The Complete Guide to Knowledge Management: A Strategic Plan to Leverage Your Company's Intellectual Capital

Chapter 2. Making the Business Case for Managing Intellectual Capital

Wisdom exists only in those things that are hidden from the eye.

—Jewish proverb, circa third century

Anything essential is invisible to the eyes.

—Antoine de Saint-Exupéry, The Little Prince (1940)

In this chapter you will:

Learn about intellectual capital and its importance to managers in the form of valuing intangible assets.

Understand why increasing and managing intellectual capital is essential for the long-term prosperity of knowledge organizations.

Understand why knowledge management is first and foremost about managing and increasing intellectual capital, and how it serves as the basis for all knowledge management tools.

While you may assume so far that knowledge management is important, you still have to convince yourself and your managers about its tangible contribution to your business. You will grapple with questions like, "Intellectual capital is an intangible asset and does not appear in the conventional financial reports, so why bother with it?" This chapter helps to build the business case for investing your time and money into the proper knowledge management systems.

Intellectual Capital as the Basic Asset of a Knowledge-Intensive Business

We have already mentioned that intellectual capital (IC) is the most basic asset of the knowledge organization, essential for ensuring the sustainable success of an organization and continuous growth of its tangible financial capital.

The concept is not immediately understood, ...