Intellectual capital shifts towards maturity


The world of measuring intellectual capital has gone through some highs and lows over the last decade. Coming from a capital markets background, I was excited when in the mid-1990s significant attention began to be paid to the valuation of intangible assets, and I was involved in a number of initiatives of institutional investors to value intellectual capital. In a knowledge-based economy, the tangible assets of a company – which is all an accountant can assess – have little correlation to the worth of the firm. However I soon realized that a couple of decades of hard work would be required to get traction on the issues, and I was happy to leave that slog to others. Now some of the hard work is really starting to pay fruit. The GAP Congress on Knowledge Capital in Melbourne, Australia in early November has high-level government support, and will establish a “Melbourne Protocol” on developing and implementing intellectual capital reporting. The background reading provided for the conference provides a good overview of the current state of intellectual capital reporting. The current poster-child is Denmark, whose Ministry of Science, Technology, and Innovation provides guidelines to companies on how to implement intellectual capital reports, and where a broad array of companies provide supplements to their annual reports. Intellectual capital supplements will be where the real action will take place over the next years. The question is which of the major players in the reporting space: listed companies, investors, regulators, and third-parties (e.g. auditors), will drive the uptake?