We were thrilled to have Ben Bernanke as the keynote to open the conference. The core of his speech was about the importance of government support in research, a safe but important topic when talking about intangibles.

But more important to me were the comments he used to introduce and summarize his remarks. Here’s how he explained the growing importance of intangibles:

The topics you will address today and tomorrow, bearing on innovation and intangible capital, are central to understanding how we can best promote robust economic growth in the long run…recent research has highlighted the important role played by intangible capital, such as the knowledge embodied in the workforce, business plans and practices, and brand names. This research suggests that technological progress and the accumulation of intangible capital have together accounted for well over half of the increase in output per hour in the United States during the past several decades.

Innovation has not only led to new products and more-efficient production methods, but it has also induced dramatic changes in how businesses are organized and managed, highlighting the connections between new ideas and methods and the organizational structure needed to implement them.

In his closing he added:

We should also keep in mind that funding R&D activity is only part of what the government can do to foster innovation. As I noted, ensuring a sufficient supply of individuals with science and engineering skills is important for promoting innovation, and this need raises questions about education policy as well as immigration policy. Other key policy issues include the definition and enforcement of intellectual property rights and the setting of technical standards. Finally, as someone who spends a lot of time monitoring the economy, let me put in a plug for more work on finding better ways to measure innovation, R&D activity, and intangible capital. We will be more likely to promote innovative activity if we are able to measure it more  effectively and document its role in economic growth.

I added the bold type on the last statement. It’s simple and direct. It’s the essence of the value proposition for all of us in the intangibles field. We are more likely to successfully promote performance, innovation and growth if we can measure and document the role of intangibles. Read the speech. See the speech. To measure the effectiveness of your own organization’s intangibles, check out our IC Value Drivers assessment.

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The photo was taken earlier this week at the Exit Planning Exchange Summit 2011.  The twist was that the legend for the graphs was hidden by a red pattern that could be filtered out with special glasses.

Everyone at XPX advises private companies and their owners on building and realizing value. OK, so I was nervous about trying this out in this very professional group. But it turned out to be a lot of fun!

The glasses were a great way to engage these professionals in conversations about the fact that 80% of the value of the average company is intangible — but hardly anyone  actually makes the drivers behind this huge value, well, tangible.

Here is one of the handouts we were viewing:

Don’t have red glasses? Want to know more? Check out the slides at www.icvaluedrivers.com and click contact us!

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@mickki There are 2 groups present: those who want to expand their financial empire, and those who want to change finance completely

This dynamic made for some wide ranging conversations and stimulating discussions. But the thing that united everyone was a belief that new currencies are and must emerge. I also heard a lot of comments that equated currency to vocabulary and currency to trust. Some of the most advanced “currencies” to date are inside gaming communities and, of course, programs like frequent flyer miles. But the range of possibilities is much greater from banks of time, knowledge, trust and relationships—which is visible in the diverse organizations represented at the conference.

I haven’t focused a lot on currencies per se, although this is something that my friends Dan Robles and Jay Deragon talk about a lot. But as I digest what everyone was talking about, I think that the currency conversation is really about finding new and much richer ways to measure value that gets created in interpersonal and inter-organizational connections. The reason people feel the need to use a different vocabulary is that current concepts of measurement are so limiting. As Arthur Brock said on our panel discussion:

Just like translating a steer into pounds of beef breaks the system integrity of having a cow.  If you translate all your measures into pounds of beef and are only managing in those terms, you can’t manage the wholeness of a cow.  We need value metrics appropriate to the level where the value resides in order to properly interact with that value.

To continue Art’s point, we need measurements that will measure the health of the steer, the environmental consequences of raising the steer and the health consequences of eating its meat. This kind of message was repeated over and over during the day.

The panel I moderated was called Monetization of Intangible Capital. The participants were Dan Robles, Arthur Brock and Greg Wendt. We had a wide-ranging discussion about the elements of intangible capital (human, relationship, strategic and structural knowledge) and all the implications of measurement. Dan taped it and I will share the recordings when they are available.

The audience was so fired up that we started taking questions from the very beginning. I was thrilled when one participant came up to me afterward and described our panel as an abstract painting of the entire scope of the future of money while most of the other panels were photos of details of different parts.

So what is the future of money as we know it? It will remain but it will be enriched by a much greater appreciation for other kinds of value. After my day at the conference, I felt we were getting much closer to an economy that values and, therefore, can leverage the best of its intangible capital.

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An interesting read for those involved in the business of intangible assets…The book provides tips that will help managers adapt to the knowledge-based economy and measure the true effect of intangibles on the bottom line.

Read the full review.

For our first IAFS program of the new year, Mary Adams be interviewing panelists are James Catty, Chairman, International Association of Consultants, Valuators and Analysts; and Gabe Fried, CEO, Streambank LLC., a valuator and an asset-backed provider of liquidity. 

We are going to talk about lessons learned in the recession about valuing intangibles–what’s happened to the valuation of intangibles in distressed sales? How has this experience on the ground changed the approach taken by valuation professionals?

Join this free call by registering at IAFS

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• Chuck Hulten of University of Maryland and The Conference Board and
• Alan Anderson of ACCOUNTability Solutions and AICPA.

Today, the intangible information gap in the average company is as high as 80%. It’s past time to close this gap and these are two people that can help us all understand how to do this. Please join in our discussion!  -Mary Adams

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The conference was held at Hong Kong Polytechnic University which has 20,000+ students. They have very vibrant knowledge management and intellectual capital programs.  

I went to the conference with a mission. If you read this blog, you know that I am passionate about the power of IC thinking. We live at the dawn of the knowledge era. There is no going back. To be successful, organizations will need to understand the role of knowledge in their businesses. To me, the most powerful message of IC is in the simple concept that knowledge is held in many forms—by people, in relationships and in structural form—and that this knowledge is a dynamic system that cannot be managed but, rather, facilitated by organizations.

But the temptation for those of us raised and educated in industrial-era context are tempted to legislate and dictate how IC should be handled. It is always clear at these conferences that too many people continue to look to perfect a “better mousetrap “ rather than using IC ideas to empower organizations to use these ideas for themselves. This was my message when I called for IC 2.0 in a recent article.

So I led a track on Moving IC into the Mainstream. We had some great papers and presentations on case studies of IC in practice (I will try to get the authors to share their papers). We capped off the track with a discussion led by John Dumay of the University of Sydney on the barriers and enablers of IC in practice. We posted the discussion bullets on the IC Knowledge Center.

Then we segued into the closing forum of the conference. Organizers WB Lee and Eric Tsui kindly gave me the opportunity to pitch my thoughts on how to shape IC practice going forward and invite the conference participants to join a project I am launching with John Dumay called The Future of IC at the IC Knowledge Center. The goal is to gather stories on how IC concepts are being used in practice. We are calling it an open conversation and research project. John will be analyzing the content of the stories in a sense-making exercise. We also invite others to use these stories for research and practice.

Hope you will join in the conversations!

-Mary Adams

Since 70% of the average deal is intangible and 50% of the average deal is goodwill, there is a screaming need for better information about what’s really going on in acquisitions. Intangible Capital co-author Mary Adams is prominent among a strong set of sources for the article:  Mark Sirower at Deloitte, Dan Tiemann at KPMG, Robert Bruner at University of Virginia’s Darden School, Stephan Thollot at E&Y, as well as the CFO’s of Steel Technologies, Arrow Electronics, PMI Group and Corning.

The message of the article is clear: intangibles are not going away. M&A professionals ignore them at their own peril.

New Era, New Valuation Shift: Communicating Intangible Assets

10/21/2010
6:00 – 8:30 p.m.
ML Strategies LLC, One Financial Center, 38th Floor Conference Room, Boston, MA 02111

Implementing PR and IR Strategies for a New Knowledge-Based Economy

As we emerge from the economic downturn, MarCom budgets are slow to recover; yet we’re still charged with moving PR and IR forward for our organizations. At any moment, the economy might flip a switch and we’ll be off and running on the next wave of productivity and profitability. Will you be ready for communications in the new economy?

Today’s communications professionals and corporate PR/IR staff face an interesting challenge: how do we communicate our company’s “intangible assets” — intellectual capital, corporate culture — to the market, customers, media and investors? How do we translate that value through PR and IR communications to the marketplace?

Even consumer-based companies are on board. If you aren’t doing it already, you should be.

Join us for a discussion on how to incorporate communications that convey the value of our companies’ intellectual capital and other intangible assets into our existing communications systems. The goal is to demonstrate real value of the assets inside our organizations.

Find out how to:

• Set a plan in motion to get corporate mindshare around the concept of valuing intangible assets
• Become a leader in the charge within your organization to improve communications around IP, knowledge and other intangibles
• Create a multi-tiered program of communications strategies and tactics to better convey ‘the whole’ of the company’s assets to the marketplace.

You will be armed with an understanding of how to communicate intangibles as the New Economy rises again.

More information and to register

It’s important to understand how damaging reputational crises can be (“What’s a Reputation Worth?” May). But the real story is how to prevent them.

Seventy percent of the value of the average company is intangible. This is because processes, knowledge, and networks (all considered intangible by accountants) are the core drivers of competitive success — and reputation.

Managing reputation starts with managing these intangibles. That’s why we say reputation is the new bottom line.

Mary Adams
Founder and Principal
I-Capital Advisors
Winchester, Massachusetts