Dealing with the knowledge economy: intellectual capital versus balanced scorecard

I still haven't loaded a lot of my own content into this new site (I intend to and encourage all our members to do so as well). But, in the meantime, I thought that it would be helpful to start adding some links to other folk's content (books, articles, presentations, videos) that I have also found helpful. This is a start. I hope that others will follow with more suggestions....

If I had to pick one article that sums up the perspective of the field of IC, it is this article, Dealing with the Knowledge Economy by J. Mouritsen, H. Thorsgaard Larsen, P.N Bukh. It is especially helpful because it contrasts IC with the perspectives of the balanced scorecard. In the authors' view, the balanced scorecard (BSC) is an industrial-era tool.

Now, some will think that it unjust (and maybe confusing) to identify the BSC so strongly with the industrial era. After all, BSC is viewed as the most prominent tool that is trying to expand corporate thinking beyond a purely financial perspective--to see the intangible drivers of tangible results.

But there is a real argument to be made that the BSC is mostly about top-down control whereas IC is more about leveraging bottom-up knowledge flows. While we all know that businesses will always have to balance the top-down and bottom-up, the series of charts and discussions in this article will help you think about the implications of these two perspectives.

Have you read this article? What do you think? Do you have a nomination for the article that has most influenced you?

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Comment by Joris g. Claeys on January 25, 2010 at 9:35pm
Hi Mary,

The question or subject is indeed valid the way you have sketched it. I fully underwrite your dual role of an organization in balancing knowledge flows. Furthermore, the BSC is measures more events and numerous UoM, but skips the main driver of any company: the money flow or the real hard currency valuation of these events. To us that is exactly wher ICC and ICA differ in its core basic with BSC.

In addition we have the measuring of intangibles, such as knowledge - see more details on AREOPA's 4-leaf model. With IC we go far beyond the measures of BSC, which tends to focus on operational activities only and not valued in currency.

regards,
Joris
Comment by Mary Adams on January 25, 2010 at 11:26am
Thanks Leif - This is an interesting question. I just posted it in our discussion area to see what other folks say! Mary
Comment by Leif Edvinsson on January 25, 2010 at 11:14am
Balanced scorecard is based on a pradigm of balance. To some extent this also goes for accounting, and the balance sheet. However for Innovation the core is in the inbalance....There you will find the knowing for the Future. this takes us also to the Quesiton if the Future is an Asset or a Liability?

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