|
Focus
|
Value and Performance Measurement Innovations |
| Intangibles |
Indicators |
Market Cap |
The"Capitals" |
Value Streams |
| Selected examples |
- FASB's Intangibles Project - Value dynamics - Brookings Report |
- Balanced scorecard - KPI's |
- Market Cap - Book Value Gap Analysis - Economic Value-based analysis |
- Intellectual Capital - Human Capital - Societal Capital |
- Intangibles value streams - Event-based enterprise value streams |
| How the innovators define the problem |
- Intangibles not fully reflected in financial statements - Gap between market and book value |
- Accounting measurement is not sufficient basis for strategic management of enterprise |
- Enterprises are not managing gap between book (current operation) and market value |
- Enterprise are not managing major components of "capital" that account for the majority of enterprise value |
- Traditional transaction-based (value realization) accounting provides no insight into performance of organization in creating value |
How the innovators describe the solution |
- Measure and disclose fair value of intangible assets |
- Set goals and track performance using a broad framework of metrics |
- Decompose market cap into current and future growth value components, and create system for tracking drivers of future growth |
- Frameworks and systems for measuring customer, human, structural, and other "capitals" |
- Parallel value creation measurement system that models the potential of future value streams and tracks performance in realizing it |
Of the 80+ approaches, VMRC has selected an initial set of 7 approaches that will be available for
assessment in the initial round of measurement profiling. Further information about each approach is available
through the online profiling system.
|
Approach
|
Innovators / Exemplars
|
What it is
|
How it works
|
Intangibles
|
|
IP Valuation
|
|
|
Conventional tangibles valuation approach applied to
intangibles, using the market, cost, or income valuation methods.
|
|
IP Score¨
|
Danish Patent Office
|
Software that incorporates a method for valuing patents
|
Uses a set of qualitative inputs combined with basic
financial data to project a Net Present Value for individual patents, which
can be aggregated into an overall portfolio value, along with related
analytics. (Details at www.ipscore.dk )
|
Indicators
|
|
Balanced Scorecard
|
Kaplan, Norton
|
Framework for measuring organizational performance
|
Develops a framework of 20-30 metrics for tracking
performance in four categories (financial, customer, internal processes,
learning and growth) linked to strategy and related objectives. (Details at www.bscol.com )
|
Market
Cap
|
|
Future Value ManagementTM
|
Accenture, Burgmann
|
|
Market cap is decomposed into cash, value of current
operations, and the residual is Future Value. Various analytics are proposed to estimate how various
actions could potentially influence the value of this residual in the future.
|
Capitals
|
|
IC RatingTM
|
Edvinsson, Intellectual Capital.se
|
Method for valuing intellectual capital / non-financial
assets
|
Proprietary tool based on Edvinsson's work. IC is
decomposed into various components, each of which is assessed in relation to
Efficiency, Risk, and Renewal.
Approximately 250 elements are rated using a scale adapted from
Standard & Poor, where AAA is "best grade" and D is "worst". It is not yet clear whether the
methodology also generates a financial valuation.
|
|
IC Reporting
|
Danish Ministry of Industry, Germany's Wissensbilanz initiative
|
Method for external reporting on IC
|
Provides a framework for external reporting on
intellectual capital, based on pilot projects in Denmark and Germany
|
Value
Streams
|
|
Intangibles Value Stream Modelling
|
Sullivan, McLean, CICA
|
Method for quantifying the value potential of tradeable
intangibles
|
Models the value streams associated with intangibles
taking into account multiple contexts and perspectives.
|
