Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower

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Summary: Superb Representation of the Breadth and Depth of IC
Review: Edvinsson and Malone do an excellent job with a complex and relatively esoteric topic. The authors have created an enviable work and set up the foundation for companies and managers to act accordingly.

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Summary: The Skandia Market Value Model
Review: Intellectual capital is a truly critical topic for twenty-first century business. As known, the subject of intellectual capital appeared on the business world in the 1990s. Patrick H.Sullivan writes, in his 'Value-Driven Intellectual Capital,' "this history actually began in the early 1980s, as managers, academics, and consultants around the world began to notice that a firm's intangible assets, its intellectual capital, were often a major determinant of the corporation's profits...By the mid 1990s it was becoming clear that there were two separate but related paths of thinking about intellectual capital. One path, the knowledge and brain power path, focused on creating and expanding the firm's knowledge. The other path, the resource-based perspective, was concerned with how to create profits from a firm's unique combinations of intellectual and tangible resources."

In this context, by proposing a new intellectual capital measurement and reporting system, Leif Edvinsson and Michael S.Malone elaborate the Skandia Model. According to this model, Skandia divides market value into financial capital and intellectual capital. Intellectual capital is further divided into:

1. 'Human Capital.' The combined knowledge, skill, innovativeness, and ability of the company's individual employees to meet the task at hand. It also includes the company's values, culture, and philosophy. It cannot be owned by the company.

2. 'Structural Capital.' Brands, trademarks, written procedures for processes, and everything else of organizational capability that supports those employees' productivity-in a word, everything left at the office when the employees go home. Structural capital also includes customer and organizational capital, representing the external and internal focus, respectively, of structural capital. Organizational capital consists of innovation and process capital. Process capital is the sum of know-how that is formalized inside the company: manuals, best practices, intranet resources, project libraries are all part of the process capital. Innovation capital is what creates the success of tomorrow: it is the source of renewal for the whole company, and it includes intellectual assets and intellectual property. Unlike human capital, structural capital can be owned and thereby traded.

Finally, they argue that "rather than replacing the current financial measurement system, the product of generations, Intellectual Capital measurement in fact complements and augments it. Orthodox accounting has found its way again. It is relevant once more to our future. And thus the work of much of the last millennium is made ready for the next."

Highly recommended.

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Summary: tapping human resorces in central asia
Review: Its difficult to tap the exact talent in a thickly populated country with disturbed economy and democracy.Knowledge based industry cannot achive a break until unless manupulation is stopped in higher grades.Priority must be given to the basic human/mankind nature instead of mechanical approaches.There is a greater necessity of real/civilised kings instead of lion/uncivilised kings.