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

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.

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PATRICK H. SULLIVAN (psullivan@icmgroup.com) is an expert at creating profits from intellectual assets and is considered one of the leading conceptual thinkers in extracting value from intellectual capital. He is a founding partner of the ICM Group, a Palo Alto, California-based consulting company focused on managing intellectual capital to maximize value. He is also cofounder of the ICM Gathering, composed of managers of intellectual capital for large, diverse international companies who meet to exchange information on new and innovative management techniques.
He is a frequent speaker on a range of topics concerning the management of intellectual capital including stock value, licensing, and developing profits from IC. He is a member of the Licensing Executives Society (where he was the founding chairman of its Intellectual Capital Management Committee), the World Intellectual Property Trade Forum, and the American Bar Association Intellectual Property Licensing Section, and a fellow of the American Council on Education. He is a frequent contributor of articles on intellectual capital management for leading journals, the author of Profiting from Intellectual Capital, and the coauthor of Technology Licensing: Corporate Strategies for Maximizing Value, both published by Wiley.