Background
As we have moved away from the Industrial Era, the most important infrastructure of organizations is no longer built of tangible assets like machinery and factories. Today, it’s the knowledge infrastructure of the organization that drives its ability to innovate, generate revenues, profits and superior valuations. Corporations everywhere spend significant sums each year to build and enhance this knowledge infrastructure.
However, traditional accounting treats the extensive investments in this knowledge infrastructure as current year expenses. Thus, the accumulated investment by corporations in developing data, processes, designs, intellectual property, networks and work forces is invisible on today’s balance sheets. The consequence of this is that the tangible net worth on the balance sheet of the average company explains just 20% of it corporate value.
There are many good reasons why intangibles are not on the balance sheet. And it is unlikely that they will be any time soon. But companies can’t afford to ignore these knowledge intangibles. At Smarter-Companies we believe that the best solution is to develop ICounting as a complement to traditional Accounting.
ICounting Defined
So what do we mean when we talk about ICounting? It’s a new discipline that is being developed through an open process that helps empower teams to discover, inventory and measure the unique intangibles of their organization.
The basic approach of ICounting is not that different from Accounting. The steps are to:
- Identify and inventory key assets
- Create a consolidated presentation
- Measure operations
- Use the information to:
- Make better decisions
- Communicate more effectively with stakeholders
The big difference is that we focus on the intangible capital that forms the knowledge infrastructure of the modern organization.
Join Us!
This approach is still in its early stages but is already very powerful. We invite you to try out our open source tools and join the conversation here on the Smarter-Companies site.
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