… and the Knowledge industry

“ The global economic boom in intellectual properties has created the Information Technology (IT) Age which has led to the advent of intellectual capital now being the top driving financial force in our world today. I believe The CAN DO! Project is a format-leader that can accommodate our highest use for what has come to be known as the Super Information Highway.” -Keith Colley, Founder The CAN DO! Project

Q: Intellectual Capital: What is it?

A: “Intellectual Capital is knowledge that can be converted into value…
This definition encompasses inventions, ideas, general know-how, design approaches, computer programs, processes, and publications. Intellectual capital (IC) consists of three major components: human capital, intellectual assets, and a subset of intellectual assets that are legally protected, intellectual property.”
ICMG Group, Specializing in extracting value from innovation.

Human Resources*Know-how *Skills *Creativity
Intellectual Assets *Documents *Drawings *Data *Inventions *Processes
Intellectual Properties *Patents *Copyrights *Trademarks *Trade Secrets

“Intellectual Capital is the currency of the new millennium. Managing it wisely is the key to business success in the knowledge era.”
-Nick Bontis, Director,
Institute of Intellectual Capital Research Intellectual Capital and the Knowledge industry - pg. 1 Assoc. Editor, Journal of Intellectual Capital from Thomas A. Stewart, Member, Board of Editors, Fortune Magazine, and Author of Intellectual Capital, The New Wealth of Organizations:

“Knowledge has become the most important fact of economic life. It is the chief ingredient of what we buy and sell, the raw material with which we work. In the new economy, intellectual capital – not natural resources, machinery, or even financial capital – has become the one indispensable asset of corporations.”

“ Information and knowledge are the thermonuclear competitive weapons of
our time. Knowledge is more valuable and more powerful than natural resources, big factories, or fat bankrolls. In industry after industry, success comes to the companies that have the best information or wield it most effectively - not necessarily the companies with the most muscle. Wal-Mart, Microsoft, and Toyota didn’t become great companies because they were richer than Sears, IBM and General Motors – on the contrary. But they had something far more valuable than physical or financial assets. They had intellectual capital.”

“ The capital assets that are needed to create wealth today are not land, not physical labor, not machine tools and factories: They are, instead, knowledge assets.”

“… Because knowledge has become the single most important factor of production, managing intellectual assets has become the single most important task of business.”

“ Muscle power, machine power, even electrical power are steadily being replaced by brainpower.”

“ We are all knowledge workers now, working for knowledge companies.”
“ The intellectual capital movement promises to help unleash sources of tremendous economic potential, but companies that fail to catch on are surely doomed.”
“… Tom Stewart has turned his conceptually clear focus on intellectual capital as the driver of the global economy and the key to business success in the 21st Century...”
-Noel Tichy, co-author of the book, Control Your Destiny Or Someone Else Will

“ Globalization has placed businesses everywhere in new and different competitive situations where knowledgeable, effective behavior has come to provide the competitive edge…” -Karl M. Wiig, The Journal of Knowledge Management The Journal of Intellectual Capital

“ Knowledge and other intangible assets suddenly make up a large part of a company’s value. For instance, Microsoft owns one billion US dollars worth of offices, desks, computers, etc., yet the company is valued at over 100 times that amount. This huge discrepancy can be explained by taking a new factor into account: Intellectual Capital.”

-Intellectual Capital.org/Exploring Intellectual Capital

“ Knowledge is the new, expandable source of economic wealth. There is an emerging recognition that the most valuable resource of any country is its inherent intellectual assets, effectively exploited through innovation.”
-GKII (Global Knowledge Innovation Infrastructure):
The Innovation Superhighway

Q: “Why are companies and shareholders investing more into intangibles today than in the past?”

Leif Edvinsson: The reason is, that industrial value chain processes no longer dominate value creation. Today it is innovation; it is seeking new ways of meeting market demands… you have to invest into your Intellectual Capital. You have to invest into knowledge upgrading. You have to invest into new structures that help you to innovate and to
make a difference.” -Leif Edvinsson
(considered “World’s leading expert of Intellectual Capital”)
Corporate Director of Intellectual Capital at Skandia
Stockholm, Sweden
CEO, Universal Networking Intellectual Capital

“ Even without a common yardstick for measuring intellectual capital, the recognition of its presence by informed observers will establish a value for a firm that dwarfs its balance sheet...”
-Leif Edvinsson and Michael Malone
Realizing Your Company’s True Value
By Finding Its Hidden Brainpower
Intellectual Capital and the Knowledge industry – pg. 3

“At the transition from the industrial society to the information and
knowledge society, the corporate and societal growth basis gradually changes from tangible assets to intangible assets. The growth basis is not as much influenced by investments in physical machinery, buildings, etc., as by knowledge which is a pivotal factor for productive application and exploitation of physical capital. Focus thus shifts from individual assets to bundles of assets where different types of assets cooperate on the production of value. In an information and knowledge society the main part of these assets are intangible. It is the intellectual capital – synonym of knowledge capital – embodied in the skills, knowledge and experiences of people and in organizational procedures, systems and routines.”
* * *
“ The financial capital represents the book value, whereas the intellectual capital refers to the future through a presentation of the company’s growth basis.”
* * *
“ Intellectual capital as opposed to tangible capital increases in value when used. It is not exhausted from being used – on the contrary. It becomes stronger by being used.”
-Publikationer/Intellectual Capital Accounts

 

“The economies of the 21st, 20th and 19th centuries are based on information, industry and agriculture, respectively. While the wealth of the 20th century is physical, the wealth of the 21st century will be based upon knowledge and information.”

“Nike is not a shoe manufacturing company, as most people believe. Nike subcontracts its shoe manufacturing to overseas plants that employ 35,000 Vietnamese whose total salary is less than that of Michael Jordan. Nike is a knowledge-based company that designs, markets and distributes shoes. In other words, Nike and Michael Jordan control the intellectual capital while the Vietnamese people control the less lucrative physical capital. Whoever controls the intellectual capital controls the money capital.”
-Philip Emeagwali, Author
The Flight of Financial Capital From Africa
Intellectual Capital and the Knowledge industry – pg. 4
Value Driven Intellectual Capital:
How to Convert Intangible Corporate Assets Into Market Value
-Patrick H. Sullivan, Author

Excerpt: The Relationship Between Intellectual Capital and Corporate Value:
Intellectual capital exploded onto the business scene in the 1990’s. When Fortune magazine published Tom Stewart’s article, “Brainpower”, in 1991, it was the first article on the topic to appear in a national business magazine. By 1998, a number of books and dozens of articles in professional journals and trade magazines were devoted to the topic, to say nothing of significant coverage in the popular business magazines such as Fortune and Forbes. In 1999 alone, over a dozen conferences were held around the world on intellectual capital management in one form or another.

The Users of Intellectual Capital

· Knowledge and learning. People with these interests tend to see human capital and the tacit components of intellectual capital in the foreground. They are concerned primarily with the creation of new or more knowledge and methods and environments in which creative processes can be most productive.

· Knowledge management. This term is often used as a synonym for computer-based information systems. People with this area of interest concern themselves with the identification of data or information, where it resides. Where it needs to be, and how to get it from point A to point B in the most efficient manner.

· Innovative management. This term is sometimes used to describe the management of research and development (R&D). People with this interest focus on how to improve the efficiency and effectiveness with which ideas are generated and screened to identify those of greatest interest or value to the organization.

· Capital markets. People with an interest in capital markets see intellectual capital as a business asset and are concerned with the amount of a firm’s intellectual capital, how it is valued, how its value affects the company balance sheet, and how to provide value information to current and potential stockholders.
Intellectual Capital and the Knowledge industry

· Shareholders. People in this group have a financial interest in a business enterprise. They see the firm’s intellectual capital as a business asset and are interested in both the amount and the use of a firm’s intellectual capital. Their interest usually centers on how the intellectual capital can be focused and leveraged to improve profitability or strategic positioning.

· Company managers. These are the people who manage the firm’s intellectual capital. They, too, see it as a business asset, but their focus is on how to manage it in order to increase both its amount and more important, its ability to increase cash flow. Company managers involved with intellectual capital are most often focused on creating the firm’s future cash flow, economic profit, and sustainable competitive advantage.

Value Driven Intellectual Capital:
How to Convert Intangible Corporate Assets Into Market Value
-Patrick H. Sullivan, Author