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The Wealth of Knowledge: Intellectual Capital and the Twenty-first Century Organization by Thomas A. Stewart




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The Information Age

Thomas Stewart’s entertaining and clear writing style returns with his new book, The Wealth of Knowledge: Intellectual Capital and tbe Twenty-First Century Corporation. You may have read his earlier book, Intellectual Capital. He brings the same dine writing to this new work that helps readers learn what intellectual capital means for their business. Here’s an excerpt:

“In the knowledge economy, people are neither employees not ‘assets.’ Head count is no way to tally human capital. In fact, we should not confuse human beings with human capital at all. Surely people are not assets in the same way that desks and trucks and factories are. A school of ‘human capital accounting’ foundered some time back partly because it seemed inappropriate – and in any event impossible – to put a dollar value on people.
It’s more accurate – and more useful – to think of employees in a new way; not as assets but as investors. Shareholders invest money in out companies; employees invest time, energy, and intelligence. Shareholders pay an opportunity cost: The money they put into Sara Lee cannot be put into Solectron. Employees, likewise, then they hitch their wagon to one star, forego the ride with another. ‘I’ve given the best years of my life to the XYZ Company,’ people say, usually after XYZ has treated them shabbily. That statement shows an instinctive grasp of this view of employees: not wage slaves, not assets, but investors. What they invest is capital – their personal human capital, the sum of all they know, all they can do, all they might become.
For this investment, they expect a return. ‘Work is a two-way exchange of value, not a one-way exploitation of an asset by its owner’ – the idea not only rings true, it sets off whole carillons of thinking. It fuzzes up, if it does not obliterate, old distinctions between labor and capital. When a low-level employee at, say Cisco Systems receives more compensation from the appreciation of his stock than from his salary, is he a worker or a capitalist? It has controversial implications for training and development. It provokes new thinking about pay, particularly incentive pay. It opens a rich vein of thought about the difference between an individual’s human capital and that of a company – and, especially, how companies can enrich both themselves and their investors.”

Stewart makes it easy and enjoyable for readers to join him on a journey of asking questions and exploring how companies are changing. It’s especially interesting to read Enron and Andersen examples, given their crises.

Steve Hopkins, March 6, 2002


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