How much do you spend every year on accounting? It’s probably a lot. And at the end of the day, you get a balance sheet that explains just 20% of your total corporate value. You get very little information about your capacity to generate future growth, earnings and value.

That’s because the source of competitive advantage for every company has shifted. It used to come from hard assets you could see on the balance sheet. Today it’s about the quality of your people, processes, networks and knowledge. All of these are invisible in accounting even though they are economic assets that you spend a lot of money and time to develop and maintain.

How can you get information on these things? By improving your ICounting. Even if you don’t call it that, you probably spend time measuring different aspects of your intangibles. I don’t know if it works out exactly like this but in my experience, most companies spend 80% of their measurement budget on the accounting that only supplies information on 20% of their asset value.

Now I know that you can’t stop spending on accounting. And there are lots of other good reasons to use it. But none of them cancel out the fact that you aren’t getting critical information about the viability of your company.

The good news? You can make a very small amount of money go a long way with ICounting. It’s a system you can design yourself or with the help of an ICountant. The steps are simple:

  • Identify – Just as with accounting, you have to start with an inventory (we offer an open source inventory tool to help you with this)
  • Visualize – Think of this as the modern equivalent of a balance sheet. How do you present a single, high-level view of all your intangibles? (we also offer open source visualization tools for this step)
  • Measure – There are lots of options here (here’s an article in our library on the ABC’s of Intangibles Assessment)
  • Optimize – With a succinct statement of which intangibles are driving your results and how they measure up, you can’t help but take action.

Our goal with ICounting is that you spend 20% of your measurement budget to cover 80% of your value. Not a bad deal.

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Comment by james mark ngari on August 1, 2013 at 10:31am

in fact this is the high time especially in africa for the management of companies to realise that people(human capital) are the drivers of the particular companies. intangibles are the drivers of the economy

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