Management Consulting Practice In Intellectual Capital

Intellectual capital today and consulting firm’s interest in the topic Today, many organizations recognize the importance of intellectual capital as a principal driver of firm performance and a core differentiator. Also governments are recognizing the importance of intellectual capital. The European Union aims for their membership countries to invest a minimum of three percent of their GDP into research and development initiatives. In the UK, for example, Prime Minister Tony Blair wrote in a recent Government White Paper that creativity and inventiveness is the greatest source of economic success but that too many firms have failed to put enough emphasis on R&D and developing skills. Patricia Hewitt, Secretary of State for Trade and Industry, added in a recent DTI report that increasingly it is the intangible factors that underpin innovation and the best-performing businesses. An increasing number of firms start to report more of the intangible aspects of their business, even without the force of regulations. This trend is especially observable in Europe with various initiatives by the European Commission (e.g. projects such as METITUM, E*KNOW NET, PRISM). Another example is presented by the Danish Department of Trade and Industry, which produced guidelines of how companies can produce intellectual capital reports. In Austria, the Government has passed a law that all universities have to report on their intellectual capital, in the UK companies will be forced to produce an Operating and Financial Review outlining many intangible elements of their business, and countries as diverse as Iceland, Germany, or Spain have started their own initiatives. At the same time accounting guidelines are being developed and standards are being questioned and reviewed. With the introduction of the International Accounting Standards more emphasis will be placed on accounting for intangible components and stricter compliance rules force companies to report on other intangible aspects of their performance. Leading software companies such as SAP, Hyperion, Oracle, 4GHI or Peoplesoft are developing applications to address this, and even governments are beginning to measure the intellectual capital of cities, regions, and countries. Many consulting companies have discovered different areas of this increasing awareness and interest in intellectual capital to offer their services like PricewaterhouseCoopers who offer their services to help companies in their value reporting initiatives to increase transparency in corporate reporting orWatsonWyatt who offer human capital audits. In recent reports or marketing material from different consulting firms this trend is apparent: Accenture writes that today’s economy depends on the ability of companies to create, capture, and leverage intellectual capital faster than the competition. Cap Gemini Ernst & Young believes that intangibles are the key drivers for competitive advantage and KPMG states that most