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

One of the greatest challenges facing any business today is the gap between its balance sheet and its market valuation. This gap, representing the bulk of a company's true value, consists of indirect assets -- organizational knowledge, customer satisfaction, product innovation, employee morale, patents, and trademarks -- that never appear in its financial reports.

Only in the last few years have companies and academics around the world tackled the challenge of measuring this "Intellectual Capital." And no company has taken IC measurement as far as the Swedish financial services company Skandia, which in 1995 published the world's first IC annual report. The executive who led the team, the first-ever director of Intellectual Capital, was Leif Edvinsson.

Now Edvinsson has teamed up with noted business author Michael S. Malone to write the first book that explains the workings of IC measurement and its usefulness to the modern corporation. Intellectual Capital is also the first book ever to present a universal IC measurement and reporting system.

And that's only the beginning. The authors also show how IC measurement can be used in any organization, including government agencies and nonprofit institutions; they present a simple new measure as a yardstick to compare the IC value and efficiency of different organizations; and finally, they propose a new kind of IC "stock market" exchange.

Intellectual Capital will transform the nature of doing business by establishing the real value of enterprises for those who manage them, work in them, and invest in them. The result will be a revolutionary transformation of the modern economy.

Highly readable and engaging, Intellectual Capital will prove to be one of the landmark business books of this decade.

Leif Edvinsson is Corporate Director of Intellectual Capital at Skandia AFS of Stockholm, Sweden. He is the world's leading expert on Intellectual Capital.

Michael S. Malone is the author of numerous books on business and high technology, including The Virtual Corporation. He has been a columnist for the New York Times and is currently a contributing editor to Forbes ASAP and Upside magazines.