The book of the month: “Corporate Longitude: Discover Your True Position in the Knowledge Economy” by Leif Edvinsson

News categories: The new New Economy economics, Enterprise and business strategy, Intellectual capital management, Innovation management, Human Capital management

“Corporate Longitude describes my approach to the corporate longitude problem. It does not provide a definitive compass for our organizational and personal behaviour. Nothing could – no matter what the self-improvement gurus may tell you. Instead, I hope, Corporate Longitude offers different ways of looking at problems. I believe that it is only through new perspectives that we can gain new insights. And it is only through new questions and perspectives that we will be able to chart the uncertain waters of our futures. The future, after all, is made up of what we do not know. Join me in a knowledge navigation journey, exploring the futures of the mind and of knowledge enterprising."

Leif Edvinsson

Leif Edvinsson is using an analogy of the naval world to pass his message over in his new book: longitude, which stands for long-term, long lasting – precisely what is missing in today’s turbo management approach focused on short term earnings. Instead, his compass leads us to an orientation of new coordinates for sustainable results by using both the full potential of human individuals and of organizations that provide context, structure and relationships to talented people to create sustainable value for customers, shareholders, other stakeholders, and societies.

“Corporate Longitude” describes a journey, basically the journey of the author through ten years of work on “Intellectual Capital Management” since he joined the financial service company Skandia as the world’s first corporate director for intellectual capital in 1991. At Skandia he pioneered the development of a management and reporting model – entitled the Navigator – based around intellectual capital. His 1997 book, “Intellectual Capital”, co-authored with Michael Malone, drew on his experiences at Skandia. Edvinsson has left the company in Fall 1999 and became the World’s first associate professor in Intellectual Capital and Knowledge Economics at Lund University in Sweden and serves as board member for various companies and is much in demand as speaker. This gave him the opportunity to have a much broader view on Intellectual Capital management, which is precisely what he is sharing with his readers in his new book “Corporate Longitude”.

The journey, Leif Edvinsson’s story, starts in the 17^th century when King Charles II of England founded the Royal Observatory within the park at Greenwich. The Observatory was tasked with finding a method of accurately determining longitude at sea so that sailors could navigate the world’s oceans. About 60 years later a little-educated clockmaker from Lincolnshire, John Harrison, arrived in London to work on this task and to win the prize which was set out for finding a solution “tried and found Practicable and Useful at Sea”. Harrison was an inspired thinker and innovator and he approached the problem from new perspectives. But he was an outsider. It was thought that the answer to the problem would emerge for the scientific elite or the professionals in the Navy. Harrison’s work was ignored and overlooked and it took him thirty years to enhance the design of his solution and to convince the officials that he possessed the answer and deserved the price.

According to Edvinsson, similar challenges currently face the business world. Modern corporations are used to act only in one dimension and calibrate along one, single measure: financial capital. This does not allow a company to sail the knowledge based economy of today with sustaining success. The financial view gives corporations only part of the picture, only half of the co-ordinates required to know their precise location and to map out the route to their renewal. Without another lateral co-ordinate – a measurement for intellectual capital and other vital intangibles – companies are unable to locate their true potential or chart a meaningful course into the future.

To most twenty-first century men and women, the mind is as mysterious as longitude was to eighteenth century sailors, as Edvinsson writes. And we are disbelieving of the brain’s potential. We need fresh, longitudinal, perspectives to make sense of our most cherished possessions. But also to organizations the implications are significant. Unfortunately, most organizations are even less prepared for the challenge of “knowledge economics” than individuals are. But when managerial methods and notions of how best to organize ourselves stand still, when the world moves on into the knowledge economy of the 21^st century, this results in organizational failures.

Without means of measuring longitude, all see navigation was regional. Sailors needed a clockmaker to crack the longitude problem so they could chart their whereabouts accurately and easily. And this is the context in which modern corporations and institutions operate. For all the talk of the global economy, companies and those who work within them remain trapped in their own intellectual and geographical locale. They are fearful of leaving the protection of the coastal shelf they know. To move further out, to venture from safety into new realms filled with personal and commercial potential, they need a practical method for measuring corporate longitude – something which is urgently needed. This is the mission of Leif Edvinsson’s new book and the objective of the journey to which he takes the reader. Here the “chapters” of the journey:

1. My Journey – Every journey begins, but not all reach their aspired end (this one starts at Villa Askudden near Stockholm, the Skandia Future Center)

2. The New Knowledge Economics – The economics of goods and markets have given way to the economics of knowledge and the migration of knowledge (about thought leaders, knowledge recipes, and the “intangible hand”)

3. Changing the Nature of Value – One man’s treasure is another man’s worthless mystery (what is valuable?, talent markets, trust, relationship capital)

4. Renaissance Perspectives – Enterprise & people are built in the future not in the past (accounting and the intangible gap, new perspectives to navigate the future)

5. 1+1=11 – the new theory of the firm (the chaordic organization – the future of business organizations, human capital X structural capital = intellectual capital, creating intelligent and holistic enterprising)

6. Workplace fit for knowledge workers – You are where you work (knowledge work spaces with sense and meaning)

7. U-Capital & I-Commerce – We are what we visualize (one man’s south is another man’s north, brain stress, building identity assets)

8. The Knowledge Innovation Dimension – The only vital value an enterprise has is the experience, skills, innovativeness and insights of its people (innovation perspectives, white space management / managing the space between organizational boxes, innovating culture)

9. Leading with a compass – The leader always required a compass. Now the leader must posses a mental compass (leading the new generation / the new challenges, refining the behaviour and attitude of leaders, the leader’s job today / shaping leadership perspectives)

10. The Intellectual Wealth of Nations – The stories of our societies and of our nations are mirrors of our selves and our organizations (the new wealth of nations, taking stock of the world).

Leif Edvinsson writes on his arrival: “My learning from this journey are many. What I know is that the wave is increasing. It has gathered within universities, accounting standards groups, political and business communities. The message is that we need to surf the wave of knowledge economics or drown. The opportunity is great. There are a great many people who are lost at sea, lost in the fog of the labour market, the stock market or confused by the political world. They need to understand corporate longitude otherwise they will continue to go around in befuddled circles. Knowledge navigation will continue on the quest for the new wealth of nations. There is no end, just another question, another curious leap into the dark. In the knowledge economy, the beginning is an end in itself”.

“Corporate Longitude” is not just a book about Intellectual Capital or Knowledge Management. It’s a culmination point of all the related ideas, thoughts and concepts. Leif Edvinsson did a tremendous job in documenting not only the though path of his own work of the last decade, he also made the underlying network of people and ideas transparent through the “compass links” at the end of each chapter and on the official website of his new book. This book is a must read for everyone interested in management science and economics or just in his or her personal career.

About the author:

Leif Edvinsson, who calls himself a global knowledge nomad, championed early moves to nourish intellectual capital (IC) and to have it measured in corporate annual reports. His 1997 book “Intellectual Capital” (co-authored with Michael Malone) drew on Edvinsson’s experiences at the financial service company Skandia where he was appointed the world’s first corporate director of intellectual capital in 1991. He is also co-author of “Accounting for Minds” (with Gottfried Grafström, 1998). At Skandia, Edvinsson pioneered the development of a management and reporting model – entitled the Navigator – based around intellectual capital. He also developed the “Skandia Future Center”, an organizational laboratory, as a knowledge innovation tool. Having left Skandia in Fall 1999, he was recently appointed the World’s first associate professor in Intellectual Capital and Knowledge Economics at Lund University in Sweden, and he is much in demand as a board member and speaker. He is now developing a holding company for intellectual capital recipes Universal Networking Intellectual Capital (UNIC – www.unic.net).

Corporate Longitude: Discover Your True Position in the Knowledge Economy
by Leif Edvinsson

Hardcover - 256 pages (July 2002)
Financial Times Prentice Hall; ISBN: 0273656279

Interview with Leif Edvinsson:

Interview with Leif Edvinsson: Intellectual Capital: the new wealth of corporations by Juergen Daum

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Interview with Baruch Lev: Accounting, Reporting and Intangible Assets by Juergen Daum

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Intangible Assets and Value Creation, a book by Juergen H. Daum, which focuses on the new accounting, measurement and management system companies require to thrive in the knowledge economy of today

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Interview mit David P. Norton: Intangible Assets und die Balanced Scorecard by Juergen Daum

Intangible Assets: The Art of Creating Value – Interview with Juergen Daum by sapinfo.net

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Today’s #1 management challenge: How to better exploit intangible assets to create value – article by Juergen Daum

More about about New Economy Economics and Management Best Practice in general, and about other related topics will be continued here in my newsletters. To subscribe for my free-of-charge e-mail newsletter click here.

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