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Educator's Voice

Volume 7, Issue 3
March 15, 2006

Intellectual Capital: the new currency?

Intellectual capital, in one form or another, is implicated in recent economic, managerial, technological, and sociological developments in a manner previously unknown and largely unforeseen…

—James Guthrie, Richard Petty

From the capture, codification, and dissemination of information, through to the acquisition of new competencies via training and development, and on to the re-engineering of business processes, present and future success in competition will be based less on the strategic allocation of physical and financial resources and more on the strategic management of knowledge.

—Nick Bontis

I usually don't like to begin articles with two quotes in a row, but in this case, these both stood out in terms of their power to describe not only the concept but the importance of understanding, utilizing and managing Intellectual Capital.

Definitions

Corporations are figuring it out that it's important to, well, capitalize, on people's knowledge and information (as opposed to manufactured, tangible products). People make big money by consulting around intellectual capital, protecting it, and creating software to manage it. In fact, the business of knowledge management is booming. Knowledge management is "the name of a concept in which an enterprise consciously and comprehensively gathers, organizes, shares, and analyzes its knowledge in terms of resources, documents, and people skills" (whatis.com).

Knowledge management is closely tied to intellectual capital — a business must successfully manage its intellectual capital — and there is software, consulting and accounting practices that tie to knowledge management. There is true economic value attached to "intangible assets (structural, organizational capital; human capital)" (Petty, Guthrie).

Intellectual capital is human tacit knowledge — largely intangible — however, there must be tangible ways to harness and manage this knowledge. Intellectual capital should not be looked at as intellectual property, though. Examples of intellectual property are copyrights, patents and design rights. "Until recently, while people spend a good deal of time and space paying lip service to the concept, only a few have really tried to define it, and even fewer seem to have placed much value on it." Ultimately, intellectual capital is "the pursuit of effective use of knowledge as opposed to information" (Bontis). (Bontis defines information as raw material, knowledge as the finished product.)

The concept needs to encompass more than just intellect alone. Intellectual capital must be intellect coupled with action.

Perspective

Most of the literature and research I found on the topic of intellectual capital referred to accounting models and ways to somehow price and manage it. Measuring and reporting on it is at the forefront of discussions, yet this seems to be most perplexing aspect. Nobody, however, is denying its importance and its effect on businesses and on the stock market, even. Take, for instance, the example of Netscape:

In August of 1995, Netscape went public in "one of the most oversubscribed initial public offerings in history. A company with negligible profits ended its first day of trading with a value of $2 billion." This, according to Sveiby (1997), is "a value based entirely on intangible assets" (qtd in Bontis).

This illustrates the importance placed on the tacit knowledge and capitalizing on that asset, almost solely. Managing it is integral to the success of a company. Traditionally, intellectual capital has been reported as cost to a company rather than an investment (Petty, Guthrie). Companies are recognizing, more and more, that it is important to invest in their human capital. The workplace, then, must foster a "thoughtful" environment.

Where this comes into play is allowing for brainstorming (in a lab, in a workshop setting), daydreaming, developing and continually redeveloping processes and policies. Ultimately, companies need to invest heavily in what is more commonly seen as "R & D." Employers need to promote an environment where employees are allowed to try new things, and where they are allowed to fail, learn and try again. Someone can have a high level of intellect, but if a company has poor procedures and ways to track actions/thoughts, then intellectual capital cannot reach its full potential. Structural capital, then, is necessary for intellectual capital to be measured and developed within the workplace (Bontis).

Structural capital, intellectual capital and knowledge management — these are all similar concepts leading to a similar sentiment: knowledge is power (that we know); moreover, harnessing people's knowledge and information is worth money. This is an intangible asset bringing about a very tangible value.

Education and Intellectual Capital

We know that understanding knowledge and the ownership of content is important. Look at the business of patents — an old, respected way to acknowledge someone's ideas and ownership of such knowledge/inventions. A large amount of wealth is attributed to ideas and patents of those ideas. Often, intellectual capital is the only wealth-creating asset we own.

Words like global domination and even mere survival came up often in my readings in relation to businesses paying attention to and successfully managing their intellectual capital. Of course, this research refers largely to the business world. But, is education so different than the (dog eat dog) corporate world? We have to make money to survive, and to make money, we must manage our resources and assets appropriately. We must be competitive and "win over" the students (and in some cases, faculty) from other schools. The focus on retaining current students and faculty is, of course, tremendously important as well.

Given this information, should we, as educators, be putting more effort into protecting our intellectual capital — and our systems that manage information (and knowledge)? What should we be doing to better harness the intellectual capital that exists within every institution? The techniques mentioned above (allowing for trial and error, brainstorming, workshops, etc.) should be practiced in every school — for faculty and administration alike. Fostering a safe and thoughtful environment is key, and many of the educational settings I've been lucky enough to be a part of do this already.

The eLearning world, in many ways, has an advantage over traditional teaching and learning settings in that there is an inherent knowledge management system already in place: course, learning, and content management platforms are all forms of knowledge management technologies. As faculty, we may not view our course shell as structural capital, but, really, that's just what it is: a way to provide structure and logic to knowledge and information. It provides a vehicle for our intellectual capital (the course content we instruct), and it allows for students to consume this "product." It is translated, almost directly, into revenue. With this realization, it's easy to get excited about the concept of online education as being at the forefront of this somewhat "new and novel" idea. Investing more in intellectual capital, and, more importantly, being able to measure and report on this capital is something we can do now, with online programs; whereas many large corporations are just now implementing technology solutions that capture and deliver tacit knowledge. This is old hat to us in the online world!

On a more serious note, though, as we continue to improve upon our course and content management systems and eLearning platforms, we pave the way for a more solid understanding of what intellectual capital means and how we can best realize its potential — both monetarily and intellectually. Knowledge truly is power.

       —Errin Klein, M.A.

References

Bontis, Nick (1998). "Intellectual capital: an exploratory study that develops measures and models." Management Decision 36/2; pp 63-76.

Guthrie, James, Petty, Richard (2000). "Intellectual Capital Literature Review: Measuring, reporting and management." Journal of Intellectual Capital, V. 1, #2; pp 155-176.

TIP

Using Google™ Scholar to search for literature

Chances are that you require your online students to conduct research and write papers as homework assignments, just as you would if teaching in a "brick and mortar" environment. However, many online students may not have an academic library within close proximity, and content found on the Internet can often lack credibility. Therefore, how do you ensure your online students are searching the Internet for accurate and credible scholarly research?

Google Scholar (http://scholar.google.com), a new Google search engine currently in beta, provides your students with the ability to identify the most relevant scholarly research across the world. From peer-reviewed papers and theses to books, abstracts and articles, your students have access to the most relevant information from academic publishers, professional societies, preprint repositories, universities and other scholarly organizations. Moreover, if your institution participates in Google's Library Links program, or lists their holdings in Online Computer Library Center Open WorldCat (see: http://www.oclc.org/worldcat/default.htm), students can access full-text material within your library, or easily locate a book in a local library.

Just as with the ever-popular Google search engine, Google Scholar orders search results by relevance, with the most useful references appearing at the top of the page. Using their proprietary ranking technology, Google Scholar considers the full text of each article, the author, the publication in which the article appeared, and how often the piece has been cited in other scholarly literature.

Although in its infancy, Google Scholar promises to be a powerful and popular academic research tool. Keep in mind that Google Scholar is still in the beta stage. When released, however, it will make finding and potentially gaining access to scholarly materials easier for non-scholars and online learners.

       —Eric Rohrer, M.S.Ed.