Information Today
Volume 17, Issue 8 • September 2000
• Report from the Field •
The Resurgence of Intellectual Capital
The emphasis shifts from measurement to management 
by Michael Koenig

In the early 1990s, intellectual capital (IC) was one of the hottest topics in business literature. Businesspeople sought ways to account for intellectual capital and make it part of the “balanced scorecard.” This inevitably lead to the question, “How does one measure intellectual capital?” Thomas Stewart’s articles in Fortune, and Leif Edvinsson’s supplements to Skandia Corp.’s annual reports helped to fuel the debate. But it soon became apparent that however attractive measuring intellectual capital was in principle, in practice it was difficult, and in most cases impractical if not impossible. Because of this difficulty, the enthusiasm for IC faded. The topic diminished almost to the point of becoming a footnote, and it seemed as if intellectual capital would be remembered mostly as a parent of knowledge management (KM).

Since then, intellectual capital has returned with a vengeance, not as an asset to be measured, but as an asset to be managed. Now, the new concept is called intellectual capital management (ICM). The Conference Board’s Intellectual Capital Management Conference held June 29–30 in New York sought to explain this new concept and detail ways in which to use it effectively.
 

What Caused the Change?
Intellectual capital has made a comeback because of the following factors:


IC as a Core Asset
Now the worth of patents is a hot topic. Indeed, the name of the conference might almost have been “Managing Your Patents as Assets.” The most frequently mentioned fact at the conference was that IBM receives over $1 billion per year in revenue from its patent portfolio. The most striking indication of the new emphasis is detailed in Figure 2.

What is striking of course is that most of the classic business book-value assets, (physical plant, raw material, inventory, etc.) appear under the phrase “complementary assets.” The implication is clear: that intellectual capital is the core asset. This represents not just a new emphasis on intellectual capital, but a complete sea change in how we think about the assets—indeed how we think about the very essence of a corporation. The thrust of the first wave of enthusiasm for intellectual capital was that it should be treated as one of the economic “factors” of production, alongside the traditional factors, such as land, labor, financial capital, and energy. Now we are beginning to see those traditional factors described as complementary assets to intellectual capital, which is seen as the core foundation asset. IC has not just been elevated to first-class citizenship, it’s now viewed, at least in some circles, as nothing less than, and possible more than, the very first among equals.
 

Key Points
Some of the points made at the conference include the following:

Finally, a topic of some lively discussion was the likely maintainability of recent business-process patents. One speaker made the point that, under the current practices, American Airlines’ “invention” of frequent-flyer miles would have been patentable, and that indeed there are now a number of patents that have been granted for various systems of online bonus points. The alternative view was that while in its day the concept of S&H Green Stamps may have been sufficiently novel enough to be patentable, frequent-flyer miles and online bonus points are such obvious derivatives that they should fail the “non-obvious” requirement of what is patentable. The question is, will the present climate prevail, or will a court case soon set a higher threshold for the non-obvious requirement than what the patent office is currently applying? My best guess is that the odds are two-to-one in favor of the courts setting a higher threshold.
 
 

Michael Koenig is the dean of the Palmer School of Library and Information Science at Long Island University. His e-mail address is michael.koenig@liu.edu.


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