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El.pub Analytic No. 5 Conference round-up

Page 5

Contents: The solutions company companies | Digital publishing industry consolidation | Pervasive games | Games - blurring the distinction between fiction and reality | Intangible assets | What did the first person who milked a cow, think he was doing?


Intangible assets

On a less exciting track, EBIC had a session on the measurement of intangible assets. Intangible assets include IPR and the people in organisations (or at least their skills). A lot of the discussion revolved around non-monetary measures (subjective scales) of peoples output as a control mechanism, an input to planning and team balancing and management. These methods were contrasted with 'accountant' measures that try to value intangibles in money terms.

The final keynote returned to this topic with Tom Stewart of Fortune magazine pointing up the increasing importance of knowledge in adding value. He suggested that the importance of knowledge was not properly recognised in economic measures and strategies.

In the mean time, John Kay, the well-known economist had put forward an economic view of the "new economy" that placed it in a broader and certainly more long term view, interpreting the recent tech downturn in traditional terms.

Overall one was left thinking that the problem with subjective measures and short-term business analysis of these issues is that they do not provide neutral, transparent measures that can be used for inter-industry and inter-company comparisons. The important point about money in this context is that it is neutral. A dollar is a dollar whether it is generated in the aerospace industry or used to buy a bottle of beer.

Using money, an investor can liquidate an asset in one industry and invest the proceeds in another at well defined prices and rates of exchange. No amount of case studies and statistical analysis will do this for subjective measures. Economics may be a dismal science but it is based on principles that are older than the last business cycle.

The same argument applies to people. As long as there is a free market in labour, companies have to pay experienced, knowledgeable people the going rate. To that extent, the intangible human assets are well represented in the company accounts as salary costs, stock options, etc. A lack of supply of those assets will lead inexorably to higher salaries and better working conditions.

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Last up-dated: 10 July 2017

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