Most organizations have adapted or transformed their management styles and business models to manage intellectual capital (IC) and respond to the IC-enabled dynamics of the knowledge economy. Many of these organizations have done it without even realizing that they are adopting an intellectual capital management (ICM) approach. A top executive of a leading consumer products company, whose name is withheld, commented that his company is not interested in ICM. "Show me the money," he said. "All I see are the circles and pyramids that ICM people draw in conferences." What this executive did not realize is that he was already managing IC in one way or another on a daily basis to make money. If it weren't for this executive's daily reliance on his gut feeling and tacit knowledge to manage his employees' innovation, the company he works for wouldn't be a market leader. If the company's employees did not care about the management of customer and structural capital, it wouldn't invest millions of dollars in its interactive Web site to solicit consumers feedback 24 hours a day, seven days a week.
Successful managers and businesses have been managing intellectual capital one way or another all along, whether consciously or intuitively. This however, does not mean that they have an ICM program or strategy. Managing IC as a matter of common business sense is not sufficient for the development of ICM as an organizational competency. It is only when a management style moves from being intuitively applied to a planned and systemized process that it can be perfected. Only then can it be substantially transformed from being an art to becoming a science. Once it transitions into a science, it becomes testable, measurable, more predictable, and, most importantly, repeatable. Though organizations that apply ICM advance this goal, there is still a long road of experimentation and applied research ahead for the emerging field of ICM to become more of a "science."
One of the established precepts of ICM to date, however, is dividing IC into human, customer, and structural capital what I will call the IC model. Before examining the "circles and pyramids" of the IC model, and why they are so frustrating to many executives, let's consider what's in a name.