ICBS Intellectual capital benchmarking system: A practical methodology for successful strategy formulation in the knowledge economy

Abstract

The advent of the knowledge economy fundamentally changes the way to create wealth. According to new theoretical foundations (Resource Based View, Dynamic Capabilities and Knowledge Based View) key strategic knowledge or Intellectual Capital has become the fundamental driver of wealth creation. A revision of the literature concludes that business excellence has always been due to good strategy formulation and superior strategy implementation. In order to achieve business excellence in the knowledge economy context substantial efforts have been made to improve the process of strategy implementation and some of them have produced relevant frameworks and methodologies, such as Balanced Scorecard and InCaS (Intellectual Capital Statement. Made in Europe). Nevertheless, fewer efforts have been made in the process of strategy formulation and, in practice, the SWOT analysis still is the most well known existing framework. However, in a world where customer preferences are volatile and the identity of customers and the technologies for serving them are changing, a market-focused strategy may not provide the stability and constancy of direction needed as a foundation for long term strategy. When the external environment is in a state of flux, the firm itself, in terms of its bundle of resources and capabilities, may be a much more stable basis on which to define its identity. Hence, a definition of the firm in terms of what it is capable of doing may offer a more durable basis for strategy than a definition based upon the needs the business seeks to satisfy. Consequently, the SWOT analysis methodology can't cope with the new external environment requirements and a kind of improved or extended SWOT analysis is needed. ICBS (Intellectual Capital Benchmarking System) is the output of a practical research on extended or improved SWOT analysis, a framework that knowledge economy requires for successful strategy formulation. ICBS is a new management method that allows companies to perform a competitiveness strategy check-up of their business models. For that purpose, ICBS benchmarks their core innovation and operations intellectual capital against the world class competitors in their sector. [PUBLICATION ABSTRACT]