This section outlines a non-financial measurement system for intangible assets based on the concept of the knowledge organization.
The purpose of this section is not to present a full and comprehensive picture of the intangible assets as well as its measurement, which is beyond the scope of this text, but to illustrate a few practical techniques that can be tested.
Besides the normal organizational balance sheet, there are three intangible assets worth measuring within an organization. They are:
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a) External structure
b) Internal structure
c) Competence of employees
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Intangible Asset Measurement:
The value of knowledge or the IC of any organizations and the efficiency and performance of the associated KM systems cannot be measured by the conventional tools and techniques in existence. There is no difference between monetary measures and other measures. Both are uncertain and are dependent on the observer.
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There exist no “objective” measures. The main reasons why the money measures seem more “objective” and “real” are that they are founded on implicit concepts of what a company is and that the measures have been around for so long that they are guided by definitions and standards.
As of today, there exists no comprehensive system that uses money as the common denominator and at the same time is practical and useful for managers. Knowledge flows and intangible assets are essentially non-monetary.
Most organizations measure at least some of their intangible assets and they use non-monetary indicators particularly for measuring operational efficiency. Manufacturing companies have for instance measured their output in “output per hour.”
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Hospitals and hotels measure bed utilization, and schools measure student’s performance in terms of marks. Customer relations, such as satisfaction levels and competence related measures, such as employee satisfaction and retention are still not monitored on a regular basis by most organizations.
The problem does not lie in designing systems for intangible measurements but lies in the interpretation of the results of these systems. Customer surveys, for instance, when used systematically results in an abundance of data which managers find difficult to correlate with changes in business performance.
Intangible Assets Monitor:
Intangible Assets Monitor [IAM] is a method for measuring intangible assets and a presentation format that displays a number of relevant indicators for measuring intangible assets in a simple fashion.
The choice of indicators depends on the company strategy. The format is particularly relevant for knowledge organizations.
The IAM appears similar to Kaplan/Norton’s Balanced Score Card; however there are significant differences between the two.
The IAM can be integrated in the management information system. The most important areas Organizational Knowledge Management Architecture and Implementation to cover are growth/renewal, efficiency, and stability.
The purpose is to get a broad picture; so one or two indicators in each category could be designed.
Normally, organizations are interested in indicators that indicate change, i.e. growth, and renewal as well as efficiency and stability measures.