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430 Chapter 13

Classical theories of value focus on resource-based, largely renewable nature ’ s
bounty with little concern with the role of information or knowledge. Labor power is
put into the equation but is largely unadulterated by knowledge, skills, or expertise.
Technical advances were made on behalf of all individuals — not a property of any
single individual. Land, labor, and physical factors of production constituted the basis
of this traditional approach. However, we need to consider the value of information
goods more closely. In the second half of the nineteenth century, value ceased to be
regarded as an intrinsic property of the energy inputs required for production. Instead,
value became relational and contingent. The focus was still primarily physical goods
but with knowledge playing a supporting role. Information goods cannot be inspected
prior to purchase. In fact, the value of a knowledge asset is derived from the utility of
services it renders over time and the fact that it offers a competitive advantage over
those who do not possess it. This lies at the core of the defi nition of an intellectual
asset as discussed in chapter 10.
This leads to another paradox of a knowledge asset: knowledge transfer does
not require physical contiguity. It does require codifi cation and abstraction. There
is cost involved with this, therefore only select information with potential value
and utility will justify the time and effort required. Yet the more transferable we
make knowledge, the less scarce it becomes. We therefore need reliable ways of
measuring intangibles in valuing intellectual capital. An excellent overview of the
major measures and techniques used to assess intellectual capital can be found in
Sveiby (2001) .
In general, most approaches concur that there are three different types of intel-
lectual capital (IC) to be considered:

Human capital The ability of individuals and teams to apply solutions to customer
needs, competencies, mind-sets.
Organizational capital The codifi ed knowledge, culture, values, norms.
Customer capital The strength of customer relationships, superior customer-perceived
value, and customized solutions.
The intellectual capital model is thus the relationship between human capital, cus-
tomer capital, and organizational capital that maximizes the organization ’ s potential
to create value (see fi gure 13.2 ).
Measurement success stories in a number of companies such as Skandia,
Dow Chemical, Buckman Labs, the World Bank, and CIBC are outlined in the
Knowledge Management of Internal best practices report, available at http://www
.bestpracticedatabase.com. A brief summary is provided here.