Lost in translation
August 2nd, 2004A lost balloonist lands in a random field and asks a man out walking his dog
“Where am I?”
The man replies “you are three feet in front of me in the middle of a field”.
“You must be an accountant!” retorts the balloonist
“How did you know that?” the man asks incredulously
“Easy. What you just told me is 100% accurate but absolutely useless!”
Q. Why is the world no nearer a reliable means of valuing intangible assets?
A. Because Business Leaders, (and now Journalists it seems) are insane.
Seriously, my favourite definition of insanity is doing the same thing over and over again and expecting a different result. Not only are we counting the wrong beans, but we are asking the same wrong people to find a new way of measuring what we value. Please people, stop asking the accounts to find measures for intangible assets – and please, stop being disappointed when they cannot do it.
It may only be the tiniest of insertions, but the ‘in’ of intangibles means that the language of accounting will not suffice. It simply is not rich enough to cope with the non-linear interconnected relationships of the intangible asset. Complex human behaviour (i.e. the “stuff” of intangible assets) cannot be explained (or measured) as an additive building up of simple components. Take Gestalt psychology as a starting point – experience does not come out of an accumulation of individual behaviours, instead the true currency of experience are organised wholes. For example, most of us see this…
…as a square because we react to organised wholes. It is on another level, 4 equal lines attached to each other at 90 degree angles. Perception of wholes and of form is an inherent human quality, yet when it comes to measurement and reporting of intangible assets to predict and therefore harness value, we revert to component parts, or the length of the connecting lines in this case. Impoverished? Yes absolutely!
For those who believe that one cause produces one effect and technology can solve any problem, that a problem does not exist or cannot be serious until it can be measured, that relationships are linear, non-delayed and continuous, the measurement of intangible assets will continue to follow the same tired path of trying to shoehorn rich complex relationships into accounting spreadsheets and wondering why what comes out is accurate but utterly useless.
We know this does not work – we have spoken to endless line of CEOs about the failure of any decent data to emerge from the measurement intangibles. What we do know is: behaviour is only the starting point – how behaviour inter-relates across all parts of the business process is critical and measuring inter-relatedness requires a different type of thinking – systems thinking(pdf file). Put simply the difference between a telephoto lens (tangible accounting measures) and developing peripheral vision (leveraging intangibles). It is not different measures we need, but a whole new way of thinking and language for describing what we value.
Further reading and interesting links on this topic:
Unlocking the Hidden Wealth of Organisations (pdf)
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