Financial Capital? Intellectual Capital? Which is More Important?

I have an expression: “Companies don’t fail due to a lack of financial capital; they fail due to a lack of intellectual capital.” The longer I’m in the consulting business, the more I subscribe to this theory for one simple reason — it’s amazing what financial issues can be fixed with the right level of intellectual thinking. More importantly, it’s amazing how the right level of intellectual capital can develop and execute the right ideas that maximize the return on the financial investment.

Another reason I believe in this theory is I’ve watched too many companies squander financial resources. They waste financial resources almost as if there was an endless supply of financial capital. On the other hand, I’ve watched companies fail to invest in intellectual capital out of fear of preserving their financial capital. Ironically, there is nothing that will payout a higher ROI than an investment in intellectual capital. This is a key reason why I’ve been a strong advocate of companies fostering an open culture that promotes the development and exchange of ideas.

Let me know what you think! Challenge my thinking or support my thesis. If we believe intellectual capital is more important than financial capital, then there’s no better place than right here to put it to use.

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