It sometimes seems to me that most of management's and economics' top gurus have not yet crossed the divide between classical accounting and future intangibles mathematics - for the human reformation ahead, see... 1 2

Here is a conversation I gossip with to see whose time I want to teamwork with:

Ever since the Intangible Crisis reports issued in year 2000 by Brookings (eg Unseen Wealth) and the EU, I have been interviewing these report editors and other intangible experts

With my mathematician’s hat, I have concluded that accounting maths –and all that the business case and performance metrics that follows its train of numbers – will never be sufficient to model intangibles in a whole system way. For example, I don’t see how it would have enabled Andersen to model its value destruction, whilst if you start with a clean mathematical sheet and assume that organisations are connected relationship infrastructures you come to very different maths very quickly. In Andersen’s case, whilst an over-simplification, the key equation as we could have modelled it in the year 2000 becomes

So your value to business stakeholders (customers, owners, employees, channel partners) is compounding billions of dollars and growing

But your value to society is plummeting toward zero

So the multibillion dollar question of dynamic valuation is do you use add or multiply

Ie Andersen future value will be:
1) billions plus zero = billions

2) billions times zero= zero

we now know the answer is 2)

and according to the way I do intangibles dynamic valuation, multiplication as an operand that compounds whole system connections is much safer to lead your company with than add which assumes separation and something a lot less than a transparently connected system of relationships

There are, of course, other little inhumanities in accounting’s machine age assumptions such as it is right to book in machines as investments and people as costs? – this is not in my view an assumption that can make for better organisations for people. Another 'technicality' on which humanitarian democracy stands or falls is whether spreadsheeting lowest cost assumptions of the last quarter enables you to see either systemic interactions or how different the model might be if you had demanded lowest responsibility costing (something that might save your whole reputation whilst the lowest costing may be the final straw that ruins it as you compound that logic –and its increasing human conflicts in with particular localities of the globe - period after period)

Next week the European Union hosts a workshop on Knowledge Management for NGOs. Let's hope that NGO's and humanitarian networks will have the communal confidence to rip up what the BBC 2002 Reith Lecturer on trust called the inhumane monopoly of "Herculean Micromanagement"

PS Regarding John's last post, I remember an AHA story. A year ago I was in Brussels at a knowledge society conference and recall a talk by an European banker. The trouble, he said, is by constitution we must invest a third of our money in knowledge businesses but all we know to date is that all the criteria we habitually use for selecting to invest in tangible businesses are disastrous whenever we apply them to screen knowledge networking businesses. I wonder if any bank out there has yet tuned their investment model towards the success critieria linking 'open sourcing as more valuable than copyrighting' wherever your market's service is a true 'communal learning one' that depends on customers multiplying value for themselves with the standard you offer to connect them with.



posted by ..., 6:54 PM  permalink