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company ’ s intangible assets or how they might go about it. They just know that there
is hidden value in their companies and that it is somehow wrapped up in the thoughts,
skills, innovations, and abilities of their employees. They want to learn more about
this value: how to harness it, direct it, and extract value from it (Sullivan 2000).
Intellectual assets are intellectual materials that have been formalized, captured,
and leveraged to produce higher value for the fi rm. As organizations more fully rec-
ognize the role these assets play in marketplace success, efforts to more accurately
identify and value them are becoming a top priority. While most managers readily
recognize that their most important organizational investments are in talents, capa-
bilities, skills, and ideas, often they must rely on surrogate, tangible-resource measures
such as people, capital, inventory, and money for performance decisions.
Historically, the intangibility of intellectual assets has made them diffi cult to
measure and manage. The accounting concept of “ goodwill, ” which is simply the
amount left after deducting measurable costs from the selling price, has and continues
to be used by many organizations as a type of miscellaneous category where intel-
lectual assets can be put in. A more organizationally appealing approach was intro-
duced by Stewart (1997) where intellectual assets are classifi ed as:
• A semipermanent body of tacit and explicit knowledge about a task, person, or
organization
• The capital resources (human, structural, and relational) that augment this body of
knowledge
This classifi cation scheme, if applied properly, produces intellectual asset measures
that can be targeted for KM value assessment.
Bolita (2001) states that with more than half the value of US corporations now
considered intellectual assets, organizations are increasingly looking for ways to iden-
tify, quantify, and capitalize on those intangibles. Over the last seven years, the value
of intellectual assets has increased by 700 percent. An organization ’ s intellectual assets
are computed in a number of ways (none of them precise). The difference between a
company ’ s book value and the value of all its fi xed assets is one measure. The Coca-
Cola Company (www.thecoca-colacompany.com) is often cited as a reference model
for evaluating intellectual assets. Discounting the extensive value of the sugar, water,
bottling facilities, and distribution system, the bulk of the company ’ s value lies in the
formula to make Coke, and the brand awareness the company has established.
For example, Microsoft (www.microsoft.com) paid $425 million for WebTV (www
.webtv.com), a company with few fi xed assets and only modest revenue. However,
WebTV held 35 patents for delivering the Internet over television. For that intellectual