Organizations still stutter in their appreciating of where their true value resides. It resides in all their collective capitals.
So who is stepping up to the plate to get this nailed, buttoned down, once and for all clarified?
Recognizing where our true value resides is still a real organizational problem.
The real problem we have on most organizations is they lack the appreciation of what makes up their value, the real underlying wealth creating value, the one that truly ‘generates’. The tangible part is easier to appreciate (plant, land, material etc.) but is becoming a significantly declining part of the total sum of value of our organizations- sometimes it is only making up 30 percent.
It is our difficulties of understanding the intangibles as it is a very challenging task. Yet this has huge implications on the ‘health’ of the organizations we continue to invest in. Most organizations resort to “inferring” the value. This needs to change. The value today is in the interactions between the different components that make up our intangibles, out intellectual capital.
We are in need to identify what ‘drives’ organizations for gaining and sustaining real advantage, and showing why it has the potential for creating new wealth. This needs to be far more forwards looking; it needs to be more open and more transparent. The call is growing increasingly for a new valuation model. Static knowledge where we view financial numbers is just not good enough, we do need to understand the underlying dynamic capabilities that make-up the organization.
Conflicting signals of what makes up intellectual capital dominate still
The same old problem exists today that has plagued the concept of intellectual capital and its promotion. The community that has been arguing for this as a measuring of the real value of an organization remain divided, locked in their own interest and models; the conflicting nature of these different views has held intellectual capital back. Organization management will never invest the dedicated time and interest unless they see some level of coherence and understanding that can be translated into an actionable framework.
There have been many attempts but nothing has really changed our traditional reporting of financials with some (restricted) board discussions. Organizations are hiding under rocks, taking cover from the potential relentless sun that would force them to adapt if a community of practice came together and provided a definitive body of work that all could agree upon, it simply turns up the heat. We need to change this lack of organization focus by having a collective focus to offer.
We urgently require a common approach for measuring all our organizations capital.
Measuring often many intangibles is for many very uncomfortable territory, until the approach becomes ‘standard’. If those within the IC community continue to offer conflicting advice, organizations are very reluctant to commit.
Of course, many rile at the word standard so how about a common model or common approach?
Can the IC community come together and give them a clear model to work from? Please, or will it be eventually taken out of those existing hands, passed into the hands of a new, more business savvy group of individuals that can ‘piece together’ capitals in a way organizations will actually welcome and adopt.
To encourage acceptance you need clarity, a common understanding and approach, then the value potential begins to emerge with any adoption , because it offers clear language and common measurement instruments that organizations understand and can work with.
A growing imperative
It is a growing imperative to gain a common framework to measure the sums of all our capitals.Those that have spent many years keen to establish this, I'd suggest, or to be bolder, should find the ways and means to combine. In 2014 we need to "embrace", it is not premature to define a working model, it is the right time. Organizational adoption will remain stunted unless it 'believes' there is a good degree of certainty in what they will commit too, for investment and their learning. They need help, a common understanding that may not be perfect but sensible, practical and workable.