The 4th Category of IC: Business Recipe

The classic categories of IC that we and most in the field use are human, relationship and structural capital. I’ve been reviewing these in detail in the last couple weeks. But there is one more that you will find useful as you begin to apply these concepts within your own organization: business recipe (I’ve also seen it called strategic capital).

We learned about this last category of knowledge assets from our colleagues in Sweden, Henrik Martin and Peder Hofman-Bang. If you just look at the three traditional categories of knowledge assets—human, relationship and structural knowledge—you still haven’t addressed how this is a business. By adding this fourth category, you will be able to identify the shared knowledge, experience, and vision of the organization as it has been translated into a business model.

Business recipe is basically a combination of your market opportunity and your organization’s strategy to take advantage of that opportunity.

The viability of your market can be judged by traditional tools already in the hands of most businesspeople to analyze its size, outlook, segmentation and barriers to entry. The factors driving demand include customer needs and demographics, price and technological change.

Strategy is how you organize yourself to take advantage of the opportunity–a “knowledge factory” that creates value for your customers using your unique combination of human, relationship and structural capital.

This category is useful as a measuring stick for the rest of your IC–your goal must be to have the right IC to deliver on your business recipe.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.