Despite its potential, few managers have begun even to scratch the surface of information about intangibles and the opportunity it offers.
Many managers have been looking forward to when they can track information about their intangible assets — for example, the value of their brands or the quality of their human talent — as easily as they monitor cash flow and market share.1 Inspired by the works of strategy theorists such as Robert Kaplan and David Norton, they have anticipated a day when it would be possible to keep track of customer sentiments, innovation and employee skills with real-time data, just as they manage profit and loss.2 Whether managers are aware of it or not, that day is almost here. Thanks to advances in information technology, managers of consumer-oriented businesses have the ability to track not only the percentage of satisfied customers but also the reasons why people are satisfied or dissatisfied. Companies in other industries can use IT and industry data for their own purposes — for instance, to follow opportunities for patent licensing or acquisitions. Despite the potential, most managers have been slow to respond. Few have begun even to scratch the surface in seizing the opportunities that information about intangible assets offers.
Different companies, of course, have different types of intangible assets. The most common include licenses, franchises, patents, trademarks, brands, knowhow, market competences and human resources. For many companies, the mix of intangibles represents a large percentage of the total corporate value, as measured by stock market valuation, investment level or perceived importance.3 A 2003 study by Accenture and the Economist Intelligence Unit found that 94% of the global executives surveyed saw comprehensive management of intangibles and/or intellectual capital as important, and half considered it one of the top three issues facing their organizations.4 But management awareness about how to take advantage of this value remains surprisingly low.
Until recently, there were good reasons why managers paid scant attention to information about intangibles. Companies had no regulatory obligation to disclose information about intangible assets to shareholders the way they had to disclose, say, executive compensation or pending litigation. In addition, most managers had limited experience dealing with intangibles. Those who were familiar with intangibles mostly relied on intuition to choose appropriate valuation methods for mergers and acquisitions as well as simple surveys to gauge employee morale. In general, managers were reluctant to introduce new methodologies without a clear understanding of the return on investment.