Transforming from an industrial to a knowledge-based enterprise
Daniel Andriessen
Professor of Intellectual Capital
INHOLLAND University of professional education
Amsterdam, The Netherlands

Using case studies
1. Have you ever used case studies before?
2. What are case studies:
• Snapshot of history of a company
• Story of a company
• Actor
• Reader sees a business dilemma
3. What is a business dilemma?
• Relive the situation
• Business decision to choose between option
• No good /bad decisions
• Apply theory
• Discuss options within the group
• Both lecturer and student learn
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Brief History of Jentjens
• ’50s – ’70s: from ship repair to steel construction
• ’70 – ‘80s: from steel construction to machine manufacturing
• ’90s:
• ’00s:
• ’04: from machine manufacturing to engineering from engineering to Oriented Handling® becoming an Original Equipment Manufacturer
Investing in
Intellectual
Capital
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Teaching Purposes
1. Adding value in a knowledge-based economy and the position of companies in the industrial value chain
2. Intellectual capital resources of the firm
3. Making R&D decisions
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Climbing the value ladder
Original
Equipment
Manufacturer
Company that sells products under their own brand name and that often uses subcontractors.
System supplier
Subcontractor that offers complete product modules that always include sub-subcontracting.
Component supplier
Subcontractor that offers also assemblies that include some sub-subcontracting.
Part supplier
Subcontractor that produces parts or offers special production phases. The amount of assembly is limited.
Capacity subcontractor
Subcontractor used when extra capacity is needed.
Jobber
Subcontractor who manufactures single parts.
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Intellectual Capital is the driver of value
Tangible capital
Human Capital
Companies
Intellectual capital
Organizational Capital
Financial capital
Relational Capital
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TNO has knowledge
Tangible capital
Human Capital
Implicit knowledge
Companies
Intellectual capital
Organizational Capital
Explicit knowledge
Financial capital
Relational Capital
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McKinsey has skilled workers
Tangible capital
Human Capital
Implicit knowledge
Skills Attitude
Companies
Intellectual capital
Organizational Capital
Financial capital
Relational Capital
Reputation
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Philips has intellectual property
Tangible capital
Human Capital
Implicit knowledge
Skills Attitude
Explicit knowledge
Companies
Intellectual capital
Organizational Capital
Financial capital
Relational Capital
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McDonalds has processes
Tangible capital
Human Capital
Companies
Intellectual capital
Organizational capital
Implicit knowledge
Skills Attitude
Explicit knowledge
Processes
Financial capital
Relational capital
Reputation
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GE has pride and ambition
Tangible capital
Human Capital
Companies
Intellectual capital
Organizational capital
Implicit knowledge
Skills Attitude
Explicit knowledge
Processes Culture
Financial capital
Relational capital
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Nike does not manufacture shoes
Tangible capital
Human Capital
Companies
Intellectual capital
Organizational capital
Financial capital
Relational capital
Implicit knowledge
Skills Attitude
Explicit knowledge
Processes Culture Networks Reputation
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Rabobank has involved customers
Tangible capital
Companies
Intellectual capital
Financial capital
Human Capital Organizational capital Relational capital
Implicit knowledge Skills Attitude
Explicit knowledge
Processes Culture Networks Reputation
Customer capital
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Structure of the case
• Part 1: To cut or not to cut, that is the question (2001)
•
Meeting with four growers of pot roses.
• The growers wanted to automate the striking of cuttings from pot roses.
• What was needed was a robotised solution
• Has never been done before
•
All technology in-house except for vision technology
• No experience in horticulture market
• Shall he pick up the challenge?
• Part 2: Robots to conquer the world (2006)
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History
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Value creating model
• What does the company actually sell (created value)?
•
Core competence: Oriented handling of objects
• Products: machines and robots that intelligently handle objects
• How is this value produced (main business processes)?
Client intake
Engineering Manufacturing Assembly Installation Maintenance
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Business strategy
• External business environment:
• Outsourcing of labour intensive processes to other countries
• Increase of sophistication in production and of repetitive but complicated production processes in healthcare, automotive, electronics and horticulture
• Competition in high tech products from other countries
• Main strategic objectives:
• Leader in robotics
• Solving problems others can’t solve
• Focus on market sectors healthcare, automotive, electronics and horticulture
• Business success:
• Profitability
• Sustainability
• Image / customer loyalty
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Jentjens’ Intellectual Capital
• What are in 2001 the most important intellectual capital resources of
Jentjens?
• Can you divide them into human capital, organizational capital, and relational capital resources?
Human
Engineering knowledge
Maintenance knowledge
Attitude
Leadership
Organizational
Engineering process
Production process
Relational
Component manufacturers
Suppliers
Customers
Brand & reputation 18/27

Jentjens’ IC Monitor
Investments
Assets
Effects
Human Capital
• Days for vocational training
• Recruitment expenses
• # of internships
Organizational capital
• # of hours spend on quality management
• # of hours spend on
R&D
• # of employees with bachelor degree
• # of employees with master degree
• # employees with PhD
• # of specialists in core technologies
• Image at schools
• Employee satisfaction
• Enterprise resource management system
• ISO certification
• CAD/CAM software
• # of customer complaints
• # of maintenance assignments per product
• # of new products
• # lines of new software code
Relational capital
• # of hours sales manager
• # of hours account manager
• Investments in promotion and fairs
• # of suppliers with
ISO rating
• # relationships with universities
• # customers
• # new clients
• Client satisfaction
• Image in marketplace
• # of publications
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To cut or nor to cut…
• If Jentjens were to decide to develop the cutting robot, what additional intellectual capital resources would it need to have access to?
• Should George Jentjens decide to develop the cutting robot? Why / why not?
• If your answer is yes, what recommendations would you make to
George concerning the implementation of the decision to develop the robot?
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Dilemma’s 2001
1. Getting access to vision technology
•
Option 1: hire a vision technology experts and develop the technology from scratch
• Option 2: partner with a company specialized in vision technology
• Option 3: try to find if the technology is for sale and licensing-in this (probably patented) technology
2. Getting access to the horticulture market
3. Funding the development costs and managing the risks
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Dilemma’s 2001
1. Getting access to vision technology
2. Getting access to the horticulture market
• Option 1: hire a sales expert and put together a dedicated sales team to conquer this new market
• Option 2: partner with a company specialized in selling equipment to this market
•
Option 3: partner with the four growers who know their market well
3. Funding the development costs and managing the risks
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Dilemma’s 2001
1. Getting access to vision technology
2. Getting access to the horticulture market
3. Funding the development costs and managing the risks
•
Option 1: fund the development from his current cash flow and taking the costs as expenses, and maybe find some additional subsidies from the local or European government
• Option 2: fund the development from his current cash flow and activate the costs as investments on the balance sheet. Under Dutch law it is allowed to activate certain R&D costs on the balance sheet
• Option 3: have the four growers pay for the development and treat this opportunity like a regular, one time project with no sharing in future profits.
•
Option 4: Have the four growers pay for the majority of the development and set up a licensing scheme in which the growers own the technology and Jentjens has the sole right to produce the machines. Jentjens would then share in future revenues of every product sold.
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Classroom discussion
4. What happened in the case?
5. What do you think is the issue?
6. How do you think the company did business before 2001?
7. How would you rate the performance of manager George Jentjens?
8. What do you suggest he should do?
• Explore the options
•
Pro & cons of the options
• Who votes for option A? B?
• Explore further
9. How should George implement the decision?
10. Should the company implement any changes?
11. What really happened
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Part 2: situation in 2006
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