Measuring and Managing Intangible Assets
Intangible assets and intellectual capital are the sources of value and the levers for sustainable business performance in today's competitive economic context. They are the sources of competitive advantages and above normal financial returns. In fact, with intangibles, some of the basic economic rules seem to be breaking down. Take for example the law of decreasing returns - the more you use machines or buildings the smaller is the marginal return. However, for intangibles such as knowledge, brands, or relationships this does not apply in the same way. It is often argued to be the opposite, the more we use our knowledge the higher the return. In addition, unlike physical resources that can only be used for one activity at one point in time - intangible assets can be deployed at the same time in multiple uses - take for example the case of the knowledge to produce a specific drug, the programming of software codes delivering an application, a brand or even the corporate culture. All of these can be used simultaneously for multiple uses at different places.
Firms, organisations, as well as governments require tools and techniques to manage, measure, and report their key value drivers. The problem is that most traditional management systems were designed for an era when tangible assets dominated. Accounting systems, as just one example, appear to completely ignore most intangibles and knowledge-based assets. The knowledge economy is therefore in the need of new management methods and techniques to identify the assets delivering most value, to visualising how these resources drive performance and tools to measure and value the dynamic interactions of these assets.
The Centre for Business Performance realises this need and is engaged in multiple research projects in order to shed more light on this important area. Some of the most significant research questions addressed include:
- How do organisations identify the critical value drivers in their organisation?
- How can we understand the value creation pathways and transformations of such our intangible value drivers into business performance?
- How do we visualise and map these inter-relationships?
- How do we measure our intangible assets and integrate those into our corporate performance management systems?
- How do we use knowledge management processes to maintain and grow our knowledge assets and our intellectual capital?
- How do we report and disclose intangible assets and intellectual capital?
- How do firms, banks, investors, and the stock markets value the intangible value drivers?
Leading firms, organisations, and governments are currently involved in innovative research activities in this emerging field. Companies such as Shell, Astra Zeneca, DHL, Fujitsu, as well as many other Fortune 2000 firms are tasking the Centre for Business Performance to conduct action research projects in this field to solve real-world problems they are facing. In addition the Centre for Business Performance is part of a select group of leading university research centres sponsored by the European Commission to research the topic of intangibles in Europe.
The Centre for Business Performance chairs the PMA Intellectual Capital Group - a global and multidisciplinary network of thought-leading academics and practitioners who jointly facilitate and participate in cross-disciplinary knowledge transfer in the area of measuring and managing intellectual capital and intangible assets.
A new book with the latest developments, research, and trends about intangible assets and intellectual capital is now available in one comprehensive multi-disciplinary book: Perspectives on Intellectual Capital: Multidisciplinary Insights into Management, Measurement, and Reporting. It has been written for a wide audience including academics, managers, and students to provide a state of the art overview of the topic.
If you would like to know more about our research in this field, would like to get involved in any research project, or become a member of our Roundtable please contact cbp@cranfield.ac.uk.
Researchers
- Andy Neely
- Monica Franco
- Göran Roos
- Dina Gray
- Giovanni Schiuma