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| MAKING SENSE OF INTELLECTUAL CAPITAL
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Designing a Method for the Valuation of Intangibles
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By
Daniel Andriessen, Professor of Intellectual Capital, Inholland University of Professional Education, The Netherlands
Description
Peter Drucker has introduced us all to the knowledge era, where knowledge is the primary resource and intangibles (intellectual capital
resources and assets) are now largely recognized as the most important sources of organizations' competitive advantage. With the recognition
of the importance of Intangibles comes the problem of how to properly identify them and assign them a value within the corporation. This
is an area of concern in 5 fields: 1) accounting and financial reporting, 2) performance measurement and management, 3) valuation in
the finance field, 4) the Human Resources field in terms of management, strategy, and planning, and 5) Intellectual Capital. Over the
past eight years, over 25 methods have been proposed for the valuation of intangibles coming out of these 5 fields.
In this book, Andriessen
evaluates 25 existing methods of intangible valuation according to highly developed criteria. In performing his evaluations, Andriessen
synthesizes the state of the art research from these fields based on extensive research. He then presents his own method for valuing
intangibles, which he began developing and testing as a Senior Manager at KPMG Knowledge Advisory Services in The Netherlands. He relates
six case studies in which this method was tested in actual companies, carefully reviews the results of his tests, and then concludes
by offering a new and improved method for valuing intangibles in his Weightless Wealth Toolkit, a complete step-by-step process for identifying,
valuing, and managing Intangibles to help managers operate successfully in the Intangible Economy.
Audience
Academics, in the field of Intellectual Capital, such as the attendees at the McMaster World Congress on Intellectual Capital, professors
and students in Knowledge Management MBA and PhD programs worldwide, Chief Knowledge Officers and other executives charged with valuing
and managing Intellectual Capital and other intangibles. Secondary market: specialists in valuation of intangibles in finance, performance
measurement and management in HR/Consulting.
Contents
Table of contents
Preface and Acknowledgements xix
1. Objective: Valuation and Measurement in the Intangible Economy
1.1 Introduction
The Intangible perspective
The transformation of the economy
Seven characteristics of the Intangible Economy
Drivers of the Intangible
Economy
The Intellectual Capital community
Valuation and measurement of intangibles
Value
Valuation
Four ways to determine
value
Objective and problem
My objectives
Problem to tackle
Methodology
Practicing management research as a design science
Using the developing multiple case study
Structure of the book
2. Methodology: The Science of Designing Practical Methods
Introduction
Making sense of the social world
Distinctions make sense
The world doesn't speak
We know according to the way we are and the
way we feel
The social world does not sit still
Social science
Anything goes?
How to test an empirical proposition
How to test
a practical proposition
Bringing the two together
Science follows its own rules
Management research
The subject of management
research
The scientific nature of management research
My study
The reflective cycle used in this study
Difficulties in applying
the reflective cycle
The use of reconstructed logic
3. Legacy: Methods for the Valuation and Measurement of Intangibles
Introduction
What: Distinctions & definitions
Intellectual Capital
Intangible Assets
Human Resources and Human Assets
Reflection
Why:
Problems & consequences
Improving internal management
Improving external reporting
Statutory and transactional issues
Reflection
How: Solutions & results
Financial valuation methods
Value measurement methods
Value assessment methods
Measurement methods
Reflection
Implications for the requirements of a new method
4. Design: Draft of a New Method
Introduction
Request for proposals
Request
Evaluation
Iteration 1
Design
Evaluation
Iteration 2
Design
Evaluation
Iteration 3
Design
Evaluation
Iteration 4
Problem definition
Requirements
Design
5. Test: Trying Out the New Method
Introduction
Bank Ltd
Context & problem
definition
Specific requirements & design
Implementation & results
Additions to the design
Reporting to the client
Evaluation & modifications
Electro Ltd.
Context & problem definition
Specific requirements & design
Implementation & results
Reporting
to the client
Evaluation & modifications
Automotive Ltd.
Context and problem definition
Specific requirements & design
Implementation & results
Evaluation & modifications
Logistic Services BU
Context & problem definition
Specific requirements & design
Implementation & results
Reporting to the client
Evaluation & modifications
Professional Services LLP
Context & problem definition
Specific
requirements & design
Implementation & results
Reporting to the client
Evaluation & modifications
Consulting Dept.
Context & problem definition
Special requirements & design
Implementation & results
Reporting to the client
Evaluation & modifications
Result of the tests
The method and its requirements
The success of the method
6. Lessons Learned: Contributions to Intellectual
Capital Research
Introduction
Lessons about the method
The application domain of the method
The strengths and mechanisms
of the method
The weaknesses of the method
Final modifications to the method
Lessons about valuing intangible resources
Valuing
intangibles requires values
Valuing intangibles requires a beholder
Valuing intangible resources does not require money
Valuing
intangibles requires identification and demarcation
Valuing intangibles requires diagnosis
Valuing intangibles requires methods
Lessons about practicing IC research as a design science
Reconciling the rigor-relevance dilemma in IC research
Determining the effect
of the implementation
Determining the contribution of the method
The analyst versus the researcher
Implications for future IC research
Valuing and improving problem definitions
Explaining and improving success-rate
Explaining and improving the impact of numbers
Epilogue
Appendix A. Overview of 25 Valuation and Measurement Methods
A.1 Balanced Scorecard (Kaplan & Norton)
A.2 Calculated Intangible
Value
A.3 Citation-Weighted Patents
A.4 Economic Value Added (Stewart)
A.5 Holistic Value Approach HVA (Roos)
A.6 Human Resource
Accounting
A.7 IC Audit (Brooking)
A.8 IC-Index (Roos)
A.9 Inclusive Value Methodology? (M'Pherson)
A.10 Intangible Asset Monitor
(Sveiby)
A.11 Intangibles Scoreboard (Lev)
A.12 Intellectual Capital Benchmarking System (Viedma)
A.13 Intellectual Capital dynamic
Value (Bounfour)
A.14 Intellectual Capital Statement (Mouritsen et al.)
A.15 iValuing factor (Standfield)
A.16 Konrad Group
A.17
Market-to-book ratio
A.18 Options Approach
A.19 Skandia Navigator (Edvinsson)
A.20 Sullivan's Work
A.21 Technology Factor (Khoury)
A.22 Tobin's q (Tobin)
A.23 Valuation approaches
A.24 Value Added Intellectual Coefficient VAIC?(Pulic)
A.25 Value Chain Scoreboard
(Lev)
Appendix B. Weightless Wealth Toolkit
B.1 How to Use the Toolkit
B.2 Phase One: Do Intake
B.3 Phase Two: Identify Intangible
Resources
B.4 Phase Three: Carry out Value Assessment
B.5 Phase Four: Perform Financial Valuation
B.6 Phase Five: Develop Management
Agenda
B.7 Phase Six: Report Value Dashboard
Glossary of Terms
Bibliography
About the Author
Index
| Bibliographic details |
Paperback, 456 pages, publication date: DEC-2003
ISBN-13: 978-0-7506-7774-5
ISBN-10: 0-7506-7774-0
Imprint: BUTTERWORTH HEINEMANN
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