VIEWS: 106 PAGES: 4 CATEGORY: Accounting POSTED ON: 6/26/2009
Intellectual Capital: The calculation of intangible assets. The financial link between intangibles and monetary valuations means these intangibles can now be placed on your corporate balance sheets.
What is Intellectual Capital? With our economy changing from a production-oriented economy towards a knowledge- oriented economy, your intangible assets are becoming more and more important. To make better products, to deliver better services or to perform better as a company in general we need to put in more knowledge and know-how. To make your company work in the best possible way, you will not only need the machines, computers, production facilities ... but you will also need the drivers that makes your company function well. These drivers are your people with their know-how and experience, your internal processes to guide the business flow but also the interaction with your alliances/partners and your customers. Without these drivers, your company wouldn't function at all and therefore they are of "Capital" importance. This is your "Intellectual Capital". The amount of Intellectual Capital will determine how good or bad you will be able to perform. It is the difference between success and failure because no matter how good the product or idea, without enough Intellectual Capital, no outstanding result can be expected. How can ICC help you to understand your company? Areopa's ICC (Intellectual Capital Calculation) offers companies the solution to calculate the Intellectual Capital that constitutes the organization. ICC is based on the newly developed 4-leaf Model of Intellectual Capital integrating Human Capital, Structural Capital, Strategic Alliances (business partners), and Customer Capital. These four components form 15 intersecting areas that explain, define and document the components of Intellectual Capital. From a practical point of view, ICC offers a sample of formulas that will calculate the value of Intellectual Capital for a company as a whole or for specific parts (departments, agencies, one country, training course (ROI) and even individual people). The Areopa 4 leaf Model 1) Human Capital is shared with its „owners‟: When the person leaves, he takes his skills & competences, reputation and potential along. 2) Customer Capital is also shared with its „owners‟: when the customer leaves, he takes his revenue potential along. 3) Strategic Alliance Capital is also shared with its „owners‟: when the alliance breaks up, the leverage from the partnership is lost and a “zero-sum game” relationship is restored. 4) Structural Capital is whatever is left when the personnel “go home” and the customers and alliances take their business elsewhere: it consists of internal processes, systems & organisational structures. 5) Combined Human & Customer Capital consists of individuals‟ closeness to customers and the application of their creativity to specific customer needs, i.e. product and business development. 6) Combined Human & Strategic Alliance Capital consists of individuals‟ closeness to alliances and the extent to which integrated teams exist between the two entities. 7) Combined Human & Structural Capital lies within the knowledge processes, i.e. the externalisation of tacit (personal) knowledge and the dissemination & internalisation of explicit knowledge. 8) Combined Customer & Strategic Alliance Capital consists of the (increased) revenue potential from customers leveraged by the partnership with strategic alliances. 9) Combined Customer & Structural Capital lies within the knowledge processes, i.e. the externalisation of tacit (personal) knowledge and the dissemination & internalisation of explicit knowledge. 10) Combined Structural & Strategic Alliance Capital consists of the integrated processes, systems & organisational structures shared with the partners. 11) Combined Human, Customer & Strategic Alliance Capital consists of the product and business development leveraged by strategic alliances. 12) Combined Human, Structural & Strategic Alliance Capital concerns the knowledge processes shared with and leveraged by strategic alliances. 13) Combined Structural, Customer & Strategic Alliance Capital consists of the ecosystem of inter-company processes comprising customers, suppliers and other business partners. 14) Combined Human, Structural & Customer Capital concerns the application of individuals‟ creativity to specific customers‟ needs but subsequently developed for broader application: knowledge products (patents, copyrights, designs, licences). 15) Combined Human, Structural, Customer & Strategic Alliance Capital lies at the core of IC, and is typically represented by the same items as §14 namely intellectual property rights, patents, etc. which in this case are shared with and leveraged by those of strategic alliances. We at AREOPA believe that Intellectual Capital (IC) is the only and true method to determine the net present value of a company in a constantly and rapidly changing business environment. Traditional assets are of course still a valuable source of capital, but in a business context, the human aspect is gaining more and more importance, especially through its scarcity. When a highly qualified individual leaves an organization, this has dramatic consequences on the total value of the human asset. The company does not only lose a factor of production, but also the total human and intellectual added value that the individual brought to the company (network, social skills). In this context, we believe that it is important for a company to be aware of, to identify, to value, to account for and manage its Intellectual Capital. By doing so, the company will be able to clearly identify the sources of Intellectual Capital (IC), develop methods to attract and retain IC, as well as being able to position itself on a market tending more and more towards the use of IC. What makes Areopa's Intellectual Capital Calculations (ICC) unique? AREOPA is able to provide companies with packages that contain all the relevant and essential formulas to determine their IC. Through our Strategic Alliances, we can provide the necessary IT solutions to implement, operate, and further develop IC calculations. When you want to know the impact of your decisions on your company's IC, Areopa can provide you with a simulation package based on the use of its SIMIST® tool. When is measured it can be managed! Areopa will guide you through the change process necessary to manage your company's Intellectual Capital. In short, the whole uniqueness resides in the fact that AREOPA is simply the first company in the world to offer complete and coherent solutions for IC calculations and management. Contact: Nigel Dawes Vice president, Areopa S. E. Asia firstname.lastname@example.org
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