Every growth-stage company invests heavily in intangible assets. They hire and train people. They build proprietary software. They develop processes and playbooks. They invest in brand and customer relationships. They accumulate data that informs their decisions.
These investments are real. They consume capital. And in knowledge-intensive businesses, they typically dwarf spending on physical assets.
Most companies have detailed visibility into their server costs but no visibility into the return on their most important investments — their intangible assets.
Yet almost none of this is tracked as capital investment. Under current accounting standards, most intangible spending is expensed immediately — classified as an operating cost rather than an investment in a productive asset.
This article examines what happens when you do measure these investments — and what the data reveals about which intangible asset categories drive the greatest productivity gains.
The connection between intangible investment and productivity is well-established at the macroeconomic level. The OECD has documented that firms investing intensively in both human and relational capital alongside digital and analytics capital show disproportionately higher productivity per employee than firms investing in only one category.
The Productivity Institute's UK Intangibles Growth-Accounting dataset demonstrates this at the national level. Their analysis of 42 non-farm market sector industries shows that the slowdown in UK labour productivity growth is largely attributable to reduced contributions from intangible capital deepening — the technical term for increasing the stock of intangible assets available per worker.
The ONS data reinforces the scale of the opportunity. UK businesses invested 185.5 billion pounds in intangible assets in 2021, exceeding tangible investment by 28.5 billion pounds. But the distribution of that investment across categories matters enormously.
The evidence consistently points to a hierarchy of impact. Not all intangible investments are created equal, and the interaction effects between categories are at least as important as the individual investments.
Investment in workforce skills, training, and development consistently emerges as the highest-impact intangible investment category for growth-stage companies. This includes formal training programmes, on-the-job learning, mentoring, and the deliberate development of organisational knowledge.
The mechanism is straightforward. Skilled workers produce more output per hour. They make fewer errors. They solve problems faster. They innovate more effectively. And critically, they improve the productivity of everyone around them — a skilled team lead raises the output of their entire team.
In a 30-person company, one exceptional hire can shift the productivity of the entire engineering team. In a 30,000-person company, the same hire is a rounding error. This multiplier effect makes human capital investment disproportionately powerful for startups.
If you are cutting training budgets to extend runway, you may be saving cash in the short term while destroying your most productive asset.
Organisational capital — the systems, processes, routines, and management practices that govern how a company operates — acts as a productivity multiplier on all other intangible investments.
A company with strong organisational capital gets more output from the same workforce because processes are efficient, knowledge is documented, and decision-making is systematic. A company with weak organisational capital wastes the potential of even highly skilled employees because they spend time navigating confusion, duplicating work, and solving problems that should have been solved once and codified.
For growth-stage companies, organisational capital investment is particularly critical during scaling phases. The processes that work for a 20-person team will break at 50 people. The management structures that work at 50 will break at 200. Companies that invest proactively in building organisational capital ahead of these transitions scale more smoothly and lose less productivity during growth.
Data asset investment — the development of proprietary datasets, analytics capabilities, and data-informed decision-making processes — produces returns that compound over time in ways that other intangible categories do not.
A customer behaviour dataset becomes more valuable with each additional data point. A machine learning model improves with each training cycle. An analytics capability that informs one business decision this quarter can inform ten decisions next quarter.
For companies in data-intensive sectors (SaaS, fintech, healthtech, e-commerce), data assets often represent the single largest source of long-term competitive advantage. The companies that invest early in data infrastructure, data quality, and analytical capability build an advantage that widens with each passing quarter.
The most important finding in the intangibles and productivity research is not about any single category — it is about the interaction between categories.
The OECD research shows that companies investing in both human capital and digital capital simultaneously achieve productivity gains that are disproportionately higher than the sum of investing in each separately. This is not a linear relationship. It is multiplicative.
The reason is intuitive once you see it. Digital tools are only as productive as the people who use them. Skilled people are only as productive as the systems that support them. Customer data is only as valuable as the organisational processes that translate it into decisions. Each intangible asset category amplifies the others.
The winners invest across categories simultaneously and manage the interactions deliberately.
The research points to several actionable conclusions for founders, CFOs, and investors.
First, track intangible investment by category. Using the seven-category framework, disaggregate your spending into human capital (training, recruitment, development), organisational capital (process improvement, systems, management practices), data and digital capital (data infrastructure, analytics, software development), and innovation capital (R&D, experimentation, prototyping). This does not need to be precise initially — even approximate tracking reveals patterns.
Second, look for imbalances. If your company is investing heavily in one category while neglecting others, you are likely leaving productivity gains on the table. The interaction effects mean that a small increase in your weakest intangible category may produce larger returns than a further increase in your strongest.
Third, connect investment to outcomes. Track productivity metrics (revenue per employee, output per hour, cycle times) alongside intangible investment data. Over time, you will build an empirical picture of which investments produce the greatest returns in your specific context.
Fourth, communicate this to investors. Investors cannot value what they cannot see. Companies that can articulate their intangible investment strategy and demonstrate its connection to productivity outcomes will command stronger valuations than companies presenting revenue charts alone.
The fact that most companies do not measure intangible investments is not just a problem — it is an opportunity. Companies that begin measuring now will have years of comparative data by the time their competitors start. They will make better capital allocation decisions. They will have stronger fundraising narratives. And they will build the underlying assets that drive sustainable competitive advantage.
Intangible investments drive productivity — the data is unambiguous. The question is whether you are managing those investments with the same rigour you apply to your financial KPIs. Companies that start measuring now gain a compounding advantage in capital allocation, fundraising, and competitive positioning.
Try the Productivity Calculator for quick productivity benchmarking or the Intangible Asset Valuator for a comprehensive assessment of your intangible asset portfolio.
This is the sixth in a series of articles on intangible asset valuation and growth accounting. Read the complete guide: The Complete Guide to Intangible Asset Valuation
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