Intellectual Capital: The New Wealth of Organizations
by Thomas A. Stewart
Book Description
Visionary in scope, Intellectual Capital is the first book that shows how to
turn the untapped knowledge of an organization into its greatest competitive weapon.
Thomas A. Stewart demonstrates how knowledge--not natural resources, machinery, or
financial capital--has become the most important factor in economic life. Through
practical advice, stories, and case histories, Stewart reveals how organizations and
individuals can create and use the knowledge assets they need. Dazzling in its ability to
make conceptual sense of the economic revolution we are living through, this ingenious
book cuts through the vague rhetoric of "paradigm shifts" to show how the
Information Age economy really works.
Intellectual Capital should be read as if the futures of your company and your
career depend on it. They do.
Synopsis
Shows corporate managers how to find, develop, and use their employees' specialized
knowledge and skills to improve their products and procedures, offering examples of the
intellectual capital revolution sweeping America's corporations today.
Synopsis
Intellectual capital is a brand-new concept for a brand-new way of doing business. It
involves looking at products, processes, and people in order to profit from the
intelligence it contains. This brave book by the foremost authority on the subject tells
how, why, and what this revolution means.
Reviews
Upside Magazine, Jonathan Littman
Thomas Stewart, an editor at Fortune, weaves the genesis of intellectual
capital with flair and historical insights. Intellectual capital is the synergy,
flexibility and strength gained from focusing and investing in three fundamentals: human
capital, structural capital and customer capital. Stewart explains the long-building
pressures that are making the tenets of intellectual capital attractive. His book provides
compelling trends, anecdotes and guidelines for executives, startups and knowledge workers
struggling to discover the secrets of intellectual capital.
A
reader from Puerto Rico, September 18, 1999
The best way to learn about the business!
A
reader from Claremont, California , May 24, 1999
Must read for educators who help build intellectual capital.
Intellectual Capital : The New Wealth of Organizations by Thomas A. Stewart, is a must
read for educators. The education domain has dramatically underestimated its value and
contribution to the development and deployment of intellectual capital. It is time
educators reassessed and this is the book to start with.
A
reader from Chicago, IL , March 6, 1999
Stewart demonstrates he has intellectual capital too
Knowledge is the currency of the information age. The sudden ubiquity of information
technology is considered by the author to be the biggest story of our time (p. xvii). He
may just be right; and while information is not alone sufficient to constitute knowledge,
this discussion goes way beyond the current platitudes of transforming data into
information and, in turn, into knowledge. The author considers such arbitrary distinctions
a tar baby (p. 71), a place to get stuck. He implies (but does not explicitly state) that
knowledge is constituted by bringing a framework, structure, organization to experience,
what is called "content" in the age of Internet computing. Such knowledge
includes the expertise that grows up in a community of practicing experts around a task,
person, or organization as well as the tools (networks and databases) that augment that
knowledge (p. 71). For example, in the knowledge economy the flow of information is as
important as the flow of good and services and, to some extent, interchangeable. The
inventory of goods required to be ready to hand to address customer purchases can be
reduced by an accurate inventory demand forecasting system in a victory of information
over inventory (p. 26). Physical assets are being replaced by the networks and databases
-- structural knowledge capital -- in the generation of economic value. Information
technology has an essential facilitating and enabling role to play in each of the three
forms of knowledge capital identified and discussed by Stewart. To this reader, though
perhaps not to many business and technology managers, the first kind -- human knowledge
capital -- is the least interesting of knowledge assets. Round up and insert here all the
usual suspects in stories of dumb companies that try to treat their workers like
interchangeable cogs in a mechanisms. Compare these with smart companies that promote
employee stock ownership, empowerment, and professional development. The dilemma remains
the same. If the employee leaves, so does his or her ability to solve problems for the
organization. True, you can make a persons miserable with legal documents and corporation
counsels;what you can't do is make them loyal that way. The author's original insight here
is that the loyalty is often to the community of practice -- professional organizations of
knowledge workers (network specialists, database specialists, etc., by analogy with
doctors and lawyers). Really smart companies create communities of practice as knowledge
exchanges, technical advisory groups, and writing workshops. More significant is
structural knowledge capital. The framework for this is information technology. The
example of the inventory system substituting for product on hand on the floor of the
warehouse belongs here. Also included are various ways of bundling information with
products -- as when the documentation accompanies the product on a CD ROM disk -- and of
products that are themselves essentially information content (digital informational
entertainment and services). Although this includes the traditional repertoire of patents,
copyrights, trade secrets, and intellectual property in the narrow legal sense, these are
a drop in the bucket. Group here the initiatives one can read about in the business and
trade publications being driven by the big six consulting organizations in building
"knowledge exchanges," wide area databases of technology and industry specific
methods and practices of solving problems.The most original insight is to think of
customer relations as knowledge capital. Once again these relations are enhanced by
connecting with the customers through networks and works flows enabled by technology,
presenting the competition with barriers to market entry and costs of catch up. Throughout
the discussion, the author argues persuasively that a switch has occurred from information
supporting the "real" business to information being the business (p. 165). This
method is fundamentally different than squeezing suppliers and distributors to increase
the companies own profit margin. The question to ask rather is our share of the customers
business growing as fast as their business is growing. If so, then a win-win process is
underway. The author conclusions with chapters on the economics of information as well as
a useful appendix on measuring and managing intellectual capital. Unlike physical assets,
knowledge is nonsubtractive. It can be used again and again without being consumed, used
up. It seems to qualify and limits (if not flat out contradict) the fundamental principle
of economics, the law of diminishing returns. For example, once a substantial up front
cost is incurred in constructing a software product, the costs of reproduction and
distribution (though perhaps not of maintenance and support) are relatively minor. There
are no diminishing returns in sight. My obtaining a piece of knowledge in no way
diminishes your ability to obtain it too. What does occur, however, is wholesale
obsolescence as the rate of technological changes (one of the fundamental drivers of
macro-economic growth) creates legacy systems at an unprecedented rate. The audience for
this book is business and technology professionals who want to understand the interplay
between economic growth and information technology in a broad sense. The style is
journalistic and suitable for the nontechnical reader with an interest in the economics of
information and knowledge. The author's rhetorical flourishes, characteristic of such
publications as Fortune magazine where the author is a writer, are well-balanced with
incisive argument and a substantial marshaling of data and evidence. The footnotes are
scholarly and are a useful supplement to readers who wish to drill down into the
intellectual content behind the headlines. There is no index. Stewart makes a significant
contribution and demonstrates a masterful grasp of his material, which makes him very
knowledgeable indeed. -- excerpt from my published review in Computing Reviews, December
1997
A
reader from Melbourne, Australia , February 20, 1999
Great Collection of Ideas - Read the First 60%.
A great read for modern business - the key insight is that Ideas are Free - it costs
nothing to have a great, marketing dominating IDEA. You just need the right people and the
right circumstance - pity that most firms have too few right people and run an operation
that does not provide ideas with the best possible opportunity to live and grow.
If your assets (people and their knowledge) walk out the door every evening, this is a
great book to awake you to the need to provide the reasons for them to come back tomorrow
morning !
The only problem is that all of this is in the first 60% of the book - the rest is a
collection of assorted stuff to fill up the required space.
Worth a read - try to borrow a copy - buy a copy if this option fails - it is worth the
investment.
A
reader from Dallas, Texas , February 17, 1999
Stewart's definition of intellectual capital is very useful.
The components of intellectual capital - human, structural, and customer/relationship
capital, provide a useful framework for evaluating an organization/individual's strengths.
If you convert the model into a broad assessment tool, an interesting picture emerges.
Accepting the premise that success in the Information Age will require strength in all
three areas (human, structural, and relationship), an assessment of your organization's
strengths/weaknesses in these areas may prove interesting.
I thoroughly enjoyed this book. I would recommend it to anyone thinking about the
challenges of the Information Age.
A
reader from Chicago, IL , September 21, 1998
Good introduction into the issues of knowledge management
Stewart does a good job of setting up the issues related to knowledge management. However
his attempt at a conversational style for the book leaves it very stilted and east coast
blue blood. This detracts from the power of his messages. The first 1/3 of the book is
great with clear definitions and descriptions. The middle third drones a bit rehashing the
first 1/3rd. The final 3rd doesn't deliver enough conclusions and items for the reader to
take action against. Overall it is a worthwhile piece, however I've found Davenport &
Prusak's "Working Knowledge" to have more practicable advice and information.
A
reader from the Republic of Panama , August 28, 1998
Brainpower
If you are looking for a plain and straight forward explanation of today's information
revolution then this is your book. It is easy to read and understand, with up-to-date
information about companies creating wealth through strategic use of Intellectual Capital
and Knowledge Management. Mr. Stewart's writing style is easy to follow and grasp, as a
good editor from an excellent magazine (Fortune Magazine) should be.
He made himself known in the field of IC when he wrote a ground-breaking-article in
Fortune Magazine on June 3, 1991 under the title "Brainpower". In this article
he wrote "Intellectual capital is becoming corporate America's most valuable asset
and can be its sharpest competitive weapon. The challenge is to find what you have-and use
it". Intense reader's reaction to this article eventually led to the writing of this
knowledgeable book.
He (Thomas Stewart) leads us by the hand, in defining Intellectual Capital and its
widely accepted classification: human capital, structural capital and customer capital.
Even though this book is an excellent introduction to modern management; equal to or
greater than reengineering; it is also of vital interest to present employees which are
faced with potential unemployment, unless they understand what are the driving forces
shaping today's corporations.
"Knowing" is the bread and butter in this ever-
changing-turbulent-technology-driven economy. Thomas Stewart explains why this information
revolution is producing victors as well as victims. While there are companies flourishing
in this uncertain economy like Wal-Mart, Microsoft, and Toyota, others are falling behind
like Sears, IBM, and General Motors. While Akers was removed from IBM because of a great
spiraling decline in growth and profits, Bill Gates at Microsoft was amassing double digit
increases in revenues and profit. While Stempel watched GM's market share erode, Iaccoca
and Eaton were increasing Chrysler's market share. While Sears was struggling, Wal-Mart
was flourishing.
This book introduces us to hidden assets not reflected in financial reports, but fully
responsible for creating wealth. Intangible assets like knowledge of a workforce, the
know-how of workmen who come up with a thousand different ways to improve the efficiency
of a factory. In a sentence: "Intellectual capital is intellectual
material-knowledge, information, intellectual property, experience, that can be put to use
to create wealth. It is collective brainpower."
After you read this book, you will then understand why your company is making all those
changes, and perhaps, avoid your being part them in the process.
This is a 21st century book for people working in post-industrial societies learning
how to survive in a fast paced environment without getting hurt.
A
reader from Pittsburgh, PA , July 30, 1998
A new view of what makes companies work
If you have an open mind and are willing to learn from what you read because you are
constantly looking to become a better business person then this book is for you because
Mr. Stewart brings forth some great new cutting edge ideas that one can take and run with.
The intellectual capital of employees are truly a company's great asset these days and Mr.
Stewart gives you various ways as to how to harness and capture the knowledge from those
workers that makes the world run.
