In my experience accountants and IC practitioners are disconnected. Most accountants don't understand IC and many IC practitioners (especially those who call themselves KM practitioners) don't understand accounting. Those who understand both try to account for intangibles. On the other hand, a few practitioners, like me, believe we should concentrate on mobilising intangible resources (including knowledge) to create utility, social and monetary value (it's not all about money). It then becomes a matter of adapting and linking the system for measuring IC to how you are mobilising IC. If, for example, the goal is to create monetary value, then you can create a system converting the cost of mobilising IC into cost savings and or revenue. The key: mobilising IC first and measuring IC after.

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John- Do you have any stories to illustrate your idea? Mary
John I could not agree with you more. The key value in IC is in how it is used to create, extract and release value in real life situations. My years of experience with Dow Chemical and subsequent years of experience working with companies and organisations coaching them on how to work with the mix of tangible assets, structural knowledge capital, intellectual property and people skills holistically and in line with the business process in order to deliver value teaches this time and time again. I have many stories but, as you can guess, most are client confidential. My position is therefore very clear: let's get IC working to improve people's lives first and afterwards we can worry about accounting for it. As my good friend Gordon Petrash once said "First visualise it, then measure it, then manage it for value" and I add "and later let us worry about accounting for it!" 

In my opinion this discussion is in parts an academic or a philosophic discussion because you need both aspects, the mobilisation an the accounting of intangible assets. It also depends on the company its leaders and the situation of the company. Normaly you have a mix of the different management elements. There are some companies were you do not need to start with an explanation of the value of intangibles. In this companies the key persons have an good idea of the advantages of managed intangibles. This kind of persons need help in improving the way of management of intangibles.

But there is also a second kind of leaders. They are more focused on the monetary aspects. If you can show them the value of an good intangible management system or the risks of not managing their core values, they also can be convinced to establish an intangible management system.

In both situations or in both aproaches you have to make the intangibles visible the manage or to account them. I think that there are different modules of an intangible management and accounting systems. After a first analysis of the situation of the company an its needs, you have to choose the right IC modules to start with.

 

In my opinion intangible management has also something to do with sustainability and with fitness in a complex dynamic world. To establish the ability to survive in today's business world it is also necessary to have enough monetary resources. Therefor intangible management has also an strong connection to monetary resources. If the intangible management does not have an effect on risk reduction, efficency or monetary results, you have to question your management system.

 

As long as most parts of the economic world things in monetary elements we should show the advantages of intangible management for the monetary results. In addition I belive that there are also a lot of intangible management elements which need to be evaluated in terms of money to question if there is some kind of value and to avoid stupid solutions in the name of intangible management.

 

 

 

Claus - I agree with you. We need both but we cannot ignore the link with financial results. I think that this failure to link IC with financials is one of the things holding our field back. One area that I especially hope we get to eventually is the view of spending to build intangibles capacity as an "i-capex" investment--I believe that this is one way that we could get awareness of how large and important IC has become for most organizations.
Claus you have brought this discussion a long way forward and you reminded me of the importance of perception by which I mean from which viewpoint does the decision maker come. Most individuals have a key focus be it financial, technical, management, legal,etc: in using the total spread of tangible and intangible assets to advance a projct or company it is important that we ascertain the viewpoint of the decision maker being addressed and talk to that person using language and arguments which resonate. In addition I remember one of the first principles we applied in Dow Chemical. Our director of intellectual capital management Gordon Petrash, an architect by training, one day said "First you must visualise what you want to do, then you must be able to measure before you have any possibility to manage."  It is a principle we always applied. The main role of intangibles is in promoting innovatin and economic development: the world of finance is the necessary support.

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