Intellectual Capital: Making the Intangible Tangible (And Valuable)

As a business leader, do you know what your team is capable of? Do you have a group of critical-thinking individuals, all with specialized tasks that each help the department run in invaluable ways to the organization as a whole?

How about contracts with specific customers; what is detailed in those? How about the actual relationships with customers??

The likely answer to all of these inquiries is “yes,” but understanding the concepts that these answers fall under is more valuable than most realize. These concepts and several more pertain to intellectual capital, and one of the most important pieces of that is not necessarily raw materials or specific products, but your employees’ knowledge base.

Intellectual capital is a hidden gem of equity in an organization in more ways than one, but it is often overlooked completely. Today, I want to explore why, and what you might be missing out on by not leveraging intellectual capital to your benefit as a business leader and to benefit your organization.

Misplaced Value

All too often, I find myself meeting with a large corporation to discuss where they are headed, and when I ask them what their most valuable asset is, their instant response always pertains to products, services, some type of software, or if they’re notable enough, their brand.

No matter what industry the company is in, these responses are, on some level, incorrect. Sure, brands, products, services, equipment, raw materials, and the like are certainly a driving factor behind how an organization makes their money to actually be a business, or they increase the equity of the organization as an entity.

However, the misguided part is thinking that these categories are most important. The reason these assets are highlighted first is because they are tangible: you can physically use the software or machinery at the company, you physically work inside the building, the brand can be physically placed on anything that can generate revenue, and so forth.

Intangible Assets

But what about intangible assets? What are they exactly? If they bring value, why does their vernacular sound so weak, so to speak?

Intangible assets are intellectual capital, as mentioned earlier in this blog. The reason they are considered intangible is because they are not something that can easily be physically measured, like raw materials, real estate, manufacturing machines, or software used internally at an organization. Intellectual capital is much like art: a process and not a product.

To better understand the value of intellectual capital at an organization, it can traditionally be broken down into three subcategories - human, relational, and structural. Human relates to your employees as unique individuals, relational has to do with those employees’ relationships with outside customers, and structural is most commonly known as intellectual property: employees’ ideas that have been utilized to further the organization.

Employee Expertise from the Knowledge Era

Out of these three subcategories, what I have observed in my career is that the human category is one of the most undervalued of them all, when in reality, it is equally as valuable as products, services, or any other tangible asset at an organization.

An employee’s expertise, or what I’ve coined as intellectual assets in the past, spawned from the Knowledge Era - a time when organizations leveraged the dawning of the Internet and placed newfound value on employee knowledge as opposed to labor, materials, or money. This essentially made intellectual property a tangible value.

But throughout the Information Age we have found ourselves in recently, it seems as though companies have strayed from viewing intellectual assets, or intellectual capital in general, as having the same intrinsic value as everything else considered in a company’s equity.

Perhaps this is due to the fact that we have too much information, and organizational leaders now feel they have to know what’s best. But can they interact better with one of their most valuable assets: their employees?

Leverage Intellectual Capital in an Anticipatory Way

So how can you, as an Anticipatory Leader or an Anticipatory Organization, leverage intellectual capital in a productive way, and even foster more company-wide transformative thinking? Likewise, how can intellectual capital help you be more Anticipatory toward what’s to come in your industry?

Let’s look at a more recent example of a known organization that nurtures its employees and their intellectual capital: The Cheesecake Factory.

If you’ve ever been to this restaurant, you know without a shadow of a doubt that their menu is quite expansive. It has been referenced in many memes around social media alluding to the fact that they serve nearly everything at their restaurants.

Aside from a detailed food selection, The Cheesecake Factory is known for considering their employees’ ideas to be the most important assets within their organization. Above all else, they place training and employee recognition at the forefront of their corporate focus, which is how they maintain consistency across their 220-plus locations.

Their mindset is Anticipatory in leveraging employee intellectual capital: asking the frontline workers how they can improve to avoid any issues already building at any one location and implementing those individualized experiences into training programs that pre-solve problems another employee may face at another location.

So let me ask you: Are you leveraging the most valuable assets in your organization - your employees and their knowledge?

If not, what are some ways you can convert information to knowledge and then productize it for revenue? For additional help, consider joining my Anticipatory Leader Membership as a way to learn skills to determine what ways you can foster intellectual assets to pre-solve predictable problems.

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