From: "Vladimir Z. Nuri" <vznuri@netcom.com>
Date: Sat, 17 May 1997 09:37:50 +0800
To: Bill Stewart <stewarts@ix.netcom.com>
Subject: intellectual capital
In-Reply-To: <3.0.1.32.19970515213401.002ec988@popd.ix.netcom.com>
Message-ID: <199705170125.SAA05023@netcom18.netcom.com>
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an interesting trend is occuring relative to the term
"intellectual capital" that BS's message reminds me of.
I've read recent issues of Forbes and "fast company" that
talk about the concept of "intellectual capital", the
former ridiculing it and the later glorifying it.

what is intellectual capital? in short, in the information
age, value becomes more and more abstract. you don't measure
value any more in a company by the number of heads, like
cattle, but in fact the volume of those heads. "intellectual
capital"-- one person may be worth ten times another based
on their contribution to the profitability of a company.

increasingly we are going to see business models that reflect
this truism, much to the dismay of "atom-based" companies
that will fight this trend tooth and nail, and die out
like dinosaurs kicking and screaming. we will see people
make money that relates far more to their actual contribution
to a company. if programmers are adding the most value, then
their salaries will reflect it. in a way, their salaries
already reflect it!

part of my posting the "microstock market" is that I hope
that this trend continues to the point that it may be possible
some day to have a stock market of ideas-- a far more 
conceptual construction in which value is related to the
people participating and their ideas, not the amount of
atoms/mass that is involved. I suspect such a thing will
eventually happen.

I think in the future we will also see ways of growing companies
from the very most seed-like idea to the mass manufacturing
system. there will be some kind of cohesion and elegance about
the whole thing, as the process is recognized as basic as
growing plants. 

a neat book I would recommend to anyone is called "accidental
empires" by an infoworld columnist on the computer industry
that hints on some of these ideas.

on to BS..

>
>Really interesting post!  I think the net will simplify the
>ownership issues and the publicity issues long before it
>makes good information about the value of small companies
>easy to get.  That's far more dependent on the personalities
>of the players in a company (hard to judge, except in person),
>the ideas the company's trying to develop into products/services
>(may need non-disclosure arrangements,


intellectual capital. imagine everyone's resumes being posted
on their web site. it may be hard to judge, but the information
is there for you if you have some kind of measure. such systems
already exist today for some companies. you see everyone's
resume online. also, in companies in which people have individual
web pages describing internal company projects, I suspect increasingly
these pages will be open to the outside world so customers can
better judge the value of a company.

[ideas] may need privacy to 
>develop in, may not want to waste their time publicizing each
>step in their decision processes, contract negotiations are
>usually very private, etc.)  

the question to ask is about "open standards" in the computer
industry. ultimately I think this is a concept that will become
far more global than merely electronics and software but begin
to permeate the entire economic system. notice that it is possible
for companies to survive, even thrive, on open standards. everyone
benefits. it's not a "us vs. them" thing any more, a paradigm
shift that requires some people to rethink their approaches
and attitudes. (bill gates would be one example of this. he has
found in the past that he made enemies out of companies that were
not really his enemy. see the "accidental empire" book).

however I do agree there is a role for secrecy even in this
system. however openness/publicity will tend to be the new
norm, instead of closed-up boxes as it is now.

>On the other hand, the net can often help those parts of a business.
>The Cygnus Support folks have done well in a very open environment.
>I recently talked with a headhunter who'd seen my discussion with 
>someone on Usenet and wanted an opinion about the guy;
>the headhunter was doing a lot of in-depth web searching to find 
>people who might be interested or qualified for a position he was
>trying to fill.

yes, what I see in the computer industry is that increasingly because
the intellectual capital is so valuable, you are going to see situations
in which valuable players become like "free agents". they move around
teams, they have people who do nothing but figure out where to plug
them into, and their salaries are very high. this is happening right
now in the computer industry. the concept of working at one company
or another is increasingly less relevant. I've not seen many good books
or articles on this amazing phenomenon, and hope that some people
might be able to cite some.

>Venture capital firms provide some value to their investors
>by managing the granularity of the transactions, but they also
>add value by providing personal understanding of the companies 
>they're evaluating whether to invest in.

I agree. venture capital firms are on the leading edge of understanding
the importance of "intellectual capital" and what it adds to a company.
although I've heard horror stories of VC firms that just throw a lot
of money around without the slightest clue about the technology
involved. I suspect the converse is true that there are some very
sophisticated technology-only VC firms that go over the technology
they are funding with a fine-toothed comb. the image of VC is that
it is very chaotic and hit or miss but I wonder if some VC firms
are becoming far more scientific than throwing darts ...

  Information wants to be free,
>or is at least cheap to copy, but providing the personal attention
>needed to understand and analyze information and make good decisions on it
>is still expensive.

intellectual capital is what transforms mere information into 
profit. there is a proportion going on here that might be 
exponential (profit is exponentially related to intellectual
capital?)  unfortunately while I believe IC exists, it is very
hard to measure. it's like an intelligence test. everyone agrees
that "intelligence exists", but no one has found a foolproof
way to measure it. oh well, the market will support those who
come the closest to the optimum.

  The nets can improve the
>information they have available on both the company and the market,
>and can provide better information to investors about what 
>venture capital analysts are good at evaluating what kinds of businesses.

tremendously. in fact I think our future economy is going to become
extremely web-based. customers and companies will all use the web
to interface with each other. companies without web pages will be
considered extremely gauche.

>Will the nets split these businesses up into individual
>venture-advice-consultants competing for investors?  Or will the 
>lead to broader coordination between venture capital businesses?  
>Or both?

there is a neat idea in "accidental empires" that involves the 
idea of a software studio, which I think is a great idea. in short,
the idea is to make software creation like moviemaking. you begin
from the start in assuming that you may or may not have a hit.
you hire contract workers who get a piece of the final action.
the contract workers move onto new projects all the time. I think
this could be a very powerful model, which is already being used
in the production of computer games.


p.s. thanks for taking me seriously BS <g>