What is it, Really?
In response to growing investor and management concerns regarding the current accounting and finance models, the International Intangible Management Standards Institute (IIMSI) has released 33 international intangible standards that provide a completely new way of managing and reporting the true value of organizational performance.
Knowledge Economy Management
"Designed specifically for the Knowledge Based Economy, international intangible standards, are the long awaited solution to the accounting and management crisis", stated Dr. Ken Standfield, consultant, trainer, author and Chairman of IIMSI. The February 2002 Intangible Management Value Survey revealed that the 500 largest firms in the United States generated intangible value of US$7.3 trillion (69.96% of total value). "These firms, employing more than 21.6 million employees and generating over $US 6.1 trillion in revenue, cannot use conventional management systems to identify, classify, and report this intangible value", he observed. "The only solution is to implement a completely new management system to identify, classify, measure, report and manage intangible value. Such systems need to be based on international intangible standards."
Many notable experts express their concerns with the current state of accounting and finance theory. Alan Greenspan, Federal Reserve Board Chairman stated, "There are going to be a lot of problems in the future as accounting is not tracking investments in knowledge assets." Former SEC Chairman, Arthur Levitt, extended this principle - "as intangible assets grow in size and scope, more and more people are questioning whether the true value - and the drivers of that value - are being reflected in a timely manner in publicly available disclosure." Peter Wallison, a resident fellow of the American Enterprise Institute concurs, "today substantially all of a company's profitability depends on intangible assets, so the accounting problems associated with intangibles become quite serious."
After 15 Years of R&D …
Dr Standfield is no stranger to intangible value. Over the past 15 years, he has developed intangible management, intangible accounting, intangible financial analysis, intangible economics, intangible risk management, 7th generation knowledge management, 7th generation intellectual capital management and numerous other areas. In his new book "Intangible Management: Tools for Solving the Accounting and Management Crisis" (Academic Press, May 2002), Dr Standfield introduces international intangible standards and explains how they can be applied to solve many of the problems the shift to the Knowledge Based Economy has brought.
The introduction of intangible management has been well received. Esther Yap, CIO states that "Intangible management is one of the most important advances in management theory since the dawn of management theory itself (well over 1000 years ago). The ability to measure and manage all forms of intangibles (intangible assets, intangible liabilities, intangible expenses, intangible revenues and intangible capital) gives executives unprecedented power to manage their operations according to the new rules of the Knowledge Based Economy." Claire Ostberg, Accountant and Management Consultant agrees "what was impossible is now possible. Dr Standfield's contributions reverse more than 500 years of accounting and finance thinking." Alan Cullen, Chairman of the Private Capital Council, supports these thoughts, "Intangible Management is the inevitable next essential step from knowledge management, intellectual capital, EVA and the balanced scorecard." Wayne Larkin, Chairman, of Technology Information Management Marketing Services states, "Dr Standfield is the new Management genius of our time and will be as profound to management science as Einstein was to Physics. I cannot talk highly enough of my regard for the Institute's work and stress enough the importance it has to the World. He deserves a noble prize for his work. Dr Ken Standfield's Intangible Management is a profound revelation that will have enormous impact on the future of life and management, as we know it."
David Klein, Intellectual Property Officer of NeuronZ Ltd, concurs "Before Intangible Management our understanding of intangible assets was severely restricted by conventional accounting, management and legal thinking. These systems were created over 500 years ago, and are only capable of identifying 'hard' intangibles - such as representations of knowledge (intellectual property), reputation (goodwill) and financial transactions. As we move further into the knowledge economy we learn that the past is no longer a good indication of the future. As the gap between market value and book value continues to widen, organizations are losing almost complete control over their value creation processes. Intangible Management provides a comprehensive framework to objectively identify, measure, manage and report 'soft' intangibles. These 'soft' intangibles - such as knowledge, expectations, relationships, service, quality, and staff morale are the real drivers behind financial performance, productivity and revenue. Intangible Management is future looking, and can be applied to any organization in any industry. Intangible management fundamentally redefines the value-creation paradigm, and is the long-awaited revolution in management science."
"At the heart of the accounting and management crisis is the inability of conventional management systems to identify, classify, measure, manage and report soft intangible value", states Dr Standfield. "To overcome this problem the totality of conventional management thinking needed to be analyzed from a completely different perspective - a fully intangible one. Soft intangibles such as knowledge, service, relationships, quality, emotions, are the gas that fuels organizational growth, sales and repeat business. If employees destroy intangible value, sales are lost and costs increase" he states. As Wendy Saunders, director of research states, "if an organization has employees and/or customers, intangible management is essential if knowledge and relationships are to be effectively managed."
Applicability of IIS Standards
Implementing 33 international intangible standards in a practical manner is made less daunting by the software the Institute is developing. "The institute is close to completing advanced software systems that can be implemented by any organization (government, private and public) to manage, report and value intangible value. We are currently looking for global international distribution and consulting partners", states Dr Standfield.
The International Intangible Management Standards Institute also conducts eLearning certification in the field of Intangible Management. There are three levels of qualification available through the Institute: Certified Intangible Management Practitioner, Intangible Management Executive and Intangible Management Consultant. For a limited time the Institute is offering free membership.
As Eric Goh, Managing Director of Compaq Computer Asia states, "Charles Darwin said that for species to survive, it has to be adaptable to change. In the business world, this translates to an organization's nimbleness in adapting to changing customer demands, the external environment as well as nurturing a culture of constant innovation. Intangible Management provides executives with the skills required to better manage risks and create value for all stakeholders in rapidly changing competitive environments." Frank Olsson, Managing Director of NAB Singapore states, "by using intangible management we can release energy and capture efficiencies from people that previously we could only dream of. Intangible management puts humanity and sustainability back into business. Intangible management is about appreciating all those things that really makes a difference, getting to the core and soul of the business. To focus on intangibles is to focus on what really counts and is key to keeping business aligned to what communities and people really value and want. Serving your constituents in the marketplace is fundamental to long-term success. Intangible management aims at a values based future where concern for tangibles and short term pressures do not impair greater long term value."
To understand intangible management and international standards I highly recommend the book "Intangible Management: Tools for Solving the Accounting and Management Crisis", by Dr Ken Standfield (Academic Press, May 2002). This book provides you with the background information you require and introduces you to international intangible standards. This book is critical reading. People can also join the Institute free of charge by registering online at http://www.StandardsInstitute.org .
Peter Stone is a Feature Writer for the Journal of Intangible Management. Peter can be contacted at PeterStone@StandardsInstitute.org .