Getting strategy straight starts with understanding how the critical tools a firm uses to drive growth and value fit correctly together.
When partners and practice leaders talk about strategy, they frequently throw around a handful of terms as if they’re interchangeable. While intellectual capital, thought leadership, and intellectual property might sound similar, each one is unique in your business strategy. Having a clear understanding of each is critical to building a highly differentiated, fast growing, exitable firm.
Intellectual Capital (“IC”)
IC represents the building blocks of a successful business. Your firm’s intellectual capital combines your unique culture, your core capabilities, and the hard-earned wisdom of your people with tangible investments in primary research and proprietary processes. Ultimately, IC is the backbone of all your marketing, sales, and delivery efforts, and is the basis for building a highly differentiated firm.
Your firm’s thought leadership is the outward expression of that intellectual capital. Thought leadership brings clarity to complex issues, offers novel and better solutions to big, thorny problems, and offers clients a unique perspective on their world that they’re compelled to follow. Thought leadership often takes the form of books, articles, videos, speeches, and podcasts. It’s also your best lever to grow revenue and margins.
Intellectual Property (“IP”)
Ultimately, IP derives from your firm’s investments in intellectual capital and thought leadership. It’s the portions of those investments that can be legally protected. Intellectual property is the copyright on your book, the trademark on a service name, or the rare patent on a unique methodology. IP is one of a few levers at your disposal that can be used to build enterprise value. Legally protected assets are transferable and help reduce risk to an interested buyer when it comes time to exit your firm.
Let’s look at all three through the lens of a single, high-profile example — The Challenger Sale.
- Intellectual Capital: The thinking that eventually became The Challenger Sale began in conversations between CEB consultants and their clients during the Great Recession. Those conversations surfaced a hypothesis that there was a small subset of high performing sales executives that needed better understood. While CEB consultants had a sense of who they were, the company invested in a deep study of over 6,000 executives to understand and codify the characteristics of those highly successful B2B sales reps.
- Thought Leadership: From that foundational research and the hard-earned wisdom of its people, CEB developed a unique point-of-view on what the most successful B2B sellers do differently. That POV was brought to life via the 2008 bestselling book. It brought clarity to an important issue, offered a better way to solve a thorny problem, and offered a POV that sales leaders everywhere were compelled to follow. The book subsequently spawned a range of other content assets, services, and revenue growth for the firm over the next decade.
- Intellectual Property: The book, of course, also yielded a few legally protected assets including a copyright on the firm’s thinking and a trademark on the name itself. Ultimately, the IC and the thought leadership spurred a sea change in the world of B2B selling that helped catalyze CEB’s sale to Gartner in 2017 (creating rapid growth in enterprise value that led to an exit for the owners).
For more on The Challenger Sale and how it built demand for CEB, check out our post on the topic.
Setting Strategy is About Making Choices in IC, IP, and Thought Leadership
As previously mentioned, when it comes time to develop firm strategy, partners and practice leaders often mix-and-match these three concepts as if they’re one. But, it’s important that we take the time to be clear about how they actually fit together so we can make effective strategic choices about where and how to invest limited resources. Here are some tips to consider when weighing investments in these areas.
What Not to Do:
Don’t get tricked into believing that what you’ve done in the past is what you should do in the future. When weighing investments in intellectual capital or thought leadership, firm leaders frequently get tricked into over designating resources to large, commoditized practices. Just because a practice drives the most revenue doesn’t mean it should receive the majority share of investments in intellectual capital or thought leadership.
Simultaneously, it’s easy to get pulled too tactically too quickly. When partners are asked to think about these concepts they often default to simple concepts like brainstorming article headlines or discussing the merits of publishing and promotional channels (Should we self-publish or publish externally? How do we “work” the algorithm to get better social visibility? Should we invest in SEM or display advertising?) While all these types of questions are surely valid ones, it’s important that we start a bit higher up the food chain.
What to Do:
To agree on a destination you have to know your starting point. Ask yourself some simple questions, where are we most known today? Where are we most relevant? Where do business inquiries come from today? Which industries, which practices, which solutions, and which issues are starting new client conversations?
From there, think about what the firm would like to be known for tomorrow. Prioritize issues and problems over markets and solutions. Explore where you do, and don’t, have a compelling point-of-view. Discuss what assets you have to start with. Do you have any foundational research? Do you have a proprietary process? In short, do you have any unique assets that could form the basis of a compelling marketing message? A more effective sales conversation? A better solution to clients’ problems?
For more insight on these topics check out our webinar, How to Develop an Intellectual Capital Strategy to Drive Growth Today and Tomorrow.