Business Benefits Beyond GIS

While there are some differences in their definitions, Stewart (1997) and Edvinsson and Malone ( 1997) generally define IC as human capital plus customer capital plus structural capital.

Human capital is the combined knowledge, skill, innovation, and ability of the company’s employees to meet the task at hand. It also includes the company’s values, culture, and philosophy.
Customer capital is the value of its franchise—its ongoing relationship with the people or organizations to which it sells. Some say this is the most valuable element of IC because customers provide revenue.
Structural capital is hardware, software, databases, organizational structure, patents, trademarks, and other organizational capabilities that supports an employee’s productivity. It is everything that is left at the office when the employee goes home.

Some definitions of IC list customer capital as a subset of structural capital. However, the concept that “customers take control” is a fundamental business driver. Therefore, customer capital must be treated as a separate element. To thoroughly understand IC it is necessary to look at each of these elements in more detail.

Human Capital
There is a huge amount of economic and management literature about human capital. The economic value of human capital does not need to be proved. It is common knowledge that people are our most important asset.

Some employees are immensely valuable assets, but others are more costly. Robert Shiner of Yale University calculates that 72. 1% of U.S. household wealth consists of human capital. He defines it as the present value of expected lifetime earnings. We usually think of employees in terms of their pay. But what is their real value? How much is the job really worth? Consider a person earning $100,000 per year plus a 5% annual raise. If this person were run over by the proverbial bus and wanted to leave assets equal to the value of their career, they would have to leave $1.54 million of Treasury bonds at 6.5% for the heirs to receive an income of $100,000 per year.