Karl-Erik Sveiby - Intellectual Capital - 1995
The most common purpose is the Industrial Era approach to measure for control. Management accounting is still under the spell of Taylor's “Scientific Management” in which some one up there controls the lesser beings down there.
I advocate that the Knowledge Era purpose of measuring should be for learning, not for control. Mathematics and statistics are languages that help us crystallize and see things we can't see with words and pictures so they should be used as much as possible. - Karl-Erik Sveiby
Sveiby, working at the Swedish insurance company Skandia, develops the Navigator, a reporting concept that considers a number of indicators that attempts to compare a company's book value with its market value. The difference is said to be the dollar value of the firm's “intellectual capital.”
He argues that the traditional balance sheet is not effective at measuring the real value of a company in that there is normally a big difference between the book evaluation and the market value.
However, this intellectual capital report has become somewhat faddish with some companies publishing several indexes that were often unrelated to one another (e.g. the percentage of female employees is considered part of the intellectual capital).
Next Step
Return to the Information and Knowledge history page