Monday, July 8, 2013

What is Intellectual Capital & Why Should You Care?

By Pascal Dennis

I left engineering & business school well versed in how to take care of two kinds of assets:

  • Financial, and
  • Physical

Managing these kinds of capital is necessary, of course.

But in the world of Google, Apple, Amazon and Facebook, is it sufficient?

Clearly not. Nowadays, many extremely valuable companies. Have negligible physical assets.

What they do have is Intellectual Capital -- the sum total of all the knowledge, experience, capability, creativity and urgency of all team members.

How well do we manage Intellectual Capital?

The answer is obvious, is it not?

Do we harvest this splendid resource?

Do today's organizations grasp the catastrophic effect of thoughtless layoffs, excessive exec compensation, stifling bureaucracy and all other IC killers?

There are many kinds of wealth -- financial, physical, intellectual, relational, reputation, time and so on.

These are inter-convertible. For example, my daughter Eleanor has time wealth (& Dad's wallet...), which she is transforming into capability wealth.

When she graduates, God willing, she'll translate capability wealth into financial wealth.

But Intellectual Capital differs from financial & physical capital in that,

  1. It can be withheld, and
  2. It can walk away,

IC is controlled by our team members.

Treating them like dirt is akin to hitting yourself in the face with a two-by-four.

How many corporations understand this?




  1. Well stated. What many consider Toyota's 8th waste, the waste of Human Capital, has long been overlooked in this country. Firms that market "Intellectual Property" are more prone to recognize it in their designers and coders, but your point goes far deeper: EVERYONE in an organization is part of the human capital.

  2. I am very happy to ready your column, I have been in the Manufacturing, transportation and now Service Industry in two different countries of the world - INDIA and CANADA. One thing I have seen common and mostly under utilized is the INTELLECTUAL CAPITAL.
    I fail to understand that WHY huge Organizations fail to recoginise this?
    Thanks once again.

    1. Dear Charanjit,

      Thanks for your kind feedback. It's a mystery indeed. How can large international organizations ignore (and often abuse) their most precious asset?

      Best regards,