Knowledge is the New Oil

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Oil
It is hard to imagine the tangible economy without oil. It fuels our cars and trucks. It generates electricity to power our factories and homes. It serves as a raw material for products we use everyday, from plastics to fabrics, fertilizers, and high tech materials. These many uses for oil have made this commodity a source of great wealth.
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Like oil, knowledge is both a product and a raw material. It is an abundant asset that is a part, directly or indirectly, of everything we use. And it can make you very rich. Knowledge has already made many people rich. Just ask Bill Gates and Paul Allen, the founders of Microsoft. Or ask Sergey Brin and Larry Page, the founders of Google. These are the modern day wildcatters, striking it rich by finding a new oil field with an essentially infinite supply. These wildcatters are a great illustration of the fact that there is a role for both luck and smarts in the knowledge business, or any business for that matter. But the story goes much deeper than these few success stories. Read more

Our book Intangible Capital is now available!

Here’s the text of the press release:

A Manager’s Practical Guide to Leveraging Hidden Knowledge Intangibles to Fuel Growth, Value and Innovation in Business Read more

The Role of the Intangibles Information Gap in the Financialization of US Corporations

The financialization of US corporations has been aided by the lack of information on intangibles (which make up 70% of total corporate value). Filling in the gap is a big part of the solution to the problem.
Read more

Exciting book about the economics of intangibles: From Poverty to Prosperity

If you took economics in school, your mind is trapped inside a box. It’s not alone. Most minds in our business and economic communities today are still inside that box.

But it’s time to break out of the box because the knowledge economy is here to stay. And the knowledge economy breaks some of the fundamental rules of economics as we know them. That’s because the economics we learned is based on the concept of scarcity. I sell you a shirt and I have one less in inventory.

Knowledge, in contrast, is not a finite asset. If I share an idea with you, my inventory of ideas doesn’t go down. We will probably collaborate to improve the idea. If I sell you a software license, my software doesn’t decrease in value, it will probably increase in value because I’ll get user feedback. Read more

Comments on IC 2.0 recorded for ECIC 2010

At the invitation of some colleagues from the intellectual capital community, I just posted some ideas on how to move our field to a new stage, what we have all been calling IC 2.0–an approach to IC that focuses on how to engage businesspeople and get IC thinking into a broad range of businesses. Take a look and let me know what you think! Read more

Intangible Capital in M&A

I was thrilled to see this new report by the Hay Group The Silver Bullet of Success: Winners and Losers in the M&A Game. The report is about how intangible capital is critical to the success of M&A. Below are the major points of the paper (quotes in italics) with my comments on each one:

Companies underestimate intangible capital : Executives typically value intangible capital – including culture and customer relationships – at just 30 per cent of market capitalization, not the 75 per cent that analysts expect. Read more

Tiger Woods and Intangibles

Yesterday in the New York Times, Frank Rich called for making Tiger Woods, Person of the Year. Rich said

What’s striking instead is the Enron-sized gap between this golfer’s public image as a paragon of businesslike discipline and focus and the maniacally reckless life we now know he led. What’s equally striking, if not shocking, is that the American establishment and news media – all of it, not just golf writers or celebrity tabloids – fell for the Woods myth as hard as any fan and actively helped sustain and enhance it.

Enron and Tiger Woods. He got me there. I couldn’t resist despite all that has been written about Tiger, as we all had come to call him.

You see, in both cases, we saw success in one sphere and assumed success in all others. Read more

Save the date Jan 28, 2010

A Fresh Start: A Workshop to Optimize Your Strategy and Execution in 2010

I will be leading this workshop sponsored by the Association for Strategic Planning at the Suffolk University Business School on Thursday evening, January 28, 2010.

The program will help you leap ahead of your competition by applying the lessons of intangible capital and the knowledge economy to your business. We will focus in on the new rules of competitive advantage, strategy, management and measurement. The program is open to the public. Get more details and register.

What will next year’s Labor Day look like?

Today is a strange Labor Day. The holiday was created as a way to get back to work. Yet the U.S. economy currently has a high unemployment rate, not counting those that have stopped looking for work and those that are independent and/or permanent contractors, whose work (or lack of) does not get counted in these statistics.

This unemployment is happening at a moment of incredible challenge (and, yes, opportunity). The challenges facing our nation (and our globe) include the need for sustainable energy production and use (to avoid wars and to save the environment), the need for sensible health care, the need for healthy food and the need for better education (I’m sure you can think of many more). Each one of these challenges represents opportunities that could fuel our economy for decades.

Yet here we sit. Paralyzed by assumptions and models that are failing us. Read more

Using Intellectual Capital to Build Two Kinds of Factories

Yesterday, I drove my mother to the airport in Providence RI after a vacation on Cape Cod. The route from Cape Cod to Providence is a mini-history lesson. You pass through New Bedford which has been a fishing hub for centuries–and still is. You pass  through Fall River which has dozens of shuttered factories built during the industrial era. There is still some manufacturing going on there. But it doesn’t look very prosperous. Of course, neither is our country. We never really replaced all the jobs that those factories created in the last couple centuries.

I have been thinking about manufacturing a lot lately. Because I am increasingly convinced that it is the key to an economic recovery. But not like those old factories in Fall River. A whole new kind of manufacturing. Read more

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