Edvinsson's j ob was to create ways that enable both management and employees to visualize and develop IC. The first step was to define what is IC. Edvinsson designed the Intellectual Capital Value Hierarchy, classifying IC into human capital and structural capital, customer and organizational capital, wherein organizational capital includes process and innovation capital (see also about money investment).
Combining the IC Value Hierarchy with the Balanced Scorecard concept, Edvinsson developed the Navigator as a tool that translates the IC concept into practical application (see Exhibit 2.2). The core message of the Navigator is that to manage a business focusing on financial results, which reflects past performance, hinders management ability to manage the IC—the core driver of present and future performance. But as portrayed by the IC Value Hierarchy, IC spans practically everything that the organization does and is. Thus, the focuses in the Navigator are provided to enable management focus on certain aspects when managing IC, and hence enable the design of indicators to monitor the development of IC under each focus.
The Navigator forms the crux of Skandia's ICM model. It provides:
• Taxonomy and definitions to see and identify IC
• A method to focus attention at the strategic and operational levels on IC development
• A tool that translates IC strategies into business reality throughout the whole organization including the individual level. By defining key success factors under each of the focuses, each business is motivated to manage and develop its IC.
• A framework that unifies the various approaches that each business unit or department develops for managing its IC, creating overall strategic alignment.
To stress the importance of managing IC, Skandia required the various business units and departments to use the Navigator to report on its IC. The main goal is focusing on capturing and growing IC to sustain and enhance the business unit's future performance. But for everyone to embrace the IC concept and apply it in the daily management of business, more was needed. The revolution needed to be taken to the masses (see also about secure investing).
ENLIGHTENING THE MASSES—THE NAVIGATOR AND THE NEW VISION
To take ICM to every corner of the organization at Skandia and Skandia Group, it is important to have a vision in which the organization sees itself as a knowledge organization. This was realized across Skandia Group, and in February 2001, Petersson created three groups, with representatives from the various companies in Skandia Group, to create a new vision. The group formulated the vision:
Skandia enables people to provide themselves with a lifetime of a prosperity (see also about opportunity investment).
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Company Level
/Busmess\ Concept
Business Unit Level
Employee Level
EXHIBIT 9.2 Alignment of Vision, Strategy, and Operations
Stressing that Skandia enables people to help themselves highlighted the partnership focus that Carendi engrained in the new business model. It sees Skandia's role as that of the enabler and hence sets its role as a knowledge broker. In addition, Skandia added "intellectual capital development" to its list of core values, and promoted the use of the Navigator across the whole organization as a tool to focus on IC under its commitment of "IC the future." The use of the Navigator is promoted at multiple levels to align the objectives of business units, departments, and individual employees with Skandia's vision and IC strategy, as shown in Exhibit 9.2 (see also about capital management).
At the strategic level, the Navigator is used to align the strategy of the various business units with the vision of the whole organization. With a vision and a core ideology that focuses on the development of IC, each business unit has to show how it plans to manage IC under the Navigator's focuses and report on its progress. At the operational level, the Navigator is used by the constituent departments in each business unit to align their programs, objectives, and operations with the business unit's IC strategy, by reporting on how its activities and programs affect the various IC focuses. By 1998, both employees and managers used the Navigator at American Skandia to complete an individual Navigator that charts their performance and growth goals, again in alignment with strategy. In that latter application, the Navigator is used both as a human resources management system and a communication tool. In the first function, it aids setting renewal and growth goals for every employee and hence shape the professional development plan. It provides positive coaching that aligns the individual's goals and the organization's. As a communication tool it facilitates communication between the employee and management by creating a new IC language that everyone is encouraged to experiment with (see also about money investment).
Entrusted with creating a framework that guides the implementation of the Navigator across all of Skandia, Edvinsson and his team (Ann-Charlotte Bredahl at the present time) developed the Process model. The Process model breaks the design of the Navigator into a number of planning steps as shown in Exhibit 9.3. The first step defines business objectives and the success factors that enable attaining them. Indicators are then created to monitor performance under each of the success factors. Once the indicators are chosen, they are presented under past performance perspective (financial focus), present performance perspective (customer, human, and process focuses) and future performance perspective (renewal and development focus). The Process model clarified the use of the Navigator to enable its application on the individual level, with the ultimate goal of incorporating ICM into daily business operation. This forms the gist of Skandia's ICM model.
Define the Vision Clarify the strategy.
What concrete activities do we need to carry out?
What critical conditions do we need to capture?
What indicators would
measure what we want to achieve
(arrange under relevant focus)?
EXHIBIT 9.3 The Process Model
Renewal & .Development.
