David Boyle

Intellectual currencies: An introduction to the concept of i-commerce            

Foresight 4, 1, 2002
intellectual currency / n. management tool.  an internal money system that measures, tracks and exchanges the internal flow of knowledge, know-how and experience around an organisation.
i-commerce / n. management system.  the exchange of internal knowledge and experience using intellectual currencies.

We’ve had e-commerce, m-commerce – both of which came to a juddering halt with the dot.com boom in 2001 – so why re-visit the nomenclature with i-commerce?  The answer is because all these concepts represent the fusion of ideas – e-commerce between trading and IT, m-commerce between information and mobile phones.  The concept of i-commerce is intended to go further, applying some of the latest thinking about how you build social capital in communities to the on-going problem of how you encourage the sharing of intellectual capital inside large and far-flung organisations.

It arises out of work on social auditing and local currencies by the London-based think-tank the New Economics Foundation (NEF), and from other new ways of using counting systems to rebuild a sense of local trust and self-help in cities.  The combination of all this, I believe, can create a powerful new method of building up the knowledge strength of an organisation.

i-commerce means measuring and rewarding the help and support which one department in an organisation – or one individual – gives to other parts of the organisation when it is outside their immediate responsibility.  It is a tool that can involve staff at all levels, as well as suppliers and other stakeholders.  I could also give an important competitive edge to companies looking for new ways of unlocking the hidden knowledge assets in the organisation.


1: Genesis: The problem we are trying to solve

“People need incentives to participate in the knowledge-sharing process…” (‘What’s your strategy for managing knowledge?’, Harvard Business Review, March-April 1999)

Intellectual capital’ is turning into one of the most important determinants of corporate success.  European companies are now believed to be spending about five per cent of their revenues on it, and it is a constant source of discussion in all the leading business publications of the world.  It is a phenomenon known by a range of different labels, and has led to a range of new job titles popping up around the corporate world, like ‘Learning Manager’, ‘Knowledge Engineer’, Intellectual Capital Controller’ or ‘Chief Knowledge Officer’. 

But this new field, and the various different methods it has spawned, all agree on one basic proposition: knowledge is wealth, and it has to be measured.  If your competitors are counting it, and that is reflected in a rising share value, then you must do so too.  In fact, counting up the value of a company’s fixed assets in the old way usually means a figure wildly different from its actual value on the world markets.  Securities analysts now believe that 35 per cent of market value of the stocks they follow is not covered anywhere on the balance sheets. “How ironic,” says the American business professor Baruch Lev, “that accounting is the last vestige of those who believe that things are assets and that ideas are expendable.”

Fortune columnist Thomas Stewart, the author of one of the key texts on the subject, defines intellectual capital as the sum of everything everybody in a company knows that gives it a competitive edge:

"It is the knowledge of a workforce.  The training and intuition of a team of chemists who discover a billion-dollar new drug or the know-how of workmen who come up with a thousand different ways to improve the efficiency of a factory.  It is the electronic network that transports information at warp speed through a company, so that it can react to the market faster than its rivals can.  It is the collaboration - the shared learning- between a company and its customers, which forges a bond between them that brings the customer back again and again."

Capturing know-how          

The problem is that it is much easier to measure money than it is to measure information, know-how or intelligence is, though there have been attempts to do so back to the Institute of Chartered Accountants of Scotland and their 1988 document Making Corporate Reports Valuable.  This remains the key practical problem for intellectual capital - how to capture that elusive know-how and first measure it so that its value is reflected in the company’s accounts, and second make use of it so that it actually becomes more profitable. 

It is the second of these that concerns me here, and there are broadly two approaches that are being adopted by corporations around the world.  Both clearly suit different corporations and businesses differently, and both use the power of networked computers to store, codify and share knowledge better and more cheaply.  They were described by the Harvard Business Review (back in March-April 1999) as the codification strategy and the personalisation strategy:


Codification is a primarily IT-based approach.  It means the attempt, usually through a company intranet, to store a range of different documents, guides, schedules, data and market analyses in an electronic repository so that they are available for everyone in the corporation to use.  Codification means that work carried out for one client or sector can be used to some extent in work for others.  It means that staff do not have to re-invent their work constantly over and over again.  It means that the company’s knowledge capital is seen to be growing and is, to some extent, measurable.  There are disadvantages, however:

  • Many of the documents go out of date very fast.
  • Although codification can capture the basic knowledge, it finds it hard to capture the skills and the know-how that lies behind it.
  • Some knowledge simply can’t be codified.
  • Clients notice when their work is clearly regurgitated from some older document.
  • In practice, people still have to be encouraged to search the database laboriously.


Other consultancies and corporations emphasise a more people-based approach, because who you know is a more valuable basis for knowledge that what you know.  Personalisation means facilitating the transfer of knowledge in one-to-one conversations or in brainstorming sessions.  Companies pursuing this approach often organise ‘people-finder’ databases of contacts of people with specific expertise or experience, so that they can build fresh teams for their projects.  There are difficulties here as well:

  • The people with the skills and expertise are extremely busy on their own jobs without having to service the rest of the organisation.
  • They feel their efforts on behalf of the organisation as a whole is unmeasured and maybe even unappreciated.
  • This kind of time-sharing can be extremely time-consuming.
  • The organisation often can’t see or measure who is putting themselves out for who.
  • The habit of holding onto knowledge often remains stronger than any appraisal incentives.

Both approaches rely on incentives, though clearly the personalisation strategy needs to do that the most.  In the codification model, executives have to be encouraged to make their documents available – in the correct form – for the intranet.  In the personalisation model, there have to be powerful incentives to get people to share knowledge.  Ernst & Young, for example, review their consultants on their “contribution to and utilisation of the knowledge assets of the firm”.  Bain & Co and many other consultancies build into their appraisal process how much people are sharing.  Often the responsibility for making sure this happens lands on one department alone – for codification it is the IT function; for personalisation, it is HR.  Often the success or failure of these models actually depends on leadership from the top, but the basic problem remain: how do you measure and reward helping the corporation as a whole when doing so may actually interfere with employees’ performance of their own jobs?

Social capital

There is a parallel concept to organisational capital – the trust and openness that encourages departments or individuals to share know-how – which applies to places.  It is known as ‘social capital’, it was popularised first by the American economist Robert Putnam but was pinned down more specifically by a famous 1997 survey by Harvard University School of Public Health on what makes difference to crime levels in Chicago’s more impoverished neighbourhoods.  After interviewing nearly 9,000 people in 343 different neighbourhoods, they came to the conclusion that what seemed to make the difference was what they called “informal social control and cohesion and trust”.

Just as corporations struggle to find ways of describing the ‘capital’ that holds the people in their employ together, so economists and policy-makers have been searching for ways of describing the same concept for places and for society as a whole.  The missing element was defined by Tony Blair as “the foundation of social solidarity on which any successful society depends”.  Putnam defined it in Making Democracy Work as “networks, norms and trust that facilitate co-ordination and co-operation for mutual benefit”.   You can recognise similar concepts in Francis Fukuyama’s ‘trust’, David Selbourne’s ‘duty’ and Amitai Etzioni’s ‘communitarianism’.

What is being described here is a kind of social capital that underpins the ability of a society or neighbourhood to compete, but is not measurable in terms of money.  “The politics of ‘us’ rather than ‘me’ demands an ethic of responsibility as well as rights… This is the foundation of social solidarity on which any successful society depends,” said Blair in The Third Way.  It is the same problem which corporations are struggling to describe by using techniques like social auditing that makes this social solidarity inside their workforce and stakeholders visible.  In social policy and in corporations, the issues are parallel.  It is the question of how we can:

  • Use people’s skills and imagination to build the brand, neighbourhood, company or city.
  • Put people in touch with each other and build trust in each other.
  •  Provide a framework that encourages people to support each other.

Time exchange

NEF has also been approaching this problem for communities by developing new currency systems, both those that borrow from the world of barter and those which are derived from loyalty points, which can measure and reward this kind of social trust.  The main model has been the American idea of Time Dollars – more akin to air miles than money – which encourages people to meet their social responsibilities to each other, or to put themselves out as volunteers for the wider good.  The director of the London School of Economics Anthony Giddens describes the idea like this:              “Volunteers who take part in charitable work are ‘paid’ in time donated by other volunteer workers.  A computer system registers every ‘time dollar’ earned and spent and provides participants with regular accounts.  Time dollars are tax free and can be accumulated to pay for health care as well as other health services…”


The result is a parallel economy, using time as the medium of exchange, which can measure and build social capital.  Time money creates a reciprocal relationship between people and institutions, as well as between people and people, which volunteering is not able to achieve.  It allows almost anybody in society, including the elderly and housebound, to give something back – to make a contribution and feel needed.  It is a tool now used widely in the American healthcare industry, as well as in community development, as a way of encouraging and empowering volunteers.  NEF has been developing a similar idea – borrowing from other local currency systems – to use inside organisations.

Like corporations, cities and towns also have to find ways of measuring and rewarding social behaviour for the wider good – anything from volunteering for older people to tutoring in schools – which does nothing to meet the basic demands for money imposed by a market economy.  The evidence in 750 time banks across the USA and Japan is that measuring people’s contribution as if time was a kind of money, sending them statements and letting them spend these credits on services for themselves, does increase local trust.  It also seems to encourage people to volunteer who have never done so before.  Measuring works.

It does so partly by helping people to feel useful when they have never been asked to do anything before, and partly by making the contribution they make visible. Some local authorities and other American organisations have gone further. Baltimore Housing Authority charges part of its rent to council tenants in time dollars, which must be paid off at the rate of eight hours per household per month. The Washington law firm Holland & Knight charges community groups and charities for its pro bono work in time, which must be paid off by a local contribution in volunteering.

This paper suggests how the idea of parallel currency systems could be adapted to encourage the flow of knowledge capital in corporations, and how it can and does solve many of the remaining problems for capitalising on know-how.


2: Exodus: Setting free the know-how

"Market economics values what is scarce - not the real work of society, which is caring, loving, being a citizen, a neighbour and a human being.  That work will, I hope, never be so scarce that the market value goes high, so we must reward contributions to it." (Edgar Cahn on the importance of time currencies for the social fabric - the same applies inside corporations)

Here is the problem in a nutshell.  Corporations need to be able to persuade busy staff to put themselves out for each other, even though this will not earn either them or their departments any extra cash.  They need to persuade them to do so for the greater good of the corporation.  And though senior management is often able to persuade itself that the power of Olympian leadership or the force of rhetoric can do this, in practice individuals and departments need more than that.  They need a management tool that recognises the contribution employees make and gives them something for it.  That is the proposition behind intellectual currencies.

Intellectual currencies

Intellectual currencies provide a method whereby corporations can measure people’s ability to co-operate across sectors and departments.  Staff or departments earn the intellectual currency by providing a service for other departments.  Most intellectual currencies will be denominated in staff time, rather than trying to track the value of pounds or dollars – it is simply because market currencies are not a good method of internal accounting than intellectual currencies are necessary.

They spend the currency by buying in expertise from other parts of the organisation.  The rules by which the currencies are organised will depend partly on what the organisation wants to achieve.  It may be, for example, that departments that go into debt are helping the system along by injecting spending power in intellectual currency into other parts of the organisation.  It may be, instead, that intellectual currency earnings are given extra incentives by a link to real cash bonuses.

Currencies tend to borrow basic characteristics from each other (see next section), but each one needs to be designed for each corporation and tailor-made to fit precisely what they want to achieve.  So it may be that it is departments as a whole that are the earning unit for the internal currency or it may be individuals within departments.  It may be that each department has a target they have to earn each quarter.  It may be that each department is imposed with a ‘debt’ in the intellectual currency they have to pay off.  Or it may be that their performance is not measured in this way at all, but by the throughput – the flow of currency – that goes through the department, which determines how successful they have been.  Spending may simply show that they have been prepared to learn.

The currency system will probably include the following elements:

  • Accounting software which tracks people’s accounts and can be viewed online, or which sends out regular statements.
  • A broker or accounts manager based in whichever department organises the system, and who oversees the accounts.
  • A directory – which doubles as an intranet catalogue of the skills, experience, know-how and experience of the staff.

Parallel currencies

The currency system acts as a set of national accounts does for a national economy.  It immediately makes visible where the flow of know-how is going in the organisation.  It makes it clear who is providing it, who is hiding it, and who is using it effectively.  It makes it clear where the effort is being made and where the learning is being done – and where it is not.  Often in the early stages, the system makes it clear where the problems were before – that little or no exchange was being carried out.  But the system doesn’t leave it at that.  It provides incentives to do something about it.

By sending around a parallel currency flowing around the organisation, with different rules and policies attached to it, it provides a more subtle internal management tool than the combination of profits, earnings, rhetoric and appraisal that companies have relied on so far.  To that extent, intellectual currencies are simply a way of circulating loyalty points inside organisations.  In fact, in 1990, the Consortium for Alternative Reward Strategies found that 16 per cent of US companies were using non-cash awards of this kind to motivate employees.  Two years later, that figure had jumped to 79 per cent.  US employers now spend 7.8 per cent of their payroll on rewards and incentives, up from 4.2 per cent in 1990.  Air Miles has made internal loyalty points one of their major growth areas.

But intellectual currencies are more subtle than loyalty points, and need to be managed in an entirely different way.  This is because – unlike loyalty points – the intellectual currency is exchangeable: it behaves much more like money.  It can be spent on internal services that might save executive time.  It could also be spent on other staff benefits, or simply appraised as earnings which – like loyalty points – get deleted at the end of a certain period of time.  It tends to be the flow that is important with intellectual currencies, not the bottom line.

Most important, every exchange of intellectual currency creates a debt that must be paid off.  The flow of currency is self-generating, just as the flow of information ought to be around a corporation but all too often isn’t.


Intellectual currencies flowing inside corporations have the following rather varied advantages.  They:

  • Motivate staff and departments to share information, expertise and services internally.
  • Make visible the previously invisible flow of know-how and assistance around the organisation.
  • Can be linked to whatever objectives the company has – intellectual debt, intellectual earnings targets or as throughput.
  • Can be provided from the central ‘bank’ as loans or grants to departments for specific projects.  The loans would have to be paid off helping other departments with some of the resulting experience.
  • Provide a simple counting system that allows management to track this vital kind of performance.
  • Save time and real money of busy staff and departments.
  • Provide a framework to understand the inter-departmental co-operation any corporation requires.

3: Deuteronomy: How the currency rules work

“We try to commoditise the expertise in one area as fast as possible and move it to scale and re-use, which benefits both the client and the company.” (Peter Novins, Ernst & Young partner – this also works for internal customers)

NEF has been working with a nationwide federation of regeneration trusts.  They had been advised by the DETR that they should improve the flow of information and networking between the different semi-independent trusts.  In 1999, they asked NEF to help them construct a currency system that could tackle the problem.  The resulting currency was piloted successfully in eight of their trusts, plus their national office.  They scheme was incorporated into their intranet and local teams saved time by buying in specific expertise from elsewhere in the network.  It was a prime example of how the new currencies can help with specific knowledge management problems.

Among the intellectual currency projects NEF has been involved with, the starting points have included, for example:

  • A network of 46 organisations which needed to share information between them better.  NEF designed them a currency which linked the units and provided a motivation to share expertise.
  • A training and enterprise council which wanted a currency to link spare training capacity with training need.  NEF designed a currency which could circulate inside and outside local organisations.

As with any organisation launching their own internal currency system, there has to be a design period to make sure the rules are designed to achieve what the corporation wants them to.  Some currencies, for example, will depend on their circulation on some departments going into debt – which means they should be encouraged to do so.  That means encouraging them to learn as well as encouraging them to assist.  Sometimes it can take a little time – as it does with most new knowledge management projects – to persuade staff that the new system can help them save time and effort, and means they are less isolated from the rest of the network.

Currencies require a set of rules that explain how the currency behaves and how people are expected to use it.  There will have to be detailed explanation about what is expected of staff, and making it clear that intellectual currencies do not behave like pounds or dollars.  Their purpose is to flow.  They do not attract interest, for example, by standing still.  These are some of the issues that need to be explained.


To encourage trading and build up the intranet database, NEF developed a tailored system for one organisation whereby each self-governing unit is required to write a report every month which is ‘bought’ by the other eight participating trusts.  Start-up rules need not normally be so drastic, but this system does succeed in spreading information and getting the currency circulating.  When a currency is exchangeable, every transaction gives rise to a debt that must be paid off and therefore to other transactions.  It is this kind of circulation that I mean by i-commerce.

Double-bottom lines

The phrase ‘triple-bottom line’ is increasingly used to describe the social and environmental obligations of a corporation, alongside its financial obligations.  The trouble is that financial obligations and competition can all too often drown out the need for internal co-operation.  Intellectual currencies offer the chance for corporations to set double budgets for their operating units and departments, one in pounds but one also – reflecting their duties and expectations from the rest of the internal network – in intellectual currency.  Both can be reported in the same way.  Performance in both areas is important, after all.

Saving money

Some corporations which out-source aspects of their training, and which are in the process of meeting some of those requirements in-house, can use intellectual currencies to save money.  Imagine, for example, putting the department’s annual training budget (in pounds sterling) into a separate account and using the internal currency instead, where possible, to achieve the same ends.  The money saving is then measurable and concrete.


Intellectual currencies do not behave the same as traditional currencies.  They incur no outstanding debt with the outside world, so experimentation is cheaper.  It may be, for example that the central intellectual ‘bank’ can boost the amount of learning going on between departments by injecting more currency into the system – a kind of Keynesian economics for the ‘intellectual economy’.  They could do this in the form of grants to departments for specific projects, over and above their quarterly learning budget.  They could also do so in the form of loans, which would have to be paid off by spreading that resulting expertise to other departments.

Other networks

Intellectual currencies can circulate also among stakeholder groups, as long as rules about what kind of services they can ‘buy’ from the core departments are laid down.  This kind of service can bind stakeholder groups together and provide them with a tangible benefit for joining in with projects from national headquarters, for example.  As the boundaries between corporations and their suppliers begin to blur, intellectual currencies can circulate among them as well.  They could also – in certain circumstances – circulate among customers, which would mean that the currencies became an extension of loyalty programmes.  Currencies of this kind force corporations to work out what specific obligations they are prepared to meet to suppliers, and the intellectual currency rules are – if nothing else – a method of defining these and setting them into the contract.


There is, as yet, no tailored software for intellectual currencies.  There are related software systems available in the USA for running volunteer ‘service credit’ programmes.  So far, NEF has used either LOIS – the UK software developed for running exchanges between community groups, local barter schemes and local exchange and trading schemes (LETS) – or TimeKeeper, the UK version of Time Dollars volunteer software.


4: Numbers: What next?

“Helping large organisations develop ‘intellectual currencies’ which encourage different departments and sites to share their knowledge…” (Prediction in Financial Times management report on virtual currencies)

Intellectual currencies are really in their earliest stages of development.  They arise out of work that NEF has been carrying out for various clients in the field of parallel currencies.  Among the latest adaptations by NEF have been:

  • The first UK time banks, used as a community development or health maintenance tool.
  • The first Skill Swap centres, using people’s skills and learning as a form of currency to boost the amount of local training and education.
  • The first time bank linked to a retail loyalty scheme, supporting local volunteering with loyalty to specific retailers or town centres.
  • The first school time banks, measuring and rewarding pupils for tutoring other pupils – they can spend their credits on recycled computers.

These are very different kinds of management tools than either social auditing or loyalty programmes or customer relationship management software.  To make them work, they require experience of setting up trading and currency systems, either from the world of barter or community development.  But they also belong with the idea of social auditing of organisations.  I-commerce is about assigning numbers to the performance of departments – then giving those numbers buying power. 

This is actually not quite as unusual as it sounds.  The idea of carbon trading, at the heart of the Kyoto Agreement, is based on very much the same idea.


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title: books by David Boyle
Broke Voyages of Discovery Money Matters Blondel's Song Leaves World to Darkness The Little Money Book Funny Money The Tyranny of Numbers