Value-Driven Intellectual Capital: How to Convert Intangible Corporate Assets Into Market Value

by Patrick H. Sullivan

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...

• Format: Hardcover
• Language: English
• ISBN: 0471351040
• ISBN13: 9780471351047
• Release Date: March 2000
• Publisher: Wiley & Sons, Incorporated, John
• Length: 304 Pages
• Weight: 1.25 lbs.
• Dimensions: 1.1" x 6.3" x 9.3"

Customer Reviews

An invaluable introduction to IC Management

"In 1999, CEO Magazine and Arthur Andersen hosted a roundtable luncheon for CEOs interested in discussing intellectual capital (IC) and its impact on the firm as we know it. The luncheon drew 17 CEOs representing both manufacturing and service industry companies. All were intrigued by the potential hidden value that the intellectual capital perspective suggests lies untapped within their businesses, but none knew what kinds of value they could obtain from their company's intangible assets or how they might go about it. They just knew that there was hidden value in their companies and that it was somehow wrapped up in the thoughts, skills, innovations, and abilities of their employees. They wanted to learn more about this value: how to harness it, direct it, and extract value from it. This book is written for those CEOs and for anyone else who wants to know how to extract the hidden value that resides within the firm's intellectual capital. As of this writing dozens of firms actively engage in extracting value from their IC. The people directing the activities for these firms have formed a community (called the ICM Gathering) to share their ideas and success stories. With the expectation of a very few proprietary bits of information that could be useful to competitors, these firms are willing to share their knowledge, and this book draws heavily on their experiences. The purpose of this book is to help businesses profit from one of their most important assets, their intellectual capital" (from the Introduction pp.3-4).In this context, Patrick H. Sullivan divides his book into three major parts as follows:I. The Relationship Between Intellectual Capital and Corporate Value (Chapters 1-4). In this part, he basically: * defines and discusses intellectual capital and its importance, and outlines some of the basic concepts underlying corporate value.* describes a three-dimensional IC framework that reveals the IC aspect of the firm, and outlines the four key elements of the IC framework.* discusses the kinds of value that intellectual capital provides to the firm, including direct and indirect, offensive and defensive, and internal and external value.* discusses the ways managers may determine which activities are required to produce the firm's anticipated IC value.II. Valuing Knowledge Companies (Chapters 5-7). In this part, he basically:* discusses the concepts that underlie determining the amount of value that intellectual capital has for an organization.* discusses the quantitative value of knowledge companies in two different kinds of situations: the value as a going concern (the stock market value), and the value in a merger or acquisition scenario.* discusses the following questions: When determining how much to pay for a knowledge company being acquired, how does the potential purchaser make the calculation? Is the frame of reference an accounting or financial one? Or is it an intellectual capital one?III

A great place to start

I found this book very helpful for people in organizations that are complex. For small companies, sometimes we take for granted that managing human capital can be as easy as yelling over the top of a cube wall, and that applying for a patent can be amonumental achievement. But in companies where these things are routine, and systematic approaches are needed, Sullivan seems to present some credible, sound logic towards hot to approach these problems. This is not a how-to book, but returns to business management fundamentals to lay the ground work for an approach. There are no how-to books in this field, but this is an area that requires thought by readers, and Sullivan doesn't presume to know all the answers and detail. I have already applied many of the principles he presents in this book in my own company.

Conceptually sound and full of practical advice

Pat's new book strikes a careful balance between theory and practical advice. Unlike other books on the topic that are an easy read, but too superficial, or deep and practical, but read like textbooks, "Value-Driven" has something for everyone from the CEO down to the IP manager charged with the day-to-day responsibility of getting it done. For those readers unfamiliar with the work of the "Gathering" companies in this important field, the appendix may be the best place to start for context. The final chapter, "Making It Happen" is to date the only writing I have seen that lays out the process from beginning to end for the benefit of those struggling with where to start and what to do next.Pat's experience in this area is obvious. His recommendations are based upon years of work with real-world companies facing the same real-world challenges as our clients. I have already put the advice in his book to good use in my own work with companies embarking on similar projects.

Value Driven Intellectual Capital: How to Convert Intangible

In this book, Dr. Sullivan provides valuable insight to not only identify intangible assets, but to levegage them for cash or strategic position. I have found that many theorists whose books pertaining to IP and IC offer little more than vague principles written with an exclusionary tone. This book begins with the basics, then quickly moves through detailed strategies for valuation, portfolio management and commercialization. Of particular interest to me was the chapter on human capital, focusing on employees whose ideas directly generate income for a company. This book is a must-read, and I will recommend it to my professional associates, as well as users of the Ventius on-line community for IP professionals.

An Excellent Teaching Tool within the Corporate Setting

An important story to tell. Pat's new book is both an eye catcher and recipe for success. "Value Driven" takes the subject matter out the hypothetical and moves it into the real world where the bottom line counts. This is definitely suggested reading for any business manager charged with the responsibility extracting maximum value from the firms intellectual assets or more broadly, intellectual capital.Written in a down-to-earth fashion, this is the first book of its kind to outline a roll-up-the-sleeves systematic approach to choosing the best options to leverage the firm's intangibles. Dr. Sullivan draws from his own experience as a leading consultant on the subject as well as that of companies who are recognized leaders in intellectual asset management.As a practitioner, I will use this book within my own firm to help guide our business leaders as they wrestle with how to better manage their IA portfolios in order to achieve maximum shareholder value. A daunting task viewed by many, managing intangibles is made workable, providing a disciplined and systematic approach is adopted as Sullivan describes in his book.