How many times have you heard someone say: "People are a company's most valuable resource"? As the information age continues to mature, this has never been more true. Companies are refocusing their energy and resources on core competencies in ways that have traditional capital-asset managers running for cover. Cisco and Microsoft have led the way, showing that physical and working capital are becoming less significant indicators of corporate value as they continue to decapitalize physical assets to free up capital for brand name development, customer-relationship management, and product innovation-all considered parts of an intellectual-capital model.
For example, according to Grady Means and David Schneider from the business consulting firm Pricewater-houseCoopers, Cisco has realized tremendous success through decapitalization and outsourcing. In 2000, Cisco celebrated over 40 consecutive profitable quarters while maintaining a market capitalization of $485 billion, which made them the second most valuable company in the world, trailing only Microsoft. Yet they manufacture virtually none of their products.