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The intellectual capital literature has concentrated on issues of defining, measuring, and reporting intellectual capital. The underlying thesis is that as the economy becomes more reliant on intellectual assets management and measurement processes need to focus more on these types of assets to redress an overemphasis on monetary and physical assets. This article discusses intellectual capital concepts as a mechanism for strategic analysis and facilitator of the strategy‐formulation process. It briefly considers the nature of strategy, two major strands of strategic thinking, the external view and the resource‐based view, and the advantages of the intellectual capital approach. The authors argue that the intellectual capital approach has a number of advantages leading to more effective implementation and strategic performance measurement.

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PurposeThe purpose of this paper is to introduce the IC Rating™ approach as a management consulting approach to measure intellectual capital and to report on the implementation and experience in one case study firm.Design/methodology/approachThe paper describes the IC Rating™ model in the context of the exiting literature in the field of IC measurement and uses a case study to demonstrate its practical application.FindingsBased on the presented case study as well as implementations in other organizations we find the IC Rating™ model a useful tool to facilitate the analysis and discussion about intellectual capital in organizations.Practical implicationsThe article gives a complementary view to the most commonly used score card methods and guidelines for intangibles on how intangibles can be measured. IC Rating™ focuses on the comparability between companies and industries as well as a simplification of how to interpret intangible measures.Originality/valueThe original idea for the paper was to answer the question “Why do companies really need to measure and develop intangibles?”. The answer is “To improve company financial performance”. The IC Rating™ methodology is therefore based on the answers to two other questions: “Which parameters does an executive manager need to have insightful knowledge of, in order to make the right decisions for the future?” and “From where and whom should the executive manager receive this information?”.