Skandia, a Swedish insurance company, is one among the first in the world to value its intellectual assets. The company suggests that intellectual capital can best be managed by breaking down the market value of a company into its constituent elements such as financial capital and intellectual capital. Lief Edvinnson, who works for Skandia, claims that he is the first person in history to have a designation of director (intellectual capital).

Edvinsson has some interesting remarks to make. According to him, intellectual capital can further be sub-divided into human capital and structural capital, and the latter consisting of customer capital and organisational capital.

Since 1995, Skandia has been attempting to value its intangible assets. To publicise its work, the company has been releasing supplements to its annual report.

The Skandia navigator
At the heart of Skandia’s intellectual capital methodology is the Skandia navigator. The navigator has five important parameters. These are:
Financial focus: this comprises the gross premiums written per employee, value added per employee, personal expenses, company expenses and education investments against gross written premiums.

Customer focus: telephone accessibility, accounts per employee, satisfied customer index and number of depositors.

Human focus: this includes factors like average age, average length of service, number of people in leadership positions and level of empowerment.

Process focus: employees having IT-related knowledge, payroll costs versus administration expenses, net operating income per square feet and cost per square metre.

Renewal and development focus: education investments per employee, numbers with degrees, growth in gross premiums written and percentage increase in assets under Skandia’s management.

Skandia has now begun experimenting with "futures centre". Here individuals can speculate about the future of the company and the markets in which the company operates. This, according to the company, legitimises the process of questioning the values and norms which underlie Skandia’s strategy and business practices, an essential activity given that Skandia wishes its members to challenge continuously the organisation’s strategy.

Skandia group’s identity lies in its ability to achieve innovative renewals. This puts a great new set of demands on its leadership, organisation and networking, allowing it to move beyond conventional thinking and embrace a culture in which strategic innovation is perceived as being critical to success.

Sharing knowledge
To balance tradition and renewal, distinctive core competencies and attraction power can emerge alongside global competitive strength. The Skandia group has accomplished a great deal thus far in the 1990s, including financial and organisational restructuring balanced by globally successful growth.

However, the group has always felt that the spotlight must be on strategic vision and value-creating renewal. Innovative companies are managed by innovative leaders who manage strategic innovation.

Their consolidation of strengths ahead of the new millennium is creating a perpetual wave of innovation, generating new and sustained value for their customers, employees, business partners, shareholders and society.

Intellectual capital consists of human capital and structural capital. Structural capital, in turn, consists of customer capital and organisational capital, that is, everything that remains when the employees have gone home, that is information systems, databases, IT software and so on. Organisational capital can be broken down into process capital (value-creating and nonvalue-creating processes), culture and innovation capital (intangible rights, trademarks, patents, knowledge recipies and business secrets).

Skandia is making various attempts to increase its intellectual capital by sharing knowledge about the company’s goals, methods and values among its employees. "Meet the Cabinet" and "Question of the Week" are two such successful programmes which have been carried out for several years.

Meet the Cabinet
"Meet the Cabinet" is a programme designed for employees to get to know the cabinet members (company management) and other employees in an informal atmosphere. It gives the employees an opportunity to learn more about the company while giving the management a chance to learn from the employees’ views. Meet the Cabinet sessions are held every six weeks with the participation of four cabinet members and 25 employees. Each cabinet member is grouped with five or six employees for four 15-minute segments. After each segment, the cabinet members move to another table. By the end of the session, each group has had the chance to meet with all four cabinet members.

This "musical chairs" format allows the participants to maximise contactivity. Employees are encouraged to come prepared to present questions and suggestions or share their thoughts. At the end of the programme, they complete feedback forms.

Question of the Week
‘Communications Update’ is American Skandia’s weekly news bulletin, which is distributed to all 650 employees. It provides an easy-to-read overview of the multitude of news events occurring in all areas of the company. One particularly useful feature of the newsletter is its "Question of the Week" column. For over four years, the newsletter has been carrying a weekly question and answer column, submitted by the legal, compliance, customer service or marketing departments, to increase employees’ knowledge about the technical details of the company’s products, processes and services.

Following are some recent questions taken up in the column: Can a contract owner take a loan from his/her individual retirement account? What is the procedure for initiating and effecting business with a firm that wants to sell Skandia’s variable annuity products? What are the 404(c) requirements for qualified plans? What is the role of the compliance department?

American Skandia has fielded some 300 questions to date, which it now plans to compile in a knowledge database that will be accessible to all employees on the company’s intranet.

Special project group
In order to secure the organisation’s competence and raise the quality of work in handling employee redundancies, Skandia has created a special model. This model was used in connection with the sale of Skandia International. By working with the employees in a process-driven chain of individual and group activities, the threat of serving notices to 120 employees was instead transformed into a dialogue that helped them find new opportunities.

A fundamental condition in this process was the creative cooperation between the management, unions, employees and the special project group that was created to find alternative solutions for individual employees. External consultants were also included in the project. One important learning from this work was the role the project group played in serving as a dialogue partner and supporting individuals in considering and assessing various alternatives. Skandia also avoided a solution based solely on financial compensation, that is severance pay. The goal of the model is instead to find long-term solutions based on each individual’s possibilities and potential.

IC-Index
Now let us take a look at Skandia’s unique work on devising an IC-Index, which is a compilation of the various intellectual capital indicators’ relevance, robustness and relative weight, all summarised in an overall perspective. The development work on an index aims to visualise the creation and flow of intellectual capital. In collaboration with American Skandia, a pilot project is currently being carried out.

In today’s information overload environment, the ability to identify and articulate the right set of questions is becoming increasingly valuable. A relevant question, which focuses like a laser beam, enables the company leadership to pinpoint where to concentrate its scarce resources. Renewal and development is the key to survival in today’s highly competitive business climate, and being assertive in allocating time and effort is a number one priority at American Skandia.