The new changes to GDP calculations to include intangibles have been prompting lots of discussion in the mainstream press. That's great news to all of us in the IC community. So it feels like the right time to pull out the basic principles of Intangible Capitalism that I first wrote a few years ago......




Our economy now runs on intangible capital. 80% of the value of the average business in the U.S. is intangible. This is very exciting because the knowledge intangibles we already have hold the seeds of the solutions to many of the biggest challenges faced by our society--and the path to greater profits and prosperity. 

But intangibles are different. They require new approaches to measurement, management and monetization. Industrial models won't yield the results you want or need. How to become an intangible capitalist? Build an organization where:

  • Employees are valued for their knowledge, not just viewed as an expense
  • Information flows from the bottom to the top of an organization as freely as it flows from the top down
  • Employees are trained and empowered to make improvements and innovations in their work processes every day
  • Managers spend most of their time helping their subordinates solve problems rather than policing them
  • Partners are valued for their competencies and efficiencies rather than just their price
  • Systems support people and make their lives easier rather than harder
  • Processes automate all the easy work and free employees to focus on the highest value problems and customers
  • Most knowledge is shared collaboratively with partners to contribute to the growth of the industry
  • Critical knowledge is protected to preserve corporate advantage.
  • Decisions are made with the company’s welfare in mind—but also the environment and community
  • Managers know how to explain all this to both internal and external stakeholders

Make your stakeholders your partners so that:

  • Employees help you create the strongest company in your market
  • Customers make you the revenue leader in your market
  • Stakeholders award you the best reputation in your market
  • Investors give you the best valuation in your market

This will sound like a pipe dream to many. But it’s deadly practical. We live in an era of digital/collaborative knowledge. If you want to grow, innovate and profit, you will need to learn to leverage knowledge. Your workers and your partners are the source and the sustaining force behind knowledge. But you can’t just buy their knowledge and then tell them to shut up and do as they are told. You need a different kind of management to profit from this knowledge. Our current stalled economy is directly related to our confusion over this fact. The old rules no longer apply. Innovation, growth, profits, corporate value and reputation all depend on intangible capital.

From today forward, you have two choices. A long, slow slide under the old rules. Or a new, smarter approach to creating value and both personal and shared prosperity.   I hope that you will choose to become an intangible capitalist.


(First published in September, 2010)

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