Most organizations today are highly dependent on the strength of their people, systems, processes, relationships and strategy for success. Yet these intangibles are invisible and rarely managed in a systemic or holistic way.
This is a problem because, for better or worse, people tend to pay more attention to things they can measure. Measures help frame thinking and help create a feedback loop for learning and improvement.
One of the most established measurement systems in our economy is Accounting. This is a system that has roots in 15th century Venice. It is a well-balanced system that worked well through the industrial era. These Accounting systems have taught us to manage business by the numbers. It’s all built on the foundation of “accounts,” sorting financial transactions into categories labeled as income, expenses, capital, assets, inventory, property, plant and equipment. These “accounts” are reported on financial statements as measures of performance of the organization on a monthly basis and such measures have been hallmarks of corporate performance standards for decades.
For a lot of good reasons, Accounting will never be able to address all the intangibles in a company. At Smarter-Companies, we are promoting the concept of ICounting as a complement to Accounting to fill in that gap. It is based on the concept of ICounts, which are “accounts” categorized by the type of intangibles within your organization. ICounts provide the foundation for ongoing measures of the performance and influence of intangibles on overall organizational results.
The ICounts process involves the creation of an intangible capital inventory which is then mapped out on to an intangible capital map and/or canvas. Then these elements are measured using intangible capital graphs. This approach creates a custom-designed system that describes and measures the unique intangibles of an organization—something most companies have never seen before.
The graph report uses stakeholder feedback and ratings to score the strength of an organization’s intangible capital. Yes, I said stakeholder feedback. Therein lies an important distinction from Accounting. ICounts are not developed and measured by external standards. They are developed by a team with and for their stakeholders. And the stakeholders are the judges of how well things work.
This is why we see ICounts as the ultimate leading indicator of growth, performance, valuation and reputation. It’s the net promoter score on steroids. If you have the right people, processes, partners, culture and business model in place to create value for your stakeholders, you will be successful and profitable. If you want to know how you're doing, ask your stakeholders. You’re already managing these things. Why not measure them in a holistic, systematic way? ICounts make it simple.