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ICA-1
Using Intangible Visualization to Support Corporate Decisions
Mary Adams
I-Capital Advisors
How to become an intangible
capitalist
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ICA-2
Intro to intangible capital
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ICA-3
Research: Ned Davis
Components of
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Market Premium
Intangible Book Value
Tangible Book Value
Components of S&P 500® Market Capitalization
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
S&P 500 Market Cap ($ billions)
Market Premium
Intangible Book Value
Tangible Book Value
Undefined, intangible portion of corporate value
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Knowledge Assets
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ICA-5
Model of how IC pieces fit together
From You Can Grow Like Google on YouTube
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ICA-6
Investment (financial)
Assessment (qualitative)
Performance Management (quantitative)
Corporate Intangibles
Three ways to measure
intangibles
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1. How to grow?
Scaled business using balanced IC investment, especially structural capital
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ICA-8
Gaps in structural
capital
National relationships
Need to add headcount
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ICA-9
2. How to improve performance?
Optimized structural capital infrastructure
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ICA-10
Motivating Referral
Closing Sale
Developing Program
Relationships
Developing HCO Relationships
ID four core processes
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ICA-11
Role
Role
Intangible exchange
Tangible exchange
Tangible exchange
Intangible exchange
Map each process as a
value network
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ICA-12
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ICA-13
3. How to innovate?
Evaluated IC as the innovation ecosystem
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AA BBB A BBB
BBB
Customers
A
BBB
Human Capital
BBB AA BB A
Bus. Recipe
Intellectual Capital
Relational
I.P Process Management Employees Network Brand
Organisational
Bus. Recipe
Intellectual Capital
Relational
I.P Process Management Employees Network Brand
Organisational
BBBCustomers
BB
BBB
Human Capital
BB CC B AA
BBB BBB CCC BBB
R R R R
No value RCustomers
R
Human Capital
RR R RR R
Bus. Recipe
Intellectual Capital
Relational
I.P Process Management Employees Network Brand
Organisational
Current strength
Preparation for future
Risk
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83
74
39
74
55
57
Experience in corecompetencies
Ability tackle new projects
Training/education
Equal competence level
Vulnerability defection
Renewal of productivity
Employees AA CC R
While the staff is perceived as having the capacity to deliver world class performance, other capabilities are less certain . . Developing or expanding capabilities could be hindered by the fact that training and education efforts are largely informal and non-standardized.
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4. How to acquire knowledge?
In mergers, most people ignore important structural capital and fail to understand relationship between IC and valuation
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ICA-17
Tangible, 30%
Intangible, 23%
Goodwill, 47%
Mergers are 70% intangible
E&Y: Acquisition Accounting – What’s Next for You? Global sample of 700+ mergers in 2007
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ICA-18
Most deals ignore SC
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Human Structural Relationship Strategic
Map multiples against IC
Low
Average
Best 8x
4x
2x
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ICA-20
5. How to build reputation?
Helped stakeholders see inside the IC “black box” to attract new clients at higher rates
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ICA-21
Visualization of a six-inch methodology
notebook
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For better decision making…
• Remember that intangibles dominate value creation, revenue and expenses
• Use IC buckets to be clear about type of knowledge asset (human, relationship, structural capital)
• Use all three kinds of measurement (financial, quantitative, qualitative)
• Visualization cuts through complexity
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Resources
Slides at slideshare.com/maryadamsicaNewsletter: Management 2.0 last Tues of month Book: www.intangiblecapitalbook.comCommunity: www.icknowledgecenter.comBlog: www.smartercompaniesblog.com
Mary Adams, [email protected]: maryadamsica