Intangible Capital Reading List on Twitter for 2010-04-30

• Amex SmartBrief for CFO’s & CFOZone quoted me on making decisions: What would your stakeholders think? http://bit.ly/bg28Xk #
• Just added a new event on ic knowledge center: International Doctoral Consortium on IC Management http://ning.it/9TzW16 #
• Who is responsible for intangibles in your business? Share you thoughts http://bit.ly/a6WbJT #

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Intangible Capital Reading List on Twitter for 2010-04-29

• B-Schools And D-Schools Should Listen To The Cultural Context of the SEC Lawsuit Against Goldman– http://bit.ly/ajXYMw /cc @feedly #
• Duperrin: A process approach to enterprise 2.0 http://bit.ly/aSg2EZ He quotes McAfee on process capital /cc @feedly #
• McAfee Intangible process capital is changing the way companies operate and…the way they compete. http://bit.ly/9ScnnP #
• Corporate Governance: Best practice reporting, January 2010 from PwC http://bit.ly/bUnsi4 /cc @feedly #
• Thx to cv harquail: Misleading Image for Army: New York Times, PowerPoint and Complexity Fail http://bit.ly/c6ZwOj /cc @feedly #
• IT=IC and everyone needs to be accountable – post from Paul Ritchie http://bit.ly/aAJSk2 /cc @feedly #
• New book on corporate reporting – One Report from Eccles and Krus http://bit.ly/dtSp5F /cc @feedly #
• Corporations using derivatives too. Makes sense but they should be transparent with their stakeholders about this. http://nyti.ms/c2VtEn #
• Are you an intangible capitalist? What is working for you? Share your thoughts http://bit.ly/aaqHxp #

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Intangible Capital Reading List on Twitter for 2010-04-28

• Google communicating with investors exclusively through its website. Enables a company to tell a more complete story http://bit.ly/8ZbZKI #
• Interested in moving intangible capital / intellectual capital into the biz mainstream? Submit an idea by May 7th http://bit.ly/9yKKgp #
• Are intangibles important to the success of your business? Please share your thoughts with our readers http://bit.ly/bFVTqV #

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Intangible Capital Reading List on Twitter for 2010-04-27

• The Economist on shareholder value http://bit.ly/9WjsAy See my comment on intangibles and the long term perspective http://bit.ly/devhEJ #
• Hay Group the silver bullet – intangible capital in post-deal situations http://bit.ly/bIT8f1 #
• Just added a new article to Smarter Companies: Intangible Capital: looking inside the black box http://bit.ly/aRb8Iu #

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The Role of the Intangibles Information Gap in the Financialization of US Corporations

The financialization of US corporations has been aided by the lack of information on intangibles (which make up 70% of total corporate value). Filling in the gap is a big part of the solution to the problem.
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Intangible Capital Reading List on Twitter for 2010-04-25

• US needs to be in the clean energy game. But not alone. US-China Clean Energy Research Center fits the bill http://bit.ly/bxV6iR #

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Intangible Capital Reading List on Twitter for 2010-04-24

• At the New School for conference on US corp in recovery and beyond. No internet access so will tweet some now and more later. #
• Ronil Hira: Fate of US workers is not a priority for US corporations. Visas used to export jobs, know how. US workers train their replacemt #
• Houseman: existing research definitively shows large and persistent adverse effects of layoffs on workers’ future employment and earnings. #
• Milberg: Profits from globalization and offshoring have been returned to the shareholders thru share buyback. Has not led to re-investment #
• Mandel: in 1998, US Bureau of Labor Statistics projected 2.8 million new jobs in coming decade. Actual: loss of 67,000. #
• Zysman: looks at the Algorithmic Revolution–the effect of rules-based IT tools. Another way of talking about structural capital. #
• Robert Monks: Skyrocketing CEO pay is a symptom. The problem is allocation of power within corporations #
• Monk played video comparing the two careers of Andrew Carnegie and Bill Gates–each had corporate and human careers. http://www.ragm.com #
• Lazonick:stock based compensation doesn’t just drive innovation, it also drives manipulation #
• Ray Carey: concept of democratic capitalism. Has center for this #
• Monks. If you want to change the system, stock grants should not be sold until five years after the person retires. #
• Diamond. Since NYSE IPO, bid-ask spreads have widened. Paper makes the case that institutional design matters. #
• Ferguson: derivatives are being used extensively by non-financial companies so there is no consensus for transparency and reform #
• Gomeroy: What’s good for American corporations is no longer what’s good for America as a nation #
• Panel feels derivatives should only be traded on open exchanges. #
• Diamond. One good way to gain transparency is to reduce 144a would require mandatory reporting. #
• Maryland new type of corporation called B-Corp that has legal obligation to reflect values of shareholders employees communities environmt #

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My comments at US Corporations in the Recovery & Beyond

The conference kicked off late yesterday. On our panel, we each made short introductory remarks and then had a great discussion.

The folks from Nypro had an amazing story to tell. Owned by the sixth largest ESOP in the country, the employees have had $300 million in wealth gain in the last 15 years. They combine ownership with complete financial transparency–an ESOP needs both to succeed. They feel that they have been successful in thinking long term.

Here are some of the thoughts that I covered in my remarks:
I was in a meeting with a client recently. The company is a division of a multi-national that sells a home healthcare product that more often than not, they install in their customers’ homes. A number of years ago, they outsourced their installation staff. In the years that I have known them, I’ve heard remarks about smelly, unattractive people showing up at people’s homes.

There’s a new guy in charge-used to be in manufacturing-that is changing how they think about these low-paid but very valuable people. Now everyone sees them the face of this company in the market.

So now they are giving them training on how to teach older people to feel comfortable with the service, handling objections when the customer is waffling on the service, on market development (to drop brochures to the super when they are in an apartment building),.

Bottom line, they are investing in these people and viewing them as an asset rather than an expense. And they are converting them into knowledge workers, empowered and enabled to think on their feet and create value for the company.

This isn’t that different from stories I have heard in manufacturing companies who have shifted how they see their production employees. These are stories on the ground how the shift to the knowledge era has changed work not just at the high tech, high end-it’s everywhere.

Today, 70% of the value of the average business comes from knowledge intangibles. Michael Mandel is here and he has written about this at a macroeconomic level. The same information gap that exists on a macro level also exists on a micro level.

But accounting, the markets and limitations of industrial-era management tools still in use all conspire against recognizing and leveraging this value.

70% of the value of companies is invisible to investors, managers and stakeholders. It has forced us to see companies as income statements rather than balance sheets.

A number of the other speakers here are addressing the issue of financialization of corporations. My perspective is that this financialization is a logical outcome of the short-term thinking that results from looking only at income statements.

But it’s actually very simple to address this once one admits it is a problem. Good work has been done for close to 20 years (mostly in Asia and Europe) to identify the sources of intangible value. They are:

• People (human capital)
• Relationships (relationship capital)
• Processes (structural capital)

Every company has a unique combination of people, process and relationships that work as a system to create value for its customers. This system is the “factory” of our era.

These factories are amazing. They are infinitely scalable. They are flexible and dynamic. And they can be a hotbed of innovation. —But only if they are understood as factories, as assets.

In the eye of an income statement, they are still expenses. And an expense mindset thinks outsourcing to improve this year’s earnings is the right solution.

If we cannot arm managers and investors with information about more than just today’s earnings, we will never achieve the level of innovation that we need to fuel the growth of our economy. Sustainable human resources practices are dependent on a longer-term viewpoint.

There are many academics in this audience. Many have not heard the IC perspective before. I look forward to more conversations today. I plan to Tweet if possible.

Intangible Capital Reading List on Twitter for 2010-04-23

• Just sat next to a wonderful older gentleman on the Acela to Boston. Reminded me of my dad. For once, I was sorry to be in the quiet car. #

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Intangible Capital Reading List on Twitter for 2010-04-22

• Just added a new discussion on ic knowledge center about new categories: IC Bibliography and IC Programs http://ning.it/bVyGZO #
• RT @Ruth999: ICAS research: firms with greater intellectual capital disclosures have lower cost of equity capital http://snipurl.com/vo1x3 #
• RT @Ruth999 RT@Competia Gary Hamel & #McKinsey launched this week-under the radar-1st open exchange 4 mgmt practices http://bit.ly/9u6lfg #

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