Value-Driven Intellectual
Capital: How to Convert Intangible Corporate Assets Into Market Value
Patrick H. Sullivan
ISBN: 0-471-35104-0
Hardcover Pages: 304 Copyright: 2000
How do firms like
Hewlett-Packard, DuPont, Dow Chemical, IBM, and Texas Instruments routinely convert the
ideas of their employees into profits that sustain the corporation?
How can buyers and sellers
calculate the assets of the acquired firm in a merger or acquisition?
How can an organization
affect the firm's stock price using the leverage of intellectual assets?
Identifying a firm's
assets, especially its intellectual assets-the proprietary knowledge expressed as a
recipe, formula, trade secret, invention, program, or process-has become critical to a
company's overall vision and strategic plan and essential in such transactions as stock
offerings or mergers. In the era of the knowledge-based company, where the firm's genius
and future lies in its ideas, a firm's collective know-how has become a measurable
commodity-and as much a part of its bottom line as the condition of its cash
investments, plant, and equipment. Extracting and measuring the real value of knowledge is
essential for any corporate head who knows how high the stakes have become for corporate
survival in the information age-where the innovative idea is as good as, if not better
than, gold! Value-Driven Intellectual Capital is a corporate and financial executives'
handbook to the new world of intangible assets-what they are and how to convert them
into cash or strategic position. Written by one of the seminal thinkers in the field, and
the key organizer of the ICM Gathering, a group of leading-edge knowledge-based companies,
Value-Driven Intellectual Capital explains the new, boundary-expanding world of
intellectual assets-where translating an innovative idea into bottom-line profits
involves a tightly focused strategy with clear directives for making it happen. A
blueprint for turning corporate knowledge, know-how, and intellectual property into a
sustainable competitive weapon that will build a firm's reputation and market share,
this practical, insightful book outlines:
- Basic
concepts underlying IC (intellectual capital) and corporate value creation
- The
linkage between IC, business strategy, and profits
- The
different kinds of value-including qualitative and quantitative -firms realize from
their IC
- Activities
required to produce the value firms desire from their IC
- Methods
for calculating the dollar value of companies-for market capitalization and mergers or
acquisitions
- An
economic model of an IC company
The book's appendix is a
valuable distillation for corporate and financial executives, managers, researchers, and
analysts of IC's basic working concepts and definitions, including the principles
underlying value creation and value extraction, the concepts and strategies used by
successful companies, the sources of value for knowledge companies, and the mechanisms
used to convert that value into real profits. And since it is managerial talent that turns
intellectual property into business assets, the book provides an arsenal of key concepts,
methods, and processes for aligning with and using intellectual property as an active
element of a firm's business strategies. It concludes with a discussion of how value is
extracted from human capital, focusing on its elusive magnetic core: creativity and
productivity. In an era in which firms are increasingly accountable to shareholders and
success is judged solely by stock price, knowing how to measure and extract the value of a
firm's intellectual assets has become one of the most critical and essential skills
needed by CEOs today. Reflecting the most innovative thinking from some of the most
sophisticated firms in the world, Sullivan's Value-Driven Intellectual Capital is a
manifesto, a clarion call to excellence for any corporate or financial executive, merger
and acquisition partner or investor who understands how much future corporate survival and
success depends on the simple enduring genius of a good idea and the need to convert those
ideas into corporate value.
Praise for Value-Driven
Intellectual Capital
"Twenty-first-century
firms will live and breathe in an environment increasingly dominated by intellectual
capital transactions. This book is a down-to-earth volume that pulls together, organizes,
and articulates the best thinking of leading firms and practitioners. It is a must read
for twenty-first-century business leaders charged with understanding, developing, and
extracting value from intellectual capital.''-Joseph J. Daniele Senior Vice
President, IP and Technology Commercialization SAIC Science Applications International
Corporation
"Intellectual capital
now rivals and soon will surpass financial capital as the essential foundation for
successful organizations operating in the 'New Economy.' Sullivan dissects the topic,
comprehensively laying it out in practical terms that can guide corporate action as
companies navigate these new waters. His book is required reading for every executive
wondering how to convert what the company knows into sustainable revenue."-James P.
O'Shaughnessy, Vice President and Chief Intellectual Property Counselor
Rockwell International Corporation
"Value-Driven
Intellectual Capital is the how-to for managers everywhere who want to leverage their
company's IC in today's knowledge economy."-Kevin G. Rivette, author,
Rembrandts in the Attic
"Superbly organized and
clearly written, this book is a start-to-finish guide that traces Intellectual Capital
Management from its beginnings and goes on to teach sophisticated approaches you can use
today. Patrick Sullivan relates value creation and extraction concepts to corporate
bottom-line profits and provides a virtual toolbag of techniques for practical
application. For the curious reader as well as the experienced ICM professional, this is
an important work in the field."-Stephen P. Fox, Associate General Counsel and
Director of Intellectual Property, Hewlett-Packard Company