Intangible Capital is the New Factory

The core of the tangible economy is the factory. Simply put, a factory is a building where production equipment converts raw material into finished goods. Companies make their money by selling these finished goods. The story of the tangible economy is the story of organizing and running these factories.

The modern knowledge business can also be understood as a factory, a place where the knowledge raw materials get put to work. This factory is where you create value for customers and make money. The story of the intangible economy is the story of organizing and running the knowledge factory in combination with physical processes.
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Intangible Capital Reading List on Twitter for 2010-07-21

• M&A activity up in MA this year. More deals at lower average prices. http://bit.ly/blCrYd #
• RT @MattRedard: The seeds of economic recovery exist in the minds of our workers and the collection of knowledge #intangiblecapital #
• RT @cecildijoux: When companies derive competitive advantage from IC whips and chains are no longer an alternative http://bit.ly/9aYTDh #
• The overriding tension in today’s economy, businesses and society is tension between top-down and bottom-up solutions. #
• #intangiblecapital tells us that the smartest solutions tap into bottom-up and outside-in solutions–that’s where the knowledge is. #
• Financial engineers lost touch with what made them really successful (purpose, people, customer value) http://bit.ly/bbiUi9 #
• Redefining prosperity so it’s more meaningful, authentic, and durable. Not restarting GDP, but building a better one. http://bit.ly/ci0Bx3 #
• I agree with @umairhaque that Apple is not a new generation biz–just more artful at the old game. http://bit.ly/dwP30n #
• Outbehaving your competition–it’s how you do it, not what you do…. (actually same message as #intangible capital ) http://bit.ly/aUv4sQ #
• Just added a new discussion: IC 2.0 — where are we headed and what should the role of the IC Knowledge Center be? http://ning.it/be06No #
• Interesting angle on E 2.0 intersection with processes (structural capital). http://bit.ly/c9JFfE /cc @feedly #intangiblecapital #
• Cities and the offshoring of work.. How to leverage our collective intangible capital to create a jobs recovery? http://bit.ly/advNsp #

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The 4th Category of IC: Business Recipe

The classic categories of IC that we and most in the field use are human, relationship and structural capital. I’ve been reviewing these in detail in the last couple weeks. But there is one more that you will find useful as you begin to apply these concepts within your own organization: business recipe (I’ve also seen it called strategic capital). Read more

Intangible Capital Reading List on Twitter for 2010-07-20

• How can M&A be successful without specific information on the principal intangible capital elements? It can’t. #
• I’ll be there! RT @followscience: 7th International Conference on IC and KM. http://followscience.com/r/e/9z4r #

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Intangible Capital in Mergers

In follow-up to my posts last week about the importance of structural capital and process, I would like to address a story from the press earlier this year (in the Boston Globe, IT Business Edge and IT Knowledge Exchange)

It involves an IT consulting firm that was acquired by EMC. The founders of the firm worked for EMC for awhile and then started up a new firm that EMC says does the same thing as the original company. I won’t comment directly on the case because I don’t have enough information but I would like to comment as background to the issues around buying intangible capital as part of corporate acquisitions. Read more

Intangible Capital Reading List on Twitter for 2010-07-17

• Intangible capital and accounting. Make sure to check out this week-long discussion http://bit.ly/bmUoZI #
• Companies cannot report on intangible capital until they actually understand it. http://bit.ly/96iFbW /cc @feedly #
• The most powerful tool to understand intangible capital is actually visualization–serves as inventory and process diagram. #
• Women as national resource RT @simonbeechinor Why are businesses still not making full use of 50% of the nation’s IC? http://bit.ly/aDM59S #
• Sustainability thinking needs to also address corporate sustainability–building intangible capital, not just quarterly profits. #
• Law firms have huge potential to build structural capital.RT @jmattbuchanan: #checklistmanifesto http://ow.ly/2cAoa #

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New Superpowers – Emerging Frontiers for Process

This week I have been talking about structural capital–the superpower of today’s organization. And process is one of the most important and least understood in terms of its importance and its sustained value to an organization.

Most internal processes in today’s organizations already have been automated to one degree or other. There are software programs for accounting, enterprise resource management, risk management, human resources management, performance management, and many, many others. That doesn’t mean that this automation is complete. Quite to the contrary, companies at every level still have a multitude of opportunities to standardize, automate and optimize most internal processes in today’s organizations.

And there are also new horizons where automation has only just begun: backward through the supply chain and forward in customer-facing systems. Read more

Intangible Capital Reading List on Twitter for 2010-07-16

• Just came out.of an intangible capital lunch and learn. New perspective from one lawyer on IRS learning to track IC. #

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Intangible Capital Reading List on Twitter for 2010-07-15

• The future of media? It really gets down to the best biz model based on indiv org intangible capital http://bit.ly/aRBVoO /cc @feedly #
• How long are IC practitioners going to hold us back? It’s past time to track intangible capital investments. http://bit.ly/bmUoZI #
• IC isn’t just about marketing. It’s a whole system of human, relationship and structural knowledge assets http://bit.ly/9FjDCp #
• Knowledge is the New Oil (Intangible Capital Ch 1) glad to see our analogy being played out in mainstream press http://bit.ly/dtmfGw #
• I like the new Globe Trek as an idea–and because my original consulting firm is called Trek….http://bit.ly/aFbvxx #

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Let’s stop guessing and start counting intangible investments

I just posted a comment on an IAM blog post about Intangible Value and the Herd Instinct. It cited Nir Kossovsky, my colleague from IAFS, as saying that the S&P 500 has a larger intangible premium than the average of all western stock markets due to a market perception of better value from that market.

Here’s my comment: Read more

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