Intangibles Measurement III: Assessment

Here’s the next post in my intangibles measurement series. In my last post, I made the case for measuring your annual investment in intangibles. Tracking how much you are spending is the logical starting point for measuring intangibles.

Once you understand how much you have spent, of course the next step is to ask whether you are getting your money’s worth. Is your investment giving you the results you expected? If you try to do this on a purely financial basis, you are going to reach a dead end very quickly. As explained in my last post, intangibles get very limited attention in today’s accounting paradigm.

That’s why assessment in your best bet for getting at intangible performance quickly and accurately.

Assessment is a concept you have seen before in the human resources field. A great parallel to what I am talking about is the 360-degree assessment performed on managers in many organizations. This assessment provides feedback on a manager’s performance from all angles: peers, subordinates and superiors.

If you want to assess the strength of your intangibles, you should take a similar approach. Talk with stakeholders inside and outside the company who have varied perspectives and experience with your operations. Use a standard tool so that you can compare the results.

Ask your stakeholders directly about each of your key intangibles: Are our intangibles performing as well as they should? What’s the outlook for them? Where are we at risk?

The scope should include human capital (competencies and experience), relationship capital and reputation (including customers and other important external partners) and structural capital (all your “captured” knowledge in IP and processes).

You can start with a simple process through a short survey or workshop with your team. The most complete tool for this is the IC Rating (which, by the way, is still much cheaper than the average custom consulting diagnostic).

You will get clear, actionable information from an intangibles assessment. We have seen companies grow their businesses and/or improve performance with this approach. It’s so powerful because it is giving you a look inside the intangible side of your business, what we have started calling the knowledge factory. This side of your business is usually invisible in management information. So getting information usually leads to breakthrough thinking.

Peter Drucker often said that the most important information in business is outside the business. Speaking with your stakeholders is the best and fastest way to bring that information inside.