IC Rating ™

Bizworth brings to India, for the first time, IC Rating ™, an internationally-acclaimed and validated methodology, which enables a company to assess, harness, and energize its Intellectual Capital.  IC Rating ™ is a universally-applicable methodology, created by Intellectual Capital Sweden AB, a world-leader in the arena of Intellectual Capital.  Bizworth is the India business partner of Intellectual Capital Sweden AB.   Globally more than 400 customers have benefited from IC rating process.



Why is Intellectual Capital so important?

Intellectual Capital is important to both society and organizations. Technological revolutions, the rise to pre-eminence of the knowledge-based economy and the networked society have led to the realization that successful companies are those that are creative and perpetually create new knowledge.

Although it is still not possible to assign a monetary value for most internally-generated intellectual assets, these assets and how they contribute to competitive advantage needs to be appreciated so that the appropriate investments and pro-active action can be made to enhance their value.

Intellectual Capital in a nutshell would include all factors critical to an organization’s future success that are not shown in the traditional Balance Sheet

An organization which optimizes its Intellectual Capital will optimize its long-term profitability.

Going by the adage “What cannot be measured cannot be managed”, it then becomes very important for the company to measure its Intellectual Capital.  IC Rating™ goes beyond mere measurement, though.

It is a powerful diagnostic tool that identifies key action areas.



Measuring Intellectual Capital with IC Rating ™

                                       The Conceptual Framework of Intellectual Capital in the IC Rating ™ is illustrated below:

The Business Recipe consists of a company’s business idea and strategy in combination with the external conditions in the business environment. 

The Organizational Structural Capital consists of Intellectual Properties and the support systems and structures that form the Process Capital.  These typically reside within the organization, though not necessarily owned by the organization.

The Human Capital includes Management and Personnel.  This is the key driver for both creation and leveraging of Intellectual Capital.

The Relational Structural Capital consists of relationships with different external interest groups.
This would include networks and customers.

The IC Rating tool is designed to measure – quantitatively and qualitatively - more than 250 parameters within the Conceptual Framework. These parameters have been carefully distilled out of an initial list of 1000.  For example, the parameters cover:

• Intellectual Property : patents, licenses, in-house developed software
• Process : methods, manuals, IT systems
• Employees : competence, motivation, loyalty, incentives
• Management qualities, abilities, management methods
• Network business partners and other external connections, contributing to fulfilling company needs
• Brand : awareness, attention, differentiation
• Customers : image, relationships, loyalty, potential

In addition the parameters are measured from three perspectives

• Effectiveness – how effective is the performance of these parameters in the current scenario.
• Risk – what is the risk that the effectiveness will decrease.
• Renewal – role of the current initiatives to improve the effectiveness of the parameters.

The results are presented in the following manner:


The effectiveness of the Intellectual Capital as well as the efforts to renew and develop are rated in a tenth graded scale ranging from “AAA” down to “D”. The risk of a decreasing effectiveness of the Intellectual Capital is rated in four levels, ranging from negligible risk “-“to a very high risk “RRR”.

EFFECTIVENESS  AAA  Extremely high effectiveness  AA  Very high effectiveness  A  High effectiveness      BBB  Relatively high effectiveness  BB  Average effectiveness  B  Relatively low effectiveness      CCC  Low effectiveness  CC  Very low effectiveness  C  Extremely low effectiveness      D  Lack of effectiveness

RENEWAL & DEVELOPMENT  AAA  Extremely strong R&D efforts  AA  Very good R&D efforts  A  Good R&D efforts      BBB  Relatively good R&D efforts  BB  Average R&D efforts  B  Relatively weak R&D efforts      CCC  Weak R&D efforts  CC  Very weak R&D efforts  C  Extremely weak R&D efforts      D  Lack of R&D efforts

RISK  -  Negligible risk of decreasing effectiveness      R  Moderate risk of decreasing effectiveness              RR  High risk of decreasing effectiveness          RRR  Very high risk of decreasing effectiveness

What are the benefits of measuring Intellectual Capital?

IC Rating™ tool is relevant in several scenarios, for example:

• Organizational development: IC Rating™ pinpoints areas to improve, and lets you measure improvements consistently over time. This includes an opportunity to revisit the business strategy.
  
  
• Benchmarking: when you have several units you want to compare, either within companies or between companies, IC Rating™ provides you with a standardized tool and terminology
  
  
• Valuation: when either selling or buying a company, IC Rating™ will give you invaluable information on its future potential
  
  
• External reporting: There is an increasing demand for transparency in company reporting. IC Rating™ complements traditional financial reporting, and provides a comprehensive and future-oriented view of your company.
  

It is also important to clarify that Intellectual Capital reporting does not replace financial reporting, it is complementary: while financial figures are per default historic in character (the actions behind the figures have already taken place), a measurement of Intellectual Capital is always future-oriented (capabilities for future action). To summarize, IC Rating™  is a powerful and versatile tool for measuring and describing an organization’s Intellectual Capital, that provides strong action leads to management for enhancing its IC Value - which represents the future value.   The results of IC rating are presented in a manner that the organization can quickly understand and learn to use.



Intellectual Capital Sweden AB 

Our Knowledge Partners

Intellectual Capital Sweden AB was founded in 1997 by  Leif Edvinsson , along with Thomas Hvid and Peder Hofman-Bang. The company is headquartered in Stockholm, Sweden, and has rendered services across more than 20 countries on four continents.