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.

Few authors have examined the intellectual capital of non‐profit organizations or discussed their strategic management in terms of intangibles. The Australian Red Cross Blood Service (ARCBS), a third sector organization, is the subject of this study. The purpose of the study is to better understand the value dimensions of the ARCBS from an external stakeholder perspective. Outcomes include the creation of a value hierarchy, inclusive of the views of 11 stakeholder groups. The results show overall agreement amongst stakeholders about the four most highly valued key performance areas (KPAs) of ARCBS (safe product, product sufficiency, donor and volunteer management and public confidence). However, there were many differences between different stakeholder groups in their perceptions of the relative importance of the nine KPAs and their constituent attributes. As a result of the study ARCBS has a basis to manage strategy, organizational performance and communication with stakeholders.