Sunday, March 12, 2006

Mountain of Intangibles Valuation


All over the world the people have been cheated out of the service economy investing in people. Intrapreneurial economics 1 & case studies 1 can now confirm that it is quite possible for a company in a service sector to return 100 fold to investors but only if they honour a generation's lifetime service and connect this with society's greatest meeds from the sector. You will never get any such returns from boardrooms who have been sold the poke of shareholder valuation or who innocently believe that quarterly accounting numbers have any correlation with whether they are leading the company expoentialy up or down.

this crisis goes under the professional jargon of intangibles valuation but it is as simple as what structure flows of trust to keep resonating between people

how did the crisis start and get prolonged?

well the global accounting monopoly has always been based on a viciously inhuman rule- you can invest in machines never in people, people are cots, they are for cutting

inhuman as this assumption was, it reflected the fact that accounting standards were drawn up 90 or so years ago when the industrial age did mean that the main investment tended to be in machines, but this is absurd wherever a country's economics are mainly about service, which is what differentiates most value these days

everything went from farcical to tragic to being intimately to do with future destruction of cultures and the planet in the 1980s

first: the spreadsheet came along, and accountants algorithms were spread everywhere

second: 5 leading global accounting partner firms took over the world's accounting and they were not inclined to admit that their monoply tracked less and less of the information boardrooms needed to know

then accountants started partnering the biggest but least useful sector in other professions : we'll make your business case predominant if you make ours

so branding was valued by accountants to be all about advertising, when its now the case that advertising is the cost of corporate branding not its value

knowledge was valuesd as being how many people can you replace by computing machines

and so on

All of this was perfect as far as tangible accountants' monopoly over boardromm number-crunching were concerned: bolstered by another assumption built into their standards to give an image of precision - separability - whereas human relationship flows of trust are all about connectedness ; as too are learning networks and every other forward looking value differentiator we could be innovating. Instead the world is being governed to exponentials desctruction (such as these 21 global sectors ) clearly show

now even governments like the European Union are tied up in tangible accounting's misinformation; for 3 years the EU sponsored research into intangibles and then promptly closed it down; in parallel they have wiped most of the several hundred conversations I was originally encouraged to edit on intanbgibles and emotional inteligence, intelectual, human and scoail capital at

here's one that people have been telling me they have been searching for:

Intangibles Valuation - The Easy Bit
Three Future Shocks of Intangibles Valuation
• In service or networked economies, intangibles are the primary leadership system for innovating value
• Shocking theory: intangibles only get produced as activated in relationships connecting people
• Spinning network economics around trust-flows: systemised by quality of human relationships invested in the organisation to date, future value multiplication exchanged by the intangibles rich organisation is already measurable. It is compounding along one of the 2 curves composed by this benchmarking scale.

Intangibles Crisis
Seminal research titled Unseen Wealth was published in 2000 by economists and scholars of law at Brookings, Washington DC. A parallel report issued by the European Union foresaw an Intangibles Crisis. Organisations of every size will be at increasing risk of intangibles destruction until or unless a parallel relationships audit is implemented alongside current accounting. Since 2000, dozens of multi-billion dollar corporations have failed. While a few involved corruption at the top, the bigger “Unseen” news story is how leadership blindspots compound unless the whole of a knowledge serving organisation is valued and involved in connecting up the goodwill curve.

So that's the easy bit!Perhaps we could play a guessing game- why do I as a mathematician, social community researcher and experimenter with elearning products know the above's the easy bit?
Opportunity 1 : If there's any human discipline out there, the above could make a whole new (human relations system) case for connecting what you do in the organisation to what others do. Do you like the sound of that or does that frighten you deeper into a silo?

KnowledgeBoard, 9th February 2005Categories: KM and Emotional Intelligence SIGPublished by: Chris MacraeStory read: 1058

Chris Macrae , 10 February 2005 @ 11:18 AM a question that comes before doing KM?Mr Chris Macrae
so darling , you are a KM expert - but first I want to know if the trust-flow in this organisation is sustaining or dying - what method will help us see? HOW ABOUT A PICTORIAL CLUE

One way to look at the above picture is 45 conversational loops - like if 10 people sat round a table, that's the number of paired conversation relationships that could evolve.
Now if you wish you can define your discipline. Let's agree TRUST is the most pervasively valuable flow to have gravitating all these loops. And choosing one other connection :Trust & ... to be what your discipline helps action into every relevant relationship loop.
For example if were to choose the word promise, I believe Trust & Promise are critical to every loop. I believe that's what the profession of intangibles valuation needs to model in mapping quality of human relationships. But that's not necessarily more important than a profession which does another deeper link to trust. Yesterday I was at a rehearsal of the annual worldwide get-together of Organisational Design experts. A lady was proposing that Design =Trust*Control

On the above picture that would represent (as I see it) 17 loops - all 9 loops connecting with K3 (hierarchical knowledge manageent) and all the extra 8 loops connecting with what owners V3 demand as value. To compound maximal control and trust, that's 17 loops that need systematic caring, practicing, monitoring. And that brings lots of depth to OD which can interface with the shallower but broader auditing of all 45 loops and their ultimate composite valuation as to wher are we is compounding on the sustainability curves.
To take another sub-example. Transparency clean up after nuclear means all organisational partners (bsusinesses and local place) getting together and sharing openly across their boundaries. If you like this is Trust and Control of 15 loopsK3*K4, K3*K5,K3*V3,K3*V4,K3*V5, K4*K5, K4*V3, K4*V4, K4*V5, K5*V3, K5*V4, K5*V5, V3*V4, V3*V5, V4*V5
Now did you see it coming? what word do you tell your friend that KM=TRUST &....
and how many paired loops do you see corresponding to the verbal choice you make? There is no correct answer except that's what what you are (tacitly or now explicitly) scoping KM's work and professional competence to be about across the system (as well as understanding what else it will need to build interdicisplinary brudges with if KM is not to disconnect the whole system's trustflow (ie sending organisation down the wrong sustainability curve)


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