Business leaders are letting down both shareholders and customers by failing to properly manage and exploit the intellectual capital of their companies, according to Prof. Colin Coulson-Thomas. Of 60 companies he has recently visited only a handful were making effective use of particular types of intellectual capital, and even these entrepreneurs were ignoring most of the available know-how within their businesses. “The sale of specialized knowledge, or the licensing of intellectual capital such as particular approaches or techniques, can contribute additional income streams. Yet companies continue to miss opportunities that in some cases could be more significant than current operations”. The report ‘Managing Intellectual Capital to Grow Shareholder Value’ suggests a deep rooted problem. Most of the 51 companies surveyed fail to properly manage and fully exploit the 20 categories of intellectual capital examined by a team led by Prof. Coulson-Thomas. The companies studied generate some £10bn in revenues from their corporate know-how.

According to the University of Lincoln Professor: “The term . ‘intellectual capital’ encompasses all forms of corporate knowledge that can be converted into profit, including know-how and processes, patents and copyrights, as well as the skills and experience of employees and relationships with customers and suppliers.”

Coulson-Thomas' team compared ‘leaders’ who expected the contribution of know-how to product or service value to rise substantially or significantly with ‘laggards’ who expected it to increase only slightly, remain the same or decline. He explains: “We found the ‘leaders’ already generated significantly more income from intellectual capital than ‘laggards’. ‘Leaders’ understand key management of intellectual property issues, while ‘laggards’ fail to make ‘know-how’ an important driver of shareholder value.”

Coulson-Thomas finds: “‘Leaders’ are much more motivated than ‘laggards’ to exploit their intellectual capital. Developing new revenue streams, enhancing profits and growing existing revenues are given a higher priority. Leaders recognize that intellectual capital can be used to create new opportunities and attack and penetrate new markets. They are also more likely to measure their performance at managing and exploiting ‘know-how’.”

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Customer information, design rights and R&D know-how have been the three most significant income generators. Both ‘leaders’ and ‘laggards’ expected all 20 categories of know-how examined in the ‘Managing Intellectual Capital to Grow Shareholder Value’ report to become increasingly important.

Coulson-Thomas explains: “The greatest growth in revenue earnings was expected to result from exploitation of websites and the internet, management methodologies, customer information, brands, distribution networks, licences, market intelligence and management tools and techniques. The least growth was expected to result from copyrights, goodwill, patents, royalties, design rights, proprietary technologies, software and R&D know-how – the areas many companies concentrate upon.”

The Professor finds there is much to be done: “Many companies fail to mention the contribution of Know-how in their accounts, give a balance sheet value for intellectual capital, or report intellectual property developments to the board. The majority of companies fail to properly manage most types of intellectual property.”

Coulson-Thomas concludes: “Boards should undertake formal reviews of corporate approaches to the management of intellectual capital, and formulate pro-active strategies for harvesting more value from it. Incentives should be put in place to encourage this. The focus should be upon areas where knowledge management activities can have most impact upon the critical success factors for achieving key corporate objectives.”

This 157 page A4 report shows how the top management team can build new value into the business by harnessing intellectual capital and "know-how" more successfully. More than 20 charts contrast the experience of the leader and laggard companies – providing a unique source of guidance to help you focus your company’s resources on the critical issues that make a real difference. The report which also contains seven full-length case studies should help you to identify overlooked areas of intellectual capital, develops new approaches to measuring, representing and reporting your achievements, considers the roles different management functions should play, addresses key people and cultural issues, and develops a strategy for harvesting more value from intellectual capital.

• Executive summary
• Intellectual capital: the new value driver
• Exploiting intellectual capital
• Measuring and valuing intellectual capital
• The shareholder value connection
• The corporate team driving development
• Managing intellectual capital for more value
• Reporting intellectual capital achievements
• Intellectual capital: the opportunity factor
• Appendix 1: Research study statistical summary
• Appendix 2: Further reading