Experimentation in intellectual capital management has gone signifi­cantly beyond the firm. Entire countries, with Denmark in the lead, have come to see that they must become knowledge societies, with their competitive advantage coming from the growth of their intellectual capital. Denmark has sponsored a multiyear, multistage effort with a diverse group of companies participating in an experiment to develop an intellectual capital framework that could be flexible enough to account for all of their differences and yet present meaningful insights on how the intellectual capital of these firms is being managed and cultivated.

In the United States, the Brookings Institution carried out a study entitled Hidden Wealth.

With every major accounting body in North American, Europe, and Australia involved, the movement to determine the "correct" balance in disclosure and reporting on non-financial value grows. As Edmund Jenkins of the US Financial Accounting Standards Board (FASB) put it:

"The economy of 2001 is fundamentally different from the economy of 1950 and before. Secondly traditional financial state­ments do not capture - and may not be able to capture - the value drivers that dominate the new economy."9

NEXT STEPS

A convergence of factors is taking place that is making the under­standing and management of intellectual capital a working reality for organizations. Thought leaders and practitioners are developing the next generation of intellectual capital management approaches. s There is a gradual acceptance of the legitimacy of intangibles on balance sheets. More sophisticated research and tools exist to extract that value. s There is a continuing shift to a knowledge-based economy.

Learning that managing intellectual capital or intangibles is different than managing tangible assets is a large part of being successful, and that is what is happening in the firms that have taken on an intellectual capital perspective.

Through practice and continuing learning, companies have deep­ened and broadened their intellectual capital initiatives. In some companies, as initiatives began to yield results, often specific finan­cial payoffs, the limited experiments became learning points that are the seeds for extending intellectual capital initiatives across different parts of the enterprise. Other companies that started out with broader, more visionary efforts have become more pragmatic in their approach and are working to have the intellectual capital efforts reach into the day-to-day activities of their basic processes.

Companies are beginning to realize the extent and types of intangible wealth they have, where that wealth comes from, and how they can leverage that wealth for effect, in ways they never thought about or thought possible.

The first intellectual capital efforts were primarily about either value creation or value wealth. They next generation of initiatives are reaching a new stage where there is enough experience of both perspectives to see the strengths and limits each has and where both can link up to create even greater value for their organizations and stakeholders. The practical base of good theory and practical achievement is building the ground to this new understanding.

MILESTONES

Hiroyulri Itami publishes Mobilizing Invisible Assets in Japan. a 1986: Karl Erik Sveiby publishes The Know-How Company on how to manage intangible assets. * 1987: David Teece publishes his paper on extracting value from innovation. Sveiby publishes The New Annual Report introducing "know­ledge capital".

1989: Sveiby publishes The Invisible Balance Sheet 1990: Stewart publishes the first "Brainpower" article inFortune. 1991: Skandia names LeifEdvinsson the first-ever corporate director of intellectual capital and organizes its first intellectual capital func­tion.

1993: Hubert Saint-Onge of the Canadian Bank of Industry and Commerce establishes the concept of Customer Capital. 1994: The first meeting of the Mill Valley Group (The Gathering). 1994: Thomas Stewart writes the "Intellectual Capital" cover article fotPortune.

1995: The first Skandia public supplemental report on intellectual capital.

1996: The SEC symposium on measuring intellectual capital and intangible assets.

1997: Baruch Lev founds the Intangibles Research Project at NYU. 1997: A number of foundational books are published: » Sveiby: The New Organizational Wealth. s Stewart: Intellectual Capital. s Edvinsson and Malone: Intellectual Capital. s Brookings: Intellectual Capital.

1998: Patrick Sullivan's book published: Profiting from Intellectual Capital.

2000: The Brookings Institution publishes Unseen Wealth, the Report of the Brookings Task Force on Understanding Intangible Sources of Value.

LEARNING POINTS

Cave drawings of animals and migration routes used to educate prehistoric huntets - 30,000 BC. s Maps, trade route knowledge, and craft know-how were a competitive advantage in the Age of Discovery - 14QQ through 1800. * Merchant bankers operated internationally on access to capital tied to trust - late nineteenth century.

Knowledge increasingly became a major component of all goods and services - 1970s. Core competencies and human capital are recognized as basis for wealth generation - 1980s. Articles and books inspire organisations to develop an intellec­tual capital management capability - 1990s. Institutional efforts advocate more transparent and effective standards and protection for intellectual capital in Burope and the United States.

NOTES

1 Sullivan, P.H. (2000) Value-Driven Intellectual Capital: How to convert Intangible Corporate Assets into Market Value. Wiley & Sons, New York, pp. 238-44.

2 Sullivan.

3 Sveiby, K.E. (1997) The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets. Berrett-Kohler, San Fran­cisco, p. ix.

4 Sveiby, p. x.

5 Stewart, T.A. (1997) Intellectual Capital: The New Wealth of Orga­nizations. Doubleday, New York, Preface.

6 Edvinsson, L. andMalone, M. (1997)Intellectual Capital:Realizing Your Company's True Value By Finding Its Hidden Brainpower. Harper Business, New York, p. 16.

7 Edvinsson, p. 18.

8 Edvinsson, p. 19.

9 Jenkins, E.L. (2001) Voluntary corporate disclosure in the US. In: 4th Intangibles Conference, pp. 1-2. NYU: Financial Accounting Standards Board.