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I talk a lot about the knowledge era. I specialize in the measurement, management and monetization of knowledge intangibles. I wrote a book on intangible capital. So what I am about to say shouldn’t be that big a surprise to me but it kind of is….

Technology is not as important as it used to be.

If you think about it, technology and top-down industrial models still dominate our thinking. When we industrialized our economy, we industrialized everything from agriculture to education to government to manufacturing.

I have written before about how the shift from the industrial era is coming at a time when there are new constraints on our global economy. Externalities like energy use/mis-use, pollution, health are all represent (at the same time)nbsp; problems, opportunities and design constraints. The failure of the industrial model to address these new constraints and the potential of new models to address them is fueling the shift to the knowledge economy.

Of course, the shift has been driven by the rise of a new kind of technology: information technology and brain power.

In today’s Boston Globe, there is a great opinion piece that exemplifies what is going on.

World hunger is best treated with local growers and crops was written on the occasion of UN World Food Day on Sunday. It explains that the conversations about solutions to world hunger often go immediately to “ways to increase the food supply with purchased technologies”nbsp; that use chemicals and carbon-intensive solutions to food production.

This won’t be sustainable to improve the yields of the “half-billion small-farm families that still grow 70% of the world’s food.”

The alternative suggested is agro-ecological approaches that use local seeds, build healthy soil and conserve water. Finding the right approaches in individual communities solves the challenges of both hunger and greenhouse emissions (the article quotes GRAIN magazine’s estimate the agro-ecological approaches could offset as much as a third of global greenhouse gas emissions within 50 years).

Lest you think that this is only about the third world, read How the U.S. Curbs Farm Work. It's basically the same message.  That U.S. agricultural policies promote "industrialized and chemical intensive" production. And that

Ecologically based food systems should become the United State' overarching goal. Such a shift would invariably employ larger numbers of people while providing safer, more appealing jobs. It would also create safer, tastier, more nutritious food...

This kind of thinking is very disruptive to existing economic and business models. Many businesses will fail in the face of this thinking. But many more will prosper. Which one will you be?

And when will you start treating knowledge intangibles as the key infrastructure of your own business?

Winds of adversity? Do you embrace strategic serendipity? Do you master "effective surprises"? Find out at

http://bponline.amcham.gr/?p=1082

I stole this title from an article I read recently in Time. The article Street Smarts is about infrastructure. And why infrastructure changes need to be planned in a new way.

Just as we industrialized every corner of our economy in the industrial era, so too must we knowledgeize every corner in the knowledge era. Infrastructure is no exception.

What does that mean? It means that we have to re-think every challenge and find the most efficient solution. And remember that we have many new tools that we didn’t have before. Here are just a few of the examples cited in the Time article:

• Don’t build billion-dollar lock expansions in the Mississippi River when better scheduling and peak-hour pricing can solve most of the problem
• Don’t add new highways when telecommuting, carpools and mass transit can take cars off the road
• Don’t rebuild the Philadelphia sewer system when you can keep storm water out of the sewers through permeable roads, green roofs and rain gardens
• Don’t create an enormous national grid when you can add smart components to the existing grid
• Don’t rebuild the 4,000 structurally-deficient dams in the U.S. when you can remove them and create recreational habitats that fuel the economy.
• Here’s one that Time didn’t mention from here in Boston: Don’t disrupt the local economy for four years when you can rebuild the Fast14 bridges on eight summer weekends…

What’s different about these examples? Nothing and everything. The market usually opts for the smart solution. But many of our knee-jerk assumptions about solutions automatically default to the large-scale, top-down solutions so common in the industrial era.

Every one of the solutions above reflect new conditions, new thinking and new tools. They are all great illustrations of knowledgeization. And why we need to start paying attention to knowledge intangibles as the critical assets of this century.

Do you think the contractors for the Fast 14 were chosen because they have the right equipment? No, it’s because they have the right smarts.

The point we all keep making in the IC community is that we need the management tools and techniques to support the development of the right smarts.

As the wife of a baseball expert (and co-author with Michael of Beisbol) I known for years about Bill James, Sabermetrics and Michael Lewis’ book, Moneyball, that inspired the new movie starring Brad Pitt. So I was more than happy to head out on the opening weekend to see the movie.

What I didn’t expect was how much it felt to me like a parable about intangibles and innovation.

Here’s the Moneyball story: Baseball lends itself really well to statistical analysis because every move can be and is counted. If you’ve ever been to a baseball game, you’ve probably seen a fan in the stands keeping track of the progress of the game: each batter’s strikes, balls and hits. For a hit, there is an accounting of the fielding of the ball and the advancement of the runners.

These statistics have always been available through annual compilations and huge baseball encyclopedias. Fans of the game have pored over these stats for more than a hundred years.

What Bill James did was to take a look at all of these statistics and draw some revolutionary conclusions about what was important to the success of a team (such as on base percentage and runs created) In an interview in BusinessWeek about the movie, James said:

“My work is trying to figure out how to quantify something that has previously been regarded as intangible. It’s not to say that there aren’t true intangibles. People think that you start with the statistics, which was never true. You start with a question and you end up with a statistic.”

The movie shows how these statistics were resisted by those working in baseball organizations. There is a great scene where the protagonist, Billy Beane, manager of the Oakland A’s asks his scouts how the team can fill the holes left by some great players that had been lured away to higher budget teams. The A’s had (and still have) a budget that is a tiny fraction of teams like the NY Yankees.

The scouts offer wisdom such as a player not being worthwhile because he has an ugly girlfriend (and therefore, the scout supposes, low self esteem). Beane doesn’t buy it and keeps saying we can’t think like everyone else or with the money imbalance, we’ll lose. If ever there were a manager screaming for innovation, it was Beane. (And, by the way, the best innovations often comes from the tightest constraints)

Billy calls on the geeky analyst he has just hired, a Yale graduate with a PC and a lot of statistics about what really drove a team’s ability to win baseball games. Using his statistics, the analyst identified a number of players with low price tags who were overlooked and undervalued for one reason or another.

They put together a team that almost made it to the playoffs. On the basis of his incredible season, Beane was offered a job with the Red Sox, which he didn’t take. But the Sox did hire Bill James and others who helped guide the eventual victories in the World Series. (Here’s a good coda to the Beane story)

Here's the intangibles story: The word intangibles was used a number of times in the movie. (In fact, I stopped following the word “intangibles” on line a long time ago because over half of the references were to sports reporting.)

But here’s the thing: in sports as well as in business, “intangibles” tends to be a cop out.

And a dangerous one at that. If you believe that intangibles are behind success, then you are accepting that there is some magic to how things work.

If you believe that intangibles are behind success, then leaders are putting themselves in a special class as interpreters of this magic.

If you believe that intangibles are behind success, then your performance can’t be measured.

Those of us that are IC practitioners care to differ with this view of the world.

We believe that the “intangibles” are very real and understandable and measurable. Is there magic and luck in business and in life? Absolutely. But we are all doing ourselves a disservice if we attribute anything associated with intangibles to luck and magic.

The intangibles that drive business success today are knowledge assets. They are the competencies of your people, the shared knowledge with your partners and the knowledge that gets captured and put to work inside your organization. The shift to the knowledge era has shifted the importance of intangibles from a supporting to a leading role in your business.

Billy Beane was a catalyst to change the way baseball teams are managed. He did it by refusing to accept intangibles as a dark art but, rather, to push and probe to gain deeper insight into what was really happening.

Make intangibles real in your own organization. Change the way your business is managed. You may just end up changing much more than that.

Ken Jarboe, gave his presentation, on this ICKC platform on July 12th – ‘Intangible Assets as Sources of Increased Productivity and Enterprise Value‘ – A Personal Summary of the Conference – “New Building Blocks for Jobs and Economic Growth – May 16th-17th 2011 – sponsored by OECD, Athena Alliance, Kauffman, The Conference Board, McDonough School of Business of Georgetown University and the National Academics’.

In response to the Background paper for the conference session – “Emerging Measures for Strategic Management” and “Global Competition and Collaboration” I have posted my research report titled "How Intangible stimulates Economic Growth, Jobs Creation & Build Value Capital?" and the link is http://bit.ly/qbH2Fs

Thanks to Mary for organizing Intellectual Capital discussion. It has been a fruitful association that I am able to present my analysis : Measuring Hidden Values and Deriving the formula:

Intangible Value Capital
=
(Intellectual Value Capital + Emotional
Value Capital) ÷ 2

I should appreciate members of ICKC to have a look at the same and I welcome your comments.

Thanks you

Jayaraman Rajah Iyer

Dear ICKC member

I signal you that the finance Franch website Easy Bourse has recently dedicated great attention to the theme of the intangible assets realizing  a lot of interviews to professionals to which I have also participated and you can find my interview to the following link. I hope can be of your interest and are ery appreciate your comments.

Best regards. Andrea Gasperini

https://www.easybourse.com/bourse/communication/dossier/19467/immateriel-et-extra-financier-quels-enjeux-.html

It is necessary that the enterprises start a more transparent communication of the intangible assets and the financial analysts and investors adopt evolved methods to the evaluation

https://www.easybourse.com/bourse/international/interview/2341/andrea-gasperini-effas.html

Intangible Connecting the Dots – .gov, .com, .edu, .. Intellectual Capital of The state of Israel – Case Study by IBCM

I am pleased to release this Research Paper from IBCM a Case Study on Intellectual Capital of The State of Israel. The State of Israel has done exceptionally well in Human Resources utilization for the growth and achievements, that are many, of the country. Countries like India that waste Agricultural Produce in millions of tonnes while millions are languishing in utter poverty and die of hunger, must learn how to use the resources entrusted to their care. In India Human Capital is deliberately undermined with religious animosity fanned to inflame hatred and violence, as a State Policy.   At the same time corruption has gone beyond one’s reach of control, again perpetrators running or rather ruining the country. Connecting the Dots – .gov, .edu, .com, .relg, .pol to .ppl is the need of the hour for every country. That is why this Case Study on Israel’s capabilities is a must-read and follow for all countries in the world, particularly USA that has squandered all the riches with very poor management of Human Resources. This Case Study is available for download at: Israel_IC-Measurement_IBCM.pdf http://bit.ly/oBDuIX The Case Study has reference to link the Intellectual Capital of The State of Israel 60 Years of Achievements that is available at this link. http://bit.ly/lIO8Zx

Your comments are welcome.

Thanks

Jayaraman Rajah Iyer

Thanks Edna:

 Let me take the opportunity to let you know briefly on my theory of Intangible and the use of it in Company, Micro-macro level analysis and measurement of IC and related areas of interest to you.

1. Intangible Asset:

In the context of Intangible Asset, IAS 38 Accounting Standards defines it as: "An identifiable non-monetary asset without physical substance." This possibly might have been the root cause of the financial meltdown of 2008, for it has a long history beginning with the Exposure Draft E 50 in 1995 that ended up as IAS 38 Intangible Assets in 1998, to replace IAS 9 R&D - Capitalization of Development Costs of 1977. There was a considerable pressure from the industry to include various non-monetary assets inside the Balance Sheet in early 80's when companies, such as Grand Metropolitan and Rank Hovis McDougall, decided in 1988 to include the value of brand names, either purchased or internally developed, in their consolidated Balance Sheets. Ultimately IAS 38 was released, as is the norm of every such standards by defining each and every word like asset etc. but without defining the word 'Intangible', part of the Title to boot. Intangible Asset remains an oxymoron, intangible - meaning everlasting and asset - meaning a definite life.

2. Defining Intangible - by understanding Substance: The Quality of a substance cannot be separated from it, nor the work associated with it."

It becomes imperative to place where this intangible exists, or for that matter non-exists, in relation to matter.

Every substance has got two characteristics. Quality and the work associated with it. Together it is a single indivisible unit, be it a plant, human being, a stone or a diamond. It has two processes - Creative Process and Action Process. Every substance has an identical creative process be it an IP or a child. Every substance once created has the most unique Action process that is identifiable by its DNA. One substance joins hands with another during the action process for a task accomplishment, yet retaining its independence of each other always, and in turn creates infinite succession of finite purposes being accomplished.

The process of creating a substance is identical - be it a child or a document - Constitution or Standards or an IP, sentient as well insentient objects. It may be 9 months for a child, five years for standards, ten years for a patent or thousands of years for a diamond to be called as a substance. The stages of development are same - from a state of quiescence to conceptual to communication to formation to formulation to emerge as a substance.

The one that takes or creates itself to the next step is same in every substance. A matter is the one that takes up space and has mass. When antimatter collides with matter the mass is converted into pure energy. Collision is an important aspect of turning the mass into energy. In case of natural substance that energy flows continuously whereas in case of others mass remains at the mercy of human intelligence to collide. That antimatter responsible for creating energy is intangible which remains same for every substance.

3. This uniformity provides the basis of measurement and at the same time becomes a comparative tool. I have published a book on this called Inactivity Based Cost Management, where inactivity is directly related to the absence of energy during the creative process as well the action process, that makes the process inactive. Identifying the inactive area provides the basis for study of cost consequence.

4. Mary Adams pointed out one interesting project called "Quick fix for I-93 bridges begins" http://bo.st/mSa20D. This is a project where substance is available and the action process is on, with intangible the element behind execution at its best. "The I-93 bridge replacement is drawing national attention for its ambitious timetable and use of precast elements, including hundreds of 60- and 80-foot-long blocks of concrete and steel fabricated in New Jersey and hauled in by flatbed truck, each section weighing 80,000 to 100,000 pounds." This could be a good case-study on intangible.

5. The essence of Governance is at observance of energy flow. Illustratively, a passenger in an aircraft is provided with the video display of the real-time information on the flight path, a map covering the route, the position on dot, altitude, cruising speed, distance to destination, time from origination point and time to reach the destination. The passenger is given the assurance on the Governance aspects of the flight thereby giving a level of confidence while flying. When the captain announces the likely turbulence the passenger willingly clicks the safety belt without any murmur. - Our Governance reporting system is as archaic as reporting of Hercules marathon race to the people of Greece.

6. Substance becomes the basis of recognition of the happenings of any event. Without it, disaster is bound to occur. For example: the conversation between, Alan Greenspan and Robert Gnaizda [Former Director Greenlining Institute] , from Inside Job: : "We gave him an example of Countrywide, and 150 different complex adjustable-rate mortgages. And he said: If you had a doctorate in math, you wouldn't be able to understand them enough to know which was good for you and which wasn't. So we thought he was gonna take action. But, as the conversation continued, it was clear he was stuck with his ideology. We met again with Greenspan in '05. Often we met with him twice a year, and never less than once a year. And he wouldn't change his mind." Derivatives and CDOs were acted upon before creating a substance. The end result we all know.

7. Currently I am working on connecting the dots .Gov, .Com, .Org, .Agri, .Edu, .Relg to .Ppl with a common yardstick - Intangible. There are three criteria set for an effective Governance, i. Real-time monitoring, ii. Cost Consequence and iii. People Participation, which is made feasible by a uniform measurement that makes intangible indeed unique.

8. I have objection to GRI - Global Reporting System that has done the opposite of what they intended to do by diversified reporting. This is the major problem one comes across because of the limitation set by a Balance Sheet that indeed restricts viewing of operational efficiency by a single dimension - finance. Intangible breaks that barrier and provides an analysis & measurement of every substance jointly and severally. The entire Balance Sheet of the earth can come under Intangible and not the other way as it is made out.

9. SAP analysis done on the basis of Intangible measurement is available at http://bit.ly/lUyQS5 for download, that can give a view of intangible in action for a uniform study for all companies.

Thanks to Mary Adams for her initiatives in connecting the dots. Love to hear from you further on this. I found a restriction of 2000 characters for posting as a reply at ICKC and hence sending it as an email. This ca be disclosed to any of ICKC members.

Thanks and regards,

Just catching up from the New Building Blocks for Jobs and Economic
Growth conference in DC. I posted pretty actively on Twitter (or as Bernanke called it Tweeter) during the public sessions
and then helped lead one of the four key working sessions (more on that in my
next post).

We were thrilled to have Ben Bernanke as the keynote to open the conference. The core of his speech was about the importance of government support in research, a safe but important topic when talking about intangibles.

But more important to me were the comments he used to introduce and summarize his remarks. Here?s how he explained the growing importance of intangibles:

The topics you will address today and tomorrow, bearing on innovation and intangible capital, are central to understanding how we can best promote robust economic growth in the long run?recent research has highlighted the important role played by intangible capital, such as the knowledge embodied in the workforce, business plans and practices, and brand names. This research suggests that technological progress and the accumulation of intangible capital have together accounted for well over half of the increase in output per hour in the United States during the past several decades.

Innovation has not only led to new products and more-efficient production methods, but it has also induced dramatic changes in how businesses are organized and managed, highlighting the connections between new ideas and methods and the organizational structure needed to implement them.

In his closing he added:

We should also keep in mind that funding R&D activity is only part of what the government can do to foster innovation. As I noted, ensuring a sufficient supply of individuals with science and engineering skills is important for promoting innovation, and this need raises questions about education policy as well as immigration policy. Other key policy issues include the definition and enforcement of intellectual property rights and the setting of technical standards. Finally, as someone who spends a lot of time monitoring the economy, let me put in a plug for more work on finding better ways to measure innovation, R&D activity, and intangible capital. We will be more likely to promote innovative activity if we are able to measure it more  effectively and document its role in economic growth.

I added the bold type on the last statement. It?s simple and direct. It?s the essence of the value proposition for all of us in the intangibles field. We are more likely to successfully promote performance, innovation and growth if we can measure and document the role of intangibles. Read the speech. See the speech. To measure the effectiveness of your own organization?s intangibles, check out our IC Value Drivers assessment.

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Hi Guys, When I saw there was a posting on a newly published Human Capital Handbook I thought "Wow! The world is paying attention after all!" I was thinking, of course, that the post referred to:

The Oxford Handbook of Human Capital

Ah well. But in spite of discovering that you meant something else, I'm glad to find out about YOUR handbook - which I look forward to looking through.

Regards, JCS

Check Link http://bponline.amcham.gr/?p=703

Commentary most welcome!



I’m new to this community, so go easy on me! But I thought I’d share something first, to see what others thought of it, but also as way of showing what interests me most, which is the steadily growing realisation that it’s in the interests of society as a whole that financial masters and their business slaves learn a new shared language, that being human capital.

The Human Capital Handbook - you can download it , for free, here http://www.humancapitalhandbook.com/ - has only been out a month or so – limited release, as it’s a first edition too. 10 authors, business leaders, HR, academics, regulators, investors. Themes: human capital measurement, management and reporting. Hopefully some of you will have heard of these folks, and will find something new or interesting here.

This is the widest community I think I’ve opened it up to. 

Your feedback, good or bad, would be very welcome.

"There should not be an education marketplace, there should not be competition," Ravitch says. "Schools operate fundamentally ? or should operate ? like families. The fundamental principle by which education proceeds is collaboration. Teachers are supposed to share what works; schools are supposed to get together and talk about what's [been successful] for them. They're not supposed to hide their trade secrets and have a survival of the fittest competition with the school down the block."

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the military?s first ?smart power? command. It has no assigned troops and no headquarters in Africa itself, and one of its two top deputies is a seasoned American diplomat?. is intended largely to train and assist the armed forces of 53 African nations and to work with the State Department and other American agencies to strengthen social, political and economic programs in the region, including improving H.I.V. awareness in African militaries and removing land mines.

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How's this for making intangibles tangible? This photo shows me sharing the summary graphs from two IC Value Driver Reports that we recently completed:



The photo was taken earlier this week at the Exit Planning Exchange Summit 2011.  The twist was that the legend for the graphs was hidden by a red pattern that could be filtered out with special glasses.

Everyone at XPX advises private companies and their owners on building and realizing value. OK, so I was nervous about trying this out in this very professional group. But it turned out to be a lot of fun!

The glasses were a great way to engage these professionals in conversations about the fact that 80% of the value of the average company is intangible -- but hardly anyone  actually makes the drivers behind this huge value, well, tangible.

Here is one of the handouts we were viewing:



Don't have red glasses? Want to know more? Check out the slides at www.icvaluedrivers.com and click contact us!

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Recently I have been addressing the issues of Corporate Sustainability Leadership and have posted a few blogs in my site. I should appreciate your comments:

1. This is my comment submitted on the Article: CSR 2.0 Competitive Advantage for the Future, by Alberto Andreu Pinillos, Global Director of Reputation, CSR, Brand and Sustainability, Telefnica SA. Corporate Social Responsibility CSR 2.0 http://wp.me/p18MVb-85. My views critically look at the CSR direction proposed by Andreu. His article is also made available in the site.

2. Aman Singh Das of VaultCSR had summed up the 11 challenges to Corporate, consequent to a breakfast hosted by the Global Reporting Initiative (GRI) and NYSE Euronext where the Conference Board's David Vidal asked an insightful question: What are the top three reasons for your company's reluctance to embrace sustainability? My comment and analysis is titled: Measuring Corporate Sustainability Leadership http://wp.me/p18MVb-8Y VaultCSR's reference is also available in my blog.

3. Corporate Sustainability Leadership needs a definition that is missing hitherto. Corporate Governance, Business Ethics, CSR and Corporate Sustainability Leadership are all terms that have been coined without clarity and acceptability globally. This article, that is culled from ICKC's discussion earlier, analyzes the - Subtle and Gross of Corporate Sustainability Leadership http://wp.me/p18MVb-9e

4. Again Aman Singh Das of VaultCSR had nicely summed up the dilemma CSR Executives had brought out in a recent Financial Times' annual conference, Investing in a Sustainable Future, on how CSR executives can leverage their work internally and externally. My comments on Rankings, RoI & #CSR Function - Response to 3 Challenges for CSR Executives - of Vault.com is at http://wp.me/p18MVb-9x. Return on Intangible is one of the topics that would interest ICKC members. The positioning of CSR executives within Corporate structure will be of considerable consequence in years to come by, with employment potential of professionals to a large extent that would attract ICKC members' attention. CR 100 Best 2010 & 2011 list is critically looked at and solution offered.

I would greatly appreciate ICKC members' comments on these subjects. Basically Business Ethics, Corporate Governance, Corporate Social Responsibility and Corporate Sustainability Leadership are all intangible or in the parlance of Balance Sheet Intangible Asset that these 4 issue areas covered provide the foundation for management thinking. In my analysis of UNGC 10 Principles and UNCAC vis-a-vis CSR &  Corporate Sustainability Leadership there seems to be a lack of cohesion and attention from Universities. I call upon ICKC members to influence the universities to institute research & curriculum as a major subject of academic dissertation.

I have begun my work on my next book covering these areas on Measuring Corporate Sustainability Leadership by 10 Principles of UNGC. ICKC members are welcome to give their suggestions. As always Mary Adam bubbles with enthusiasm encouraging these discussions, that I am indeed grateful for her initiatives of ICKC. Thanks

Jayaraman Rajah Iyer

@mickki There are 2 groups present: those who want to expand their financial empire, and those who want to change finance completely

Just like translating a steer into pounds of beef breaks the system integrity of having a cow.  If you translate all your measures into pounds of beef and are only managing in those terms, you can't manage the wholeness of a cow.  We need value metrics appropriate to the level where the value resides in order to properly interact with that value.

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