Before any progress can be made in relation to IC reporting it is important to determine which of the approaches to IC reporting is more feasible or acceptable. Experimentation under each of the approaches may also be undertaken, to compare their effectiveness, provided it is clear which approach is adopted. It seems that regulatory or standard-setting bodies favor the first approach for the gradual and slow pace of change that it involves and hence lower risk for stock markets. However, as explained previously, it lacks a clear methodological framework and may backfire by creating confusion and misrepresentation of the enterprise's value. IC the­orists and practitioners seem to favor the second approach for its focus on intellectual value drivers of every enterprise in the knowledge economy. Nonetheless, the rudimentary state of research and experimentation based on the second approach, and hence the high level of risk involved, vitiates its present viability. That being said, the second approach still presents more promise for the development of a universal (i.e. comparable, reliable and consistent) IC reporting model.

The universal model presented here is based on the following propositions:

•   Perceptions of value have differed in the knowledge economy, where more emphasis is placed on an organization's ability to innovate and manage IC than its ability to acquire and manage tangible assets.

•   Despite the fact that the main intellectual drivers of value are different for different indus­tries and organizations, a number of value drivers are common to all in the knowledge economy. These include: the strength of the organization's IC (the source of its livelihood and competitive ability); the percentage of value that can be attributed to IC; and demon­stration of management ability to leverage IC.

•   Indicators can be developed to monitor the common main value drivers described above, within and across industries.

A number of indicators can be developed for each of the common value drivers as follows:

COMMON VALUE DRIVERS                                           INDICATORS

Human capital and how it is                     Idea Generation Rate

being leveraged (Innovation Index)          Idea Implementation Rate

Internal Profitability Rate External Profitability Rate Growth Potential Rate (based on all the above)

Organizational knowledge                      Time To Market, % of Revenue of Products introduced

(process capital) and how it is being          in the last 2 years, Customer Response Rate, % of

leveraged (Renewal Index)                    Time and Revenue for Renewal

Intellectual property and how it               IP Capitalization Rate (either Total Brand Equity,

is being leveraged (Intellectual Property     Patent/Trade Secret Capitalization Rate, or Copyright

Index)                                               Diversity Rate)

The indicators enumerated here can be used to communicate an enterprise's innovation, renewal (or growth), and IP capabilities and potential. Reporting on the human capital (or brainpower) through idea generation and implementation rates, and the benefits realized as a consequence, would reflect an organization's brainpower and how it is leveraging human capital by converting ideas into solutions. Reporting on process capital would show the potential and rate of an orga­nization's growth and renewal through use of metrics that measure its responsiveness to its mar­ket (customers), the time it invests to grow and the resultant renewal rate. Finally, reporting on an organization's rate of capitalization related to its IC would show the potential and success of a company to capitalize on its intellectual property after it is acquired. Different forms of intellec­tual property are important to different industries, hence the differentiation between patents, trademarks and copyrights related rates. The IP capitalization rate aims to streamline the differ­entiated rates to reflect an organization's ability to capitalize on its intellectual property regard­less of form and across industry.

These indicators present a road map wherein a lot of streets and alleys are yet to be identified and named. The search still continues and it is far from complete. Nonetheless, that road map is introduced to show that developing a standard universal IC reporting model is feasible. IC is the most valuable asset in the knowledge economy, and it is time that there is a model that reports on how organizations are leveraging their IC. That is where the future lies. The present efforts, how­ever, should be focused on developing models for managing IC beyond their rudimentary state, hence the CICM model introduced in the next chapter.