I3 UPDATE / Entovation International News

a free monthly briefing on the knowledge agenda

No. 47 January 2001





David J. Skyrme


David Skyrme Associates


Contents - Main Feature - Previous Feature - Reader's Replies - Knowledge Digest


The Intellectual Capital of Nations

Debra M. Amidon

Editor's Note - the full article can be found at http://www.entovation.com/whatsnew/ic-nations.htm)

When the Knowledge Movement began, many thought that it was a matter of productivity - and it was. However, it was only the tip of the iceberg for the real potential transformation underway. The ENTOVATION definition of Knowledge Innovation® from 1992 was "The creation, evolution, exchange, and application of ideas for new products and services to benefit (1) the success of an enterprise (both profit and not for profit, (2) the vitality of a nation's economy, and (3) the advancement of society-as-a-whole." It was only a matter of time when the knowledge and innovation communities would converge. Now, almost a decade later, the definition has stood the test of time and there is evidence that, indeed, the economic transformation is occurring on all three levels simultaneously - micro-, meso- and macro-economic.

Today, there is hardly a nation that is not carefully scrutinizing the real economic wealth of their country in terms of the intellectual capital - how it is developed and utilized.


Some nations have been more progressive than others - establishing formal, systematic measurement criteria to document and report the progress according to key factors that undergird the prosperity of the nation. Sweden was first. Announcing 1996 the "Year of Innovation," the government leadership together with Stockholm University modified the Skandia Navigator at the national level to quantify Sweden's critical success factors. Sweden was only the beginning for architects such as Leif Edvinsson and Caroline Stenfelt (http://www.unic.net) - the principals involved in the study. Believing that Intellectual Capital (IC) is the driving force for the future wealth creation and provides the roots for the "future fruits of nations as well as organizations", they hosted the Vaxholm Summit in August 1998. The original meeting was intended to have an open, imaginative and collaborative exploration of the IC of nations in order to share past experience, identify issues and develop new perspectives.

The process of measuring the IC of nations includes four steps:

  1. Defining and agreeing upon the meanings of measurement.
  2. Identifying key driving success factors.
  3. Refining navigation indicators.
  4. Collecting, processing and visualizing measurement data.


In addition to the Sweden report, there are several others available for your review. Under the leadership of ENTOVATION colleague Edna Pasher and her management consultants, an IC Report of the State of Israel - A Look to the Future: The Hidden Values of the Desert - was released in 1999. The report concludes: "...(global competition) trends are creating opportunities and new businesses based upon the Knowledge Revolution...dependent upon knowledge from the technological and scientific fields, upon information concerning world markets, and upon the optimal acquisition and exploitation of knowledge!"


Another ENTOVATION colleague who is featured on the Global Knowledge Leadership Map is Lars Kolind. In July 1997, The Danish Government published a study - A Structural Monitoring System for Denmark - believed to be the first of its kind. The publishing group - the House of Mandag Morgen - has a think-tank that analyzes main trends with economic and societal importance developed a concept to unite the competence development of the country with a national vision. In a unique effort to establish the national IC Guidelines, The Danish Agency for Trade and Industry has been publishing a series of IC Statements that systematically collect experience from nineteen companies for a couple of years. A complete package of the summary report - "IC Statements: Toward a Guideline" - and the individual company reports are available upon request.

The Netherlands

The Ministry of Economic Affairs in The Netherlands - with a shift from 'technology policy' to 'innovation policy' - published a 1998 report - The Immeasurable Wealth of Knowledge. Subsequent reports, such as Intangible Assets: Balancing Accounts with Knowledge," is available upon request. The study administered by the Central Planning Bureau showed that in 1992 over 35 per cent of national investments were of an intangible nature - an indication of the evolution of the knowledge-based economy. Report results include a status of the intangible production factors, legislation and regulation and a comparison of methods. In March of 2000, an executive summary - Benchmarking the Netherlands 2000: On the Threshold of the new Millennium - was released.

The express aim of the study was not only to show how The Netherlands was performing, but also to learn from the best practices in other benchmark countries. It does suggest one caveat. Nations do not compete, as do companies. Rather, governments influence the basic conditions for those companies (e.g., quality of living environment, climate for innovation, physical environment, etc.) A healthy competitive position, then, is ultimately expressed in the level of growth and prosperity. The second challenge is to shape the economic policy in such a way that the country can benefit form the trends, such as demographic changes, globalization, increasing demand for individual freedom of choice, information technology, growing mobility and greater environmental awareness.

Looking Ahead

And so now it is evident that the benefits to be reaped with a focus on a knowledge - not even information - society extend far beyond the context of company profitability. Indeed, those nations that seek to establish viable and sustainable economic prosperity will inevitably turn toward managing (and measuring) what we now consider the intangible wealth of the nation. As more nations focus upon the human capital and the innovation process (i.e., how knowledge is created converted into products and services and applied), we have an opportunity to increase the standard of living worldwide.

There are plans in collaboration with the Institute for Higher Studies in Vienna to prepare a report to devise position, evolution speed and direction in the new economic sphere of Austria. In Japan, the Japan Advanced Institute for Science and Technology is taking the lead. There are plans for preparing reports for the UK and Poland. There are regional approaches being pursued to contrast four innovative regions in Europe (i.e., Kista, Madrid, Stuttgart and Cambridge). We hear significant interest from developing nations and aboriginal communities and plans of newly elected executive officials using the IC Report and the platform for their reform.

This is only the beginning. Once we have enough examples to contrast national and regional approaches, the reality of a Global Knowledge Innovation Infrastructure may become a reality.

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© Copyright, 2001. Debra M. Amidon - All rights reserved.

I3 UPDATE / ENTOVATION International News is a joint publication of David Skyrme Associates Limited and ENTOVATION International Limited - providers of trends analysis, strategic advice and workshops on knowledge management and knowledge innovation®

Email: info@skyrme.com    debra@entovation.com
Web: http://www.skyrme.com    http://www.entovation.com

® Knowledge Innovation is a registered trade mark of ENTOVATION International.



Where Intangibles Meet Innovation

Innovation in intangible measures


Sweden (UNIC.Net)

Israel (Edna Pasher)


The Netherlands



Customers: a new twist on knowledge management

Virtual teaming and virtual organizations: 25 principles of proven practice

Measurement myopia; those who measure and those who act

Portal power: gateways or trapdoors?

Creativity is not innovation

Virtual trust

China: accepting the knowledge challenge

Innovation action for Europe