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

Edvinsson, Leif; Malone, Michael S.

Hardcover

ISBN 10: 0887308414 ISBN 13: 9780887308413

Publisher: Harper Business, 1997

Synopsis

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.

About this title

Review:

In a corporate world where true value is no longer determined by physical assets alone, but instead by a combination of material and nonmaterial resources, businessman Leif Edvinsson and journalist Michael Malone propose a new way to bridge the gap between balance sheet and organizational reality. In Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower, they explain why today's companies must take intangibles seriously--and how to measure them so they can.

From the Publisher:

It's The Thought That Counts: A Call to Account for Intellectual Capital in Measuring Corporate Performance

As the stock market valuation of companies increasingly proves, the true worth of modern corporations lies not in the direct assets that appear on their balance sheets, but the indirect assets such as corporate brainpower, organizational knowledge, customer relations, ability to innovate, and employee morale - the Intellectual Capital - that lies hidden within their organizations.

The search for these hidden assets has become an international obsession in recent years as more people recognize that the global economy is becoming increasingly distorted for want of an effective way to identify these assets.

Now, at last, comes Intellectual Capital: Realizing Your Company's True Value By Finding Its Hidden Brainpower by Leif Edvinsson and Michael S. Malone, the first book to offer a systematic model for determining, measuring and reporting these hidden assets.

Intellectual Capital promises to transform current models of accounting, corporate finance, even the stock market. As such, it will be one of the decade's business publishing landmarks. In presentations to hundreds of business leaders throughout the world, the model presented in the book has already met with enthusiastic response and the first signs of widespread adoption.

Many theories have been written in recent years about the subject Intellectual Capital -- time after time expressing the need for such measurement -- but none have shown how to do it.

That's what makes this book different. Only one company in the world has ever prepared an Intellectual Capital annual report: Skandia, the Swedish financial services giant. Edvinsson, the world's most acknowledged expert on Intellectual Capital, led that effort. He has brought his unmatched experience to this book which conquers the enormous challenge of taking Skandia's measurement and navigational system and converting it into a universal model that can be immediately implemented not just by every type of company, but even by non-profit organizations, government agencies and academic institutions.

And the authors don't stop there, but go on to develop a simple measure that allows quick comparison between companies the way we use profit and loss today. Even further, the authors show how IC measurement isn't restricted to just for-profit companies, but also non-profits, public institutions, even governments -- making it the first common financial measure for organizations ever created. And to top that, Edvinsson and Malone propose a new kind of stock exchange: one that trades IC options.

The extraordinary teaming of these two individuals has produced a book that manages to be packed with new ideas and practical information, but is also an engaging read - a rare combination in a business book as important as this one.

It is not often a publisher can honestly say that one of its books will change the way businesses work, and thus the way we live. But Intellectual Capital is not just another management fad book. Rather it offers the first new business measurement system in four centuries. In the years to come, Intellectual Capital, not the balance sheet, may well be the primary way we measure companies, and those companies that begin putting IC reporting systems in place now will have a head start over those who wait.

ABOUT THE AUTHORS:

Leif Edvinsson continues as director of Intellectual Capital at Skandia in Stockholm, Sweden, where his pioneering work has led to a revolution in the management of IC.

Michael S. Malone is a journalist reporting on high-tech industry and technology. He writes regularly for such publications as The New York Times, Wall Street Journal, Wired, and others. He lives in San Francisco, CA.

About this edition

• Publisher: Harper Business
• Publication date: 1997
• ISBN 10: 0887308414
• ISBN 13: 9780887308413
• Binding: Hardcover
• Edition number: 1
• Number of pages: 240