Capturing Your ESOPs Intellectual Capital for Sustainability and Growth

In the ESOP world we often talk about sustainability. Many times the conversation is more about the sustainability of the ESOP plan itself; how to manage the shares ares managed and make sure new employee-owners see the ESOP as an exciting opportunity. These aspects of sustainability are very important. Yet, what about the sustainability of the ESOP company with regard to its intellectual capital?

Let’s face it: The employee-owners in your ESOP company are the repositories of knowledge that form the core of your “Intellectual Capital.” Intellectual capital lives in the brains of your employee-owners. Much of your intellectual capital goes to bed at night, goes on vacation, retires or moves on to the next company they start or join. It may not return to the office one day.

Therefore, making the most of the knowledge of your key people (including yourself!) is crucial for sustaining and growing your ESOP company. Discover a simple way to do just that!

As an ESOP company, You Have an Exciting Way to View Intellectual Capital

As employee-owners everyone “owns” the Intellectual Capital of their fellow owners. ESOPs have the opportunity (one might even say duty) to capture that capital and keep it alive. Both your ESOP’s sustainability and its growth potential are at stake. Let’s spend a few more moments thinking about this challenge.


Crucial Intellectual Capital Lives in the Brains of Key People – and the Company Can’t Function Without It

Lots of companies have one or a few key people who have knowledge in their brains that the company must have to even function. Without them the business cannot operate. That puts whether the company can scale up and for how long it can successfully exist at serious risk for several reasons:

    • What would happen if a key person/s left or got sick?
    • The key person/s can hardly ever get away from the business. They are “hand-cuffed” to it. This can cause burnout over time.
    • The company utterly depends on the expertise a few key people hold. Sometimes, this dependence lessens the ability to hold such a person accountable.
    • Retiring or succession becomes difficult.

Many ESOP companies hold high levels of expertise. They are providing specialized professional services such as architecture, engineering, consulting of different flavors, construction, accounting, CPA services, insurance, travel; the list goes on.  ESOP companies that develop and manufacture products also hold significant intellectual capital.

In all of these examples, it is likely that the companies’ original owners have chosen to create an ESOP plan in part because they believe in it as a succession plan, and in part also because their expertise-driven companies can be hard to sell. Selling such companies to a third party is often difficult because typically the founders have critical expertise that might be lost after the sale.


Discover Brilliance Extraction™

What is the solution then? Clearly, the solution has to go beyond cryptic notes or sketches on a piece of paper in someone’s drawer or in a computer file no one else knows about. Such “documentation” is not usable by others.

Brilliance Extraction™ is an effective way to overcome this challenge. Brilliance Extraction™ is about pulling processes, procedures, methodologies, thoughts, visions, ideas and goals out of the heads of key people in the company. The expertise is captured so that it can be used, trained and replicated by others. Both revenues and company valuation go up as a result.

Importantly, the result of Brilliance Extraction is that the ESOP company has gained a strong foundation for being successful well into the future because it has secured its intellectual capital for ongoing use.  And that is of fundamental importance to an ESOP company because an ESOP pays off for the employee-owners over time rather than instantly.


What Are the Uses for Brilliance Extraction™?

It is worth repeating that Brilliance Extraction™ secures your company’s most valuable asset, namely your intellectual capital. Brilliance Extraction™ can be applied for a whole host of purposes, for example:

      • Extract a process or procedure
      • Create a training manual
      • Outline a job description
      • Create a powerful business plan
      • Map out the intellectual capital of your company and make it live forever
      • Use the captured intellectual capital for growth
      • Ensure sustainability of your ESOP company – ultimately, an ESOP’s success is defined by its sustainability!


Is Brilliance Extraction™ Even Possible?

But isn’t that difficult to do? After all, the experts are brilliant. Not just anybody will understand their knowledge, strategies and ideas. As it turns out, it is much easier to do than most experts realize. Read on!

Consider having an outside facilitator for the process of Brilliance Extraction™.

There are several advantages:

1. Your team of experts knows too much. A smart person who is not an expert in your field will ask you “dumb” questions that turn out not to be so dumb after all. These questions give a fresh perspective on subjects you and your team are taking for granted by now.

2. Brilliance Extraction™ during business planning may open the doors to more extensive opportunities. For example, Brilliance Extraction™ often leads to new systems or even products. It can lead to training systems for use with your team and/or with clients.

3. Brilliance Extraction™ works best through dialogue with someone. It is way better than sitting by yourself in front of a computer, a piece of paper or a video camera.

Caution: Choose a “Brilliance Extractor™” who does not already know too much. Otherwise, critical pieces may be overlooked. Take my husband as an example. He cooks at the level of many chefs (lucky me!). When he shares with me how to cook a dish, he often forgets to tell me part of what is critical for making the meal the way he envisioned it. That is because he takes for granted that I have the type of cooking skills that are second nature to him. They may not be second nature to me. In this example, a great Brilliance Extractor ™ would be not a be a Chef but a person with “normal” cooking skills.

Whether you work with an outside person as Brilliance Extractor™ or pick an appropriate internal person, here are some tips for how to do it.


Tips for Effective Brilliance Extraction™

Case 1: Brilliance is being extracted from you

  • Have the courage to speak what is in your head. Share your vision, thoughts, ideas, goals, and strategies. You might also share other things you know how to do well. Don’t worry about organizing any of this in your head first – that will come later. Treat it as a brainstorm. For example, you might identify a complex process that is currently only mastered by one or two people on your team. The process might be in your own head. A great goal would be to capture and outline this process, so others can learn it. This is immediately valuable because with such steps your company can scale up.
  • Let the other person/s document what you say. Video or audio recordings work well. In a pinch, a pen will do, too.
  • It is inexpensive to hire someone to transcribe what you said. You can use the material not only for your Business Power Plan™ but also for training materials, new products, articles, books and more.

Case 2: You are the person doing the Brilliance Extraction™

  • Listen!
  • Ask questions to support the other person in expressing their thoughts.
  • Document / record what he/she says.
  • Have someone organize the extracted material. If you like, ask me for a complimentary session, and I will help you.
  • For the Business Power Plan™, organize the extracted thoughts into the appropriate section of the plan.
  • For extracting more extensive knowledge, consider how it can be used. Should it be converted into training material, a system, a manual, or…?
  • In summary, we talked about a powerful method that is vital for supporting growth in high-expertise companies. Brilliance Extraction™ pulls unique ideas and knowledge out of yourself and other key players on your team. If you want to read more about Brilliance Extraction™ click here.

One more tip: Brilliance Extraction will give you even better results – and be easier to do – when you first map out the different areas of your intellectual capital and categorize it. We’ve developed that into a fine art. After the initial Brilliance Extraction the extracted content can be refined further. This step involves refining it, perhaps structuring it more, testing it on others (how well can they follow it), possibly developing into a Learning Management System (LMS) that becomes your ESOPs own university. It is a fascinating subject – and an extremely rewarding one.

Let me know how it is going for you. I am happy to connect with you and be helpful to you. If you would like to contact me, you can do that via the form below.

By the way, in another article, I will show introduce you to Business Power Planning™. It is about how you and your ESOP partners can create an effective Business Plan on 2-3 pages. Do this with the experts on your team to get their input and begin the process of Brilliance Extraction™ at the same time. I bet the results will excite you.


Dr. Stephie

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Stephie Althouse

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