non-$ – # Evals/Unit Time – # Techniques Avail – # of staff – Subject/Techn. – Age – Remaining Life $ – $ Invested – $ Received – Forecast Income – Costs to Date – Forecast costs snapshot of the firm's activities and, in doing so, quantitative measurement requires that there be points at which measurement may be taken. While quantitative measurement tells us what has happened, qualitative measurement tells us what is happening. Figure 4 highlights sample measures under each of these two headings. Tailoring IC management to fit your company IC is a significant resource for many companies. Increasingly companies are looking for systematic ways to extract value from these assets (see Appendix). This article has described the concepts and dimensions underlying successful implementation of value extraction for companies actively managing their intellectual capital. The methodologies described in this article were created and used by companies in the ICM Gathering in order to better manage and extract value from their IC (see Appendix for an example). In addition, this article has defined and described what IC is, the benefits IC can generate, how a firm can utilize those benefits, the different roles a portfolio of IC assets can play, how firms can take the necessary steps to better organize and extract value from these portfolios, and the risks to a company that does not manage its intellectual property portfolio. References Stewart, T. (1991), ``Brainpower'', Fortune, June 3, p. 44. Stewart, T. (1994), ``Your company's most valuable asset: intellectual capital'', Fortune, October 3. Sveiby, K. and Risling, A. (1986), The Know-How Company, Liber, MalmoÈ. Teece, D. (1986), ``Profiting from technological innovation'', Research Policy, Vol. 15 No. 6, pp. 285-305. Appendix. Best practice ± Neste Oy Background In today's competitive environment the frequency of mergers and acquisitions (M&A) has increased dramatically. Much of this recent M&A activity may be attributed to the ascendancy of knowledge in the new economy. This knowledge-induced frenzy for M&A is clearly demonstrated in high technology industries where paying well in excess of book value for companies with cutting edge technologies has become banal. In such a precarious environment it is vitally important to accurately assess the value of your company. And this value is more and more determined by a firm's intellectual capital. One company that realized this early on and was able to use this to great advantage in a merger situation was Neste. Faced with a requirement to merge its petrochemical business with Statoil's petrochemical business, Neste conceptualized and conducted a ``technology asset audit'' to ensure that it could obtain the most favorable terms for the impending merger. Profiting from intellectual capital Objective Although the merger proved to be the impetus for the technology audit, Neste saw it as an opportunity to comprehensively identify and categorize all of its intellectual capital. The technology asset audit had a broad mandate to assess the value and the extraction potential of Neste's existing intellectual capital portfolio. The effort was intended to maximize value extraction, while minimizing costs germane to the upkeep and maintenance of an intellectual property portfolio. Neste's vice-president of corporate technology explained that the intent of the project was ``to establish an intellectual property rights (IPR) management group whose charter is to use corporate IPR as a strategic asset and to use technology transfer as a tool to achieve other corporate objectives.'' 45 IAM system emphasis (1) Patenting criteria and decision process: . Whether to invest in legal protection? ± What is the idea? ± Is it patentable? ± What is the intended use? ± How does it contribute to the firm's strategy, IP purposes, etc.? ± What value will the firm be able to extract from this idea? (2) Coarse valuation of the opportunity: . Whether the now legally protected idea represents an opportunity of sufficient value to consider it further?: ± What value is now available to extract? ± How much value is there? ± Is the value now sufficient to warrant further investment? (3) Innovation process: . Generate and categorize innovation. . Align innovation policies/processes with strategy. . Evaluate the quality of innovative efforts. . Originate invention disclosures. Action Having to develop a technology audit strategy from scratch, while preparing for a merger, forced Neste's management to act decisively. Realizing that the technology asset audit was a paradigm shift in business processes for Neste, and that a quick turnaround was required in order to stay on schedule with the upcoming merger, the CEO and the president became the lead sponsors of the project. Another prescient decision was to centralize control of Neste's technology at the corporate level, which enabled maximum flexibility and decisive decision making. At the same time, management realized that the project had to be successfully sold to Neste's employees. They embarked on a painstaking effort to develop a common language around intellectual capital. Once this was accomplished, they developed a clear, simple message that could be taken directly to the employees. This message articulated management's intent in JIC 1,1 46 initiating the project. It also defined the technologies of interest and measurement techniques to be used. Being forthright with Neste's employees avoided much of the consternation and apprehension that surround similar change processes. Once the project was understood, questionnaires were circulated to uncover the requisite information for each technology. A standard questionnaire was created to identify technology types, technology stages, legal ownership status, and commercialization options. In addition to describing the technology thoroughly, each technology was categorized as either existing or precommercial. Also, the ownership status identified those technologies owned outright or partly owned by Neste. Finally, each technology was assessed for its commercial viability. The commercial exploitation categories included key, base, spare, pacing, and emerging technologies. Each technology was also evaluated against Neste's transfer model. The model weighed the amount of investment in a technology against the level of control Neste exercised over it. The model's output showed whether a technology should be abandoned, sold, licensed, spun off, etc. A Microsoft Access database was created to store information germane to each technology audited. The database system was found to be highly useful, and was quickly adopted by many businesses and divisions for the current and future technology planning. Results The audit project was an opportunity for all of Neste's employees to learn the importance of intellectual capital and its potential to affect the company's bottom line. Now its employees have a common language to address issues relevant to intellectual capital, and this will make further endeavors in this area much easier. The project succeeded in identifying all of Neste's technology and classifying it in terms of its ownership structure and commercial potential. Quite to management's surprise, many of their technologies were not well protected, and considerable resources were devoted to shoring up their assets. Also, over 50 percent of their patents were categorized as excess. Most of these were rapidly slated for abandonment or out-licensing; however, in a few situations, the patents could be used to develop novel business opportunities. These actions enabled immediate cost savings and/or increased revenue streams. The project also led to the creation of a technology transfer model. All technology is now evaluated against this model, which weighs the amount of investment in a given technology against the level of control Neste exercises over it. The model's output reveals whether a technology should be abandoned, sold, licensed, spun off, etc. Finally, this effort allowed Neste to hone its intellectual capital processes. Systematic reviews are now conducted of its existing patent portfolio and of any new technology potentially worthy of patent protection. Its innovation compensation system was also revamped to allow a more targeted value creation effort. Applicability Neste's technology asset audit can be emulated across a broad range of companies.
