In a world of increasing digitization and distributed workforces, investing in the intangible assets that underpin the knowledge or learning economy, such as intellectual property (IP), research, technology and software, and human capital is more important than ever. The COVID-19 pandemic has only exacerbated this need.
Backing up this assertion with research, a recent McKinsey & Company report examines sector-level data and the results of a new survey of more than 860 executives and finds that intangible assets matter more than ever in determining company growth.
In fact, they determine that top growers (companies in the top quartile for growth in gross value added, a measure of economic growth) invest 2.6 times more than low growers in the four major types of intangible assets: innovation capital, data and analytics capital, human and relational capital, and brand capital.
“Economies that are experiencing growth in intangibles investment are also posting growth in total factor productivity. This suggests that an increase in intangibles investment may trigger an increase in total factor productivity, and therefore long-term economic growth.”
Increasing investment and focus in these areas has broader implications for policy makers as well, the authors write:
“The shift from tangible to intangible assets increases the need for knowledge infrastructure. Policy makers will need to focus on facilitating knowledge infrastructure, including education, as well as communications technology including the internet, urban planning, and public science spending. Increasingly important will be digital infrastructure to store and manage data, the technology needed to support high-speed connectivity to transport data, and powerful high-performance computers to process data. This infrastructure will fully unlock the value of big data and foster scientific and technological innovation that enables firms to achieve their digital and innovation objectives.”
