I have been challenging myself to find ways to bring the richness of the intellectual/intangible capital field to the integrated thinking and reporting movement. 

The three papers shared here are the product of that thinking. We're on a journey together. I hope to hear your feedback and ideas on we all go from here.  

Part 1 reviews the data on the role of intangibles in corporate investments and valuation. Then it examines intangibles in the context of the multi-capital model from the IIRC. It ends up suggesting that all the capitals can and should be examined from three perspectives: accounting, internalities and externalities.  Read it now   

Part 2 builds on the data 10468398262?profile=originaland frameworks in Part 1, providing a four-step process to creating, managing and communicating using a multi-capital model. Examples are included from XPX, a network of business advisors, as well from as public company reporting. It ends with a review of the benefits beyond reporting of this kind of integrated approach. Read it now


This paper is i-capex _ intangible capital expenditurean excerpt from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization being re-released for readers from the integrated reporting movement. Read it now 
What do you think? I look forward to your comments!
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  • Hello Mary! I can understand the meal...My pleasure. Yes, Amazon, Apple, Netflix, Starbucks, etc...Not system thinking but human biology system. How human being works, from the chemistry of the brain to chemistry of outcomes.

    These are good questions and would deserve a talk on skype or the phone. Paul druckman said that the accounting profession is in disruption and being replace with robots. He was on a panel with a few other distinguished accountants and all asked for we need new skills to get back in life and be relevant again. They were more looking like people in a cemetery than else!

    These are not critiques, these are points based on evidence to start a real conversation. The integrated concept from Roger Martin was a questionable thinking to solve a complex issue. Today, you can't align people anymore, you have to look for harmony. Art of War. 

    In the design that i have done, there is no change to what a balance sheet looks like and the P/L. Just adding a humanistic dimension. The essence of strategy is about differentiation. Financial Statements are only about financial differeniation. This was good enough until the human side, social emtional took over and you know the reverse in terms of market value creation betwen 1975 versus today. So, if the art of war to make good decision is about understanding differentiation, what are the differences, how they matter, the impact  and what does it means to the numbers. Nobody is watching black and white tv anymore. More and more are watching 3D tv. What are the accountants doing to shift to 3D color tv? Relationships are good to know, but only if they help understanding what matters the most to make choices about what to do and what not to do.

    I have developed a pretty good causal model. It started from some of the same original documents that the IRRC used, what people want,but took a white piece of paper to design it, leveraging the little that I know in the process from past experience, good ones, bad ones, and meeting thousands of people in doing so.

    It is a very simple (not simpler)  model, because it makes everything simple. It could even be audited down the road. 

    No, i did not go from any model, because i did not want to be stuck in a box. I initally started with preconcive ideas and trying to integrate things and nothing worked. There was no magic!

    Like I said, humain biology chain, what triggers the brain to do things, or not, throughout and when you go from this, leadership, strategy, culture, operation and reporting, everything beomes clear, not matter from where you look at it.

    Then, when this base is on, all the other models, the capitals, the VDmBee, etc...they become relevant because they are forward focus to make a difference that matters. It opens the silos, new common language, new common informational navigation framekork system, like in an airplane, at first, and potentially, like the new global 2020 world air traffic control system. It's simple, fun, sustainable and helps, like airplanes can fly, e veryone to create their differentiation, being more unique, as opposed to copy or imitate their competition. 

    I would suggest that we talk on Skype and explore the reality, the opportunity together if you are up for an itinial dialogue? in comlex system, the initial steps are critical. 

    Have a great day,


  • Hi Jean - I have been digesting your great comments. Thank you for taking the time to share. I understand your critiques but where does that leave us? I understand you to say that some of the largest companies have data models that support systems thinking.  What do they look like? How do we help mainstream businesses begin the journey to this kind of thinking?

    For me, the integrated model makes sense but maybe that's because of my financial background. I like being able to see a balance sheet (in a figurative if not a GAAP sense) that explains the resources and relationships a company has developed. Then it's easier to talk about how the pieces are connected, how they combine as part of a value creation system.  

    I think that we are a long way from a definitive causal model because we haven't learned to think this way and looked at enough companies through these lenses yet. I looked at your website but didn't see E2E there. I found Thinkway's E2E model (is this what you were referring to?). It looks like it's focused on value chains, not entire companies. But I like the approach. 

    I see your comments as a call for a business causal model. How do we get started?

  • Dear Mary, 

    Sorry, one last thought. To expand a bit on my logic with respect to VDMBe, what Christensen, the IRRC, etc, are saying in a complex system environment. (Based on chaos and complex systems theory and understanding)

    Because there is no business model causal model, no common language, no framework, connecting the pieces together, from the begining to the end, it means that the efforts, what people really do, as you said below,  as no real coherence to real value creation. 

    Paul Druckman in one of his recent talk, was trying to use statistics, that he said himself, he could not understand, but there was a Tobin's Q factor by statisticiens that showed some correlation betwen better reporter and market valuation. 

    He also added, it does not mean that better reporting makes you a better business, but what is clear from his standpoint, is that a better business is a better reporter. So, my goal from the get go was about creating this better business. 

    So, the VDMBee, the IRRC, the business model not relying on clear causal evidence of a model that works, may cause the inverse impact of what it intented to do in the first place. In complex systems, when you miss the boat, the effects don't add up, they (X exponentailly) multiply. A simple change in the initial system conditions, makes you a hero or zero. Just see the United Airlines recent story. The problem with people doing real things not really knowing, jumping over the unerstanding as Paul Druckman did in his own Integrated Report , means you don't really know, can't really connect if what you do is really making a difference as opposed to compliance.

    So, the simple digitalization of templates that looks cute, as per my conversation with Theo, etc... is not a real solution and could cause some harms. A kind of double edge sword. You have to make sure that you know which side is which.

    So, my humble researches/work, have been since the begining on understanding what could be this basic common denomitor value creation framework that brings confidence, coherence and trust while each and every action, what peolple do is making a purposeful beneficial coherence difference.

    Mary, you must be aware that based on Gallup, 87% of workers worlwide are not highly engaged at work. They can't connect their work to something, only connecting to please their bosses or to get their bonuses...That is the biggest waste and is socially unsustainable in today's world. We need to put people back to work and have fun and all the space, the energy used to go to work and back home, the air conditioning, the food, etc.. that these people consume is just the biggest waste on earth.

    Mary, sorry for all this reading, have a great week-end,


  • Dear Mary, one more thing, to be clear!

    It's a system,  a forward looking human X financial adaptive system that becomes an organsation dynamic learning capability that allow, multi-level, to make choices about what to do and what not to do, knowing better first the impact, how it will make a difference and the potential amplitude, make a unique difference, and creating then articulated financial X human value and market value. The underpinning data model is dynamic, allowing the magic again in the organisation, instead of closed loop static data model. 

    Companies like Apple, Netflix, Amazon, are using some similar data models in their businesses. They are not connecting this to market value creation, or financial, because they don't need to. But I think enabling theis, this would help companies to get a stronger hands on the 80% of air that they know nothing about. 

    I think, for putting a purpose again on the accounting profession, it needs to do that, and it can, it's simple, it's fun and returing the been couter in a trutsed advisor role...

    My humble thoughts,


  • Dear Mary, thank you for your comment. 

    I am not there to criticisz your work or any work done. More dialogue, the better. I bought your book a few years ago and I found it very interesting. So, please don't get me wrong. :)

    Paul Druckman said in an exit interview that he has an issue with the word, "integrated", he said it is a non sense term. He also said that himself as head of the IRRC he had problems to put his own IR report together. They were pretty good to put all the activities in boxes, but then, said, ok, how have we created value? How has this really made a difference? He also said, the accounting profession was in soul searching because it has lost its place and its relevance in the whole new economic system. He then said in another conference a month prior, what is the relevance of US GAAPs, etc... to value creation in the short, mid and long term...What on earth are we doing as a profession? What does it really mean?

    The E2E Value creation solution is about creating first the underpining organisational  chemistry to get to know better first, where value is, is not, why, why not, what, what not, where, where not , when, when not. Undrstanding those value creation and non value creation, plus potential value creative ideas, things we don't do, but could... gaps from from amulti-stakeholders point of view. Interwine these new knowledge that can be seen into the financials, so everyone can understand the risk and opportunities of doing something or not, presenting a new value creation layer. 

    We can't not manage what we don't measure. We need to connect or add, all kinds of word done now, that is simply most of the time not connected properly to the financial information system, or start to measure it. A basic information architecture that fits the new world we live in, that could be easiliy done, that facilitate the new world of corporate governance. 

    Up-front Knowing, feeds wisdom into operation, innovation, drving performance, everyone can see and know why, feel, connect, to the purpose of their work to outcomes. Being coherent, helps the organisation create human momentum, generate relevant ideas about what people want, and create market value. 

    Connecting the dots, up-front with wisdom, build speed in what people learn and do. So, to do the right things, you need to know the right things to do.

    As per Paul Druckman, we can't like typical CFOs, get to the PL and BS and say, and the reporting, and say, ok, what value have we created...This value creation knowledge has to be up-front. It means the PL becomes more intelligent, and the BS becomes more intelligent. 

    Value creation accounting, like the cost accounting was invented. Helping the organisation win, do what matters, where the business is sustainable, not wasting human resources, first, and all the other capital that you talk about are looked after, emerging from knowing forward.

    Yes, the VDM, could have some value, and VDMBee, but collective knowing first so everyone can see, feel, understand, a single source of thruth, and connect their actions, to outcomes, that everyone could see.

    In simple words, if you watch unfolding the Ford story, something the past CEO could have used to drive Ford forward, instead of needing to change, hoping the new CEO will do better. 

    It's a simple reframing, that would bring the magic again in accounting, value creation, judgement, and everyone would just love it!

    What do you think? Have a great week-end,


  • I agree with you on one level--reality is complex and we'd like to see the true social connections. 

    On the other hand, to make a difference in business today, we have to connect these ideas to what people really do. Those interested in the integrated model include finance, sustainability, corporate reporting and executive management. How can they all understand how the pieces fit together? I've been using the capitals (not the headings, real inventories) for close to ten years and have made simple models of inter-connectivity. From my perspective VDM is the next step.

    What would an E2E solution look like?


  • Mary, that is great! Yes, he has not a high opnion of finance!  That is for sure! I tend to agree with him on many points, not on some others.

    I had conversation with his entourage too, because the busines model that he suggests is not better, and could even part of the issue. 

    With repsect to VDM \Bee, I had numerous conversations with them. The real solution requires a real enterprise E2E applcation, with an underpining value creation framework ( a simple recipe, not just headings), creating organisational chemistry...more than an application for the few. In a social world, the solution has to be more social, not just a nice tool for some intellectual in the strategic department.

    What do you think?

  • Jean - I'm not surprised that Clay Christensen took this position--his work makes it clear that few companies achieve ambidexterity. I spoke briefly with him once about the multi--capital model when he was talking about the failure of finance but never was able to continue the conversation. The causal framework is the journey that many of us are one. 

    While I agree that VDM and Allee's value networks can be mechanistic, I do think it's a valid exercise. To show causality, we have to create a model of some sort. What's the alternative?  

  • Mary, Clay Christensen mentioned in a recent MIT/Harvard webinar that ambidexterity was not a solution to disruption. To really solve the disruption/business model innovation dilemma, he mentioned that a clear connected causal mechanism model/framework must be put in place first, to understand what really causes businesses to fly  and create value as opposed to land on a cathedral. 

    He also mentioned that there was no such a good theory in place despite all the work done by academics and consultants. Most are trying to use what others are doing, best practices, but nothing on a causal model. He also mentioned that it was not principally the attributes of the innovator that drive success or failure, but rather the nature of the innovation being attempted. 

    The VDMBee models are too much a mechanical digitalisation of boxes/check list processes to value creation where people could forget really what matters the most, what is that makes a difference, why, why not, where, where not, when, when not, what, what not who, who not.  and it is hard to connect to real human, market value creation. 

  • Thanks for your thoughts Bill - I like the idea of ambidexterity. It gets to the heart of the dilemma of optimization of existing systems versus creation of new ones.

    My first thought on the intersection with the integrated model is the concept of VDML (value delivery modelling language) that I mention in both Part 1 and 2. The idea would be to create different models of how the capitals are put to work for different goals. Here's how VDMBee incorporates the capitals in their platform. In their language, innovation would be a distinct value proposition.  

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