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Over the past decade, there has been a rapidly growing realisation of the importance of intangible assets and intellectual capital as a whole in the operation of organisations. With this realisation has come the need to manage companies in a new way and to measure their performance in a new way. A sharp illustration of the differences in the managerial attitudes of the industrial and post-industrial ages (Sveiby, 1997) has been in the appreciation that people can no longer be considered to be costs on the profit and loss statement but are, in fact, assets to be invested in, developed and deployed carefully. The effect of changes in business on national life has not gone unnoticed either with governments taking a keen interest in economic development in the “new economy”(DTI, 1998a, 1998b). In the markets, the effects of the new economy have also been startling. In the US, 5% of company capitalization is accounted for by the dotcom companies, that is, about $1 trillion and this valuation is not built upon profit yielding sales or physical capital but on “stories”(Lightman, 2000). In the UK the trend is similar and is expected to continue over the next decade. It is estimated that over 25% of companies that can be expected to be listed in the FTSE 100 in 2010 do not exist at present and these will be dominated by the dotcoms and hi-techs (DTI, 2000). Elsewhere it is estimated that over half of the market capitalization of all companies is due to intangible assets.

It is a well-known argument that the dominating factor in company valuation for most companies now and especially the hi-techs and dotcoms is intellectual capital. It is obvious that managers must …