Preface: Part II of Intellectual Capital (IC) – if you appreciate what IC can do for your business, here are a few suggestions for developing it.

 

Goals and Intellectual Capital

Research indicates that the primary filter for what gets noticed by the mind (your employees) is closely correlated with goals of the listener. So too, the breakthroughs in developing intellectual capital in your business will result from the goals of your shareholders, partners, advisors, and employees. That is to say that if your human capital is concerned about payday, ok. But the really big breakthroughs arrive when your human capital is not preoccupied with work or personal stressors, but have the flexibility to freewheel on how they can improves process (work less, earn more, doing the same task) or get a bonus (create the companies next strategic sales driver) or work flexible hours. This is the development of intellectual capital.

Intellectual capital is not an asset from a generally accepted accounting principle standpoint. Those assets must be acquired with a cost and a market value, and ownership. Financial skills of a CFO are not an accounting asset, but the computers and software are assets. Karl-Erik Sveiby, a Swedish researcher, produced the taxonomy for intellectual capital and the invisible balance sheet. His team concluded that the competencies of the people in the business are biggest single factor in financial performance. In fact, the field of intellectual capital is so important, some companies have Directors of Intellectual Capital. And it is not a new area of business science, Thomas Stewart wrote an article: Brainpower: How Intellectual Capital is Becoming America’s Most Important Asset (Fortune, June 3, 1191.)

If competencies are so vital to the financial performance of businesses, how can they be developed? Namely training, mentoring, and guiding your employees towards greater competencies that your team needs to succeed. This is expensive – that’s probably the first objection – cost forfeited in work hours, plus a monetary investment in development. What is the upside? Greater than you might imagine. In the name of the golden rule, you are gifting your employees the opportunity to develop greater competencies. The competency will lead to confidence; and that confidence will lead to more opportunity (sales, goodwill, and value) for your business. The competency, confidence, opportunity cycle, will permit you to not only pay your employees well, but give them opportunities to reciprocate in loyalty, new business opportunity, and trust and ambition to further your business vision.

So you say developing intellectual capital is vital to business success, where do you begin? Well it can be easy as required reading lists for your employees (on or off the clock,) or investing in coaching, training, and/or mentoring for your team. Give your team quality tools to achieve competency and confidence in their personal development of intellectual capital, and they will likely in turn do more to help you achieve what you envision for your business. Most people don’t want to work with just smart or successful teams. They want to work with people who appreciate them, who genuinely care about them. Your business can be one of those places where people who have the aptitude to develop competency, confidence and opportunity want to work. In summary, if you aren’t impressed with the importance of monitoring intellectual capital for financial performance in your business remember this quote — “Brains are like hearts. They go where they’re appreciated.” Robert McNamara.