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Intangible Capital (IC) is misunderstood by the federal government, universities, economists, think tanks in Washington, and other organizations such as The Conference Board. Here’s a new report by the Information Technology  and Innovation Foundation (ITIF) entitled “The Limits of the Knowledge-Based Capital (KBC) Framework” that is unaware of intangible capital frameworks such as described by SmarterCompanies .  

http://www.itif.org/publications/limits-knowledge-based-capital-framework

The federal government and other organizations have been studying how IC is linked to the GDP and to innovation. The ITIF report correctly cites the work, research and prolific publications of Carol A. Corrado of the Conference Board and Charles R. Hulten of the University of Maryland and the NBER. Unfortunately, the ITIF report makes the mistake of assuming that the only KBC framework that describes intangible capital is the one defined by Corrado, Hulten and Daniel Sichel (CHS). The report is unaware of the framework for IC described by SmarterCompanies and other frameworks that integrate IC with innovation.

The link between innovation and IC has been established and described  in the fourth generation of innovation management (4G) to emerge as best practice since 2000. Since 1900, there have been four generations of best practice. 4G has been described in Wiley’s Encyclopedia of Technology and Innovation Management in Chapter 21.  In 4G, innovation is driven by capabilities which are combinations of tangible and intangible capital. 4G capabilities are people with knowledge, tools that are developed and bought with tangible capital, technology and processes.    

With architectural rules, capabilities in 4G are structured into “stacks” of services, applications, products, platforms, components and technologies combined with knowledge and processes. “Stacks” are linked together to form projects, organizations, business models, and industry structures such as value chains.  In 4G, capabilities evolve into dominant designs that govern new markets.  4G has twelve principles and one is that innovation hubs that typically have more than 50 partners such as the Department of Energy (DOE) innovation hubs and the Apple hub for their iPhone family that coordinates service providers and third party supplier of applications are required to create new dominant designs.

Investors interest for NPSP Composieten BV relates to IC Rating Report.

NPSP Composieten BV is a composites manufacturer in the Netherlands. In a €800 million domestic market with about 200 companies, NPSP Composieten BV is market leader in manufacturing composites using 85% bio based materials. This is what they call Nature Based Composites: the NABASCO brand they have developed over the last 5 years. Learn more at: http://www.npsp.nl/?IDL=2 

Almost two years ago, i2c delivered an Intellectual Capital Rating™ report based on stakeholder interviews (the extended method developed by Leif Edvinsson and ICAB, Sweden). This report stated the intellectual capital value on NPSP BV focussing on the efficiencies, renewal and risks.

The overall Intellectual Capital score of NPSP Composieten BV was satisfactory, even very good at IP and relational capital. Their main challenge was about experience in the Management Team, protecting their IP and moving towards new branches such as construction through marketing outside their common client groups.

In the Netherlands, today, commercial & investments banks, and even investments funds are criticized of lacking any initiative to support innovative technical and manufacturing companies. But NPSP Composieten BV (Financial Daily, Hans de Jongh, March 16^th 2012) found new investors. Time to find out what precisely happened.  

Wanting to share the success, CEO Willem Bottger, explained. The IC Rating report was part of the complete set of due diligence files. But the report got the attention, and convinced a traditional bank, a business angel and a private equity investor who decided on an investment of 50% of the NPSP Composieten BV turnover of 2011. During the research period of this investment group, questions about the IC report where unfolding realistic growth and development issues that the management team had intervened upon since i2c research team had presented it. Every single risk and learning had been given follow-up. The reliability of the IC report was even after such a long time not questioned, the advantage for the investors with this kind of reporting was clear. As NPSP Composieten BV will grow the coming years, they plan to do a new IC Rating Research when turnover has doubled.