Intangibles Measurement V: Reputation is the New Bottom Line

There are huge challenges all over our economy–in health care, in transportation, in agriculture, in energy production, in education, and on and on. These challenges will not be resolved by resorting to industrial era answers. To solve today’s problems, we need to build our national skills base for intangibles management.

Which is a great segue to reputation, the last in my intangibles measurement series. The general reputation of business gets talked about a fair amount these days. As does the importance of reputation to individual companies. Today, the speed of communication makes it hard to hide even small mistakes. And sometimes small mistakes get blown out of proportion. The easy answer is to blame the media. There are two other answers that cannot be ignored. Read more

Intangibles Measurement IV: Indicators and Performance Management

Here’s the next post in my intangibles measurement series. The last two posts have provided details on investment and assessment. This time, I am going to talk about the third kind of data: indicators.

Indicators and performance management are the most widely used forms of intangibles management today. This approach arose in direct response to the limitations of financial data in understanding the knowledge era business. Common approaches build a dashboard to show key performance indicators (KPI’s) of the company’s operations. Sometimes the dashboard is associated with a balance scorecard as well.

The idea is to identify data points that are leading indicators of strategic success and track them closely. Read more

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. Read more

Intangibles Measurement II: Investment

Here’s the next installment in my intangibles measurement series. I always warn folks that this the most radical of the three types of intangible measurement, although it shouldn’t be.

Today, any money you spend on building intangibles gets expensed. Even if you are investing money to build something you expect your company to use for many years to come. This means that most of the money spent on developing internal knowledge systems, operational processes and even relationships with key partners is treated as a direct operating expense on the income statement in the year that you make the investment.

There are a lot of valid accounting reasons why this is the case. I’m not out to change accounting. But I  focus on helping companies make better decisions to grow and improve performance. And the secret to that, except when my clients are buying a new machine (which isn’t that common), is to invest in intangibles like process, IP, people and networks.

So here’s my radical proposal: keep track of how much you are investing in intangibles every year. Read more

Intangibles Measurement

I just took a quick break from my vacation week to participate in the IAFS monthly conversation about intangibles. Here’s the presentation I made on Intangible Asset Performance and Financial Results.

It builds on the recent video we posted that shows how to model the intangible factory. Read more