One of the very basic tenets of accounting is that you only show as assets those things that you own. It’s completely obvious and sensible. That tenet will never change. Nor should it.
But this is one of the tenets that makes it hard to rely on accounting alone to understand how organizations work in today’s world. Because what defines a company or an organization today is not really what you own. It’s about what you attract. Can you attract the right people, the right partners, the right customers to collaborate and contribute to your mission and your business model? Will these people contribute their ideas and knowledge to support that mission? Are they engaged and do they trust you enough to share their best ideas? Will they help you build a better organization going into the future?
These relationships are assets but not the kind you own. That’s where ICounting comes in. ICounting identifies the key assets (both owned and volunteered) that an organization can count on to fulfill its mission. How does an ICountant know that an intangible is an asset that the organization can count on? By measuring them in the right way—going right to the source and asking the stakeholders themselves. If you identify all the key intangible capital assets connected to an organization and if the stakeholders say that those assets are a positive contribution to meeting their needs, then you have one of the best measures you can get. Stakeholder satisfaction today tells you much more about next year’s profits than last year’s profits do.
Figure out all the intangibles you need to keep your stakeholders satisfied and you’ll have the best kind of asset inventory. You’ll understand which assets are driving your results.
For more on this idea, check out our new paper, Do You Know Which Intangibles Drive Your Organization’s Results?
Comments