Advanced tools for Visualizing, Measuring and Managing Intangibles

© 2009 bengin Mapping values bengin Advanced Tools for Visualizing, Measuring and Managing Intangibles 5 th European Institute for Advanced Studies in Management (EIASM), Workshop on Visualizing, Measuring and Managing Intangibles and Intellectual Capital Dresden (Germany), 8-9 October 2009 – © 2009 peter.bretscher@bengin.com – www.bengin.net

Speaker © 2009 bengin Mapping values Peter Bretscher, Founder and owner, Engineering Office for Business Development Ingenieurbüro für Wirtschaftsentwicklung, Eggersriet / Switzerland Function in the Ing.Büro: Advisor to organizations in the design of economic steering and management systems that integrate the intangible perspective ,[object Object],[object Object],[object Object],[object Object],[object Object]

Summary ,[object Object],[object Object],[object Object],© 2009 bengin Mapping values «Many of the patterns of nature we can discover only after they have been constructed by our mind.» Friedrich von Hayek

Idea to Innovation Phase of incubation : 70% Phase of invention : 25% Phase of innovation : 5% Examples: Concrete 40 28 20 years Inforced concrete 22 7 18 years Aluminium 29 53 26 years Telephone ? 14 2 years Radio 56 13 2 years Radar 29 2 1 years TV 22 22 8 years Computer 115 9 5 years ICs 40 2 3 years © 2009 bengin Mapping values

Summary ,[object Object],[object Object],[object Object],[object Object],© 2009 bengin Mapping values «Count what’s countable. Measure what’s measurable. Make measurable what’s not measurable.» Galileo Galilei

Objects, Attributes, Value-Measures © 2009 bengin Mapping values Imaginary Numbers Unit: iCHF, i$, i€ Subjective Numbers Real Numbers Unit: CHF, $, € Objective Numbers Resources Objects Numbers tangible intangible Complex Numbers Unit: CHF/iCHF, $/i$, €/i€ Vector Implicit Values Explicit Values combined

Vector Type 1 (Aggregation and Drilldown) Engine Chassis Body / Design Brand / Image Functionality subjective customer value (of the product)  R&D effectiveness R&D expenditures / input ressources  R&D efficiency © 2009 bengin Mapping values qualitative / subjective quantitative / financial Total (Compound) Performance Drill-Down

Vector Type 1 (Public Service Departments) 9 Police&Justice Public Service Departments Effects (subjective citizen perspective Costs Performance (of public service departments) 8 Others 7 Healthcare 6 Economy 5 Education 4 Infrastructure 3 Finance 2 Defense 1 Foreign Affairs © 2009 bengin Mapping values

Vector Type 2: Linking „objective“ with „subjective“ axis subjective (intangible) view objective (financial) view intrinsic value price © 2009 bengin Mapping values book value use value of investment for investor A price investor B is willing to pay price investor A is willing to pay use value of investment for investor B

Overpriced Papers? Is the Vector a prognostic tool? ....a year before the downturn of the classic curve.... ...the Vector Map indicated a change of Coca Cola Amatil......... © 2009 bengin Mapping values Stock Exchange Value 0 2000000000 4000000000 6000000000 8000000000 10000000000 12000000000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 96 97 98 99 Value Vector 0 1000000000 2000000000 3000000000 4000000000 5000000000 6000000000 7000000000 8000000000 9000000000 0 2E+0 9 4E+0 9 6E+0 9 Explicit Values Implicit Values 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 96 97 98 99

0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 0.00 20.00 40.00 60.00 80.00 100.00 120.00 mV Food Media Services Electronic Information Technology Mechanical Industries Insurance Steel Electricity, Gas Wood Industries Bank Automobil Real estate Health iV Source: Morgan & Stanley Capital International World Index; Cited in: Sveiby, Wissenskapital; Seite 23; Mi-Verlag 1998 14 types of industry (Sveiby) © 2009 bengin Mapping values

Intangible Assets or Shareholders Profit Expectation? The explicit Value and the implicit Value together draw a complete picture about the company’s value and its development. The question remains: Is the implicit Value given by the real Value of the company? Is it given by some marketing tricks? Which part of it is made by the Shareholders Value Expectation? © 2009 bengin Mapping values 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 implicit value [i - Mia] explicit value [Mia] - McDonald's Microsoft IBM Ford Coca Cola

A better model for new decisions © 2009 bengin Mapping values Value Points of 75 enterprises 0 1'000 2'000 3'000 4'000 5'000 6'000 7'000 8'000 9'000 10'000 0 1'000 2'000 3'000 4'000 5'000 6'00 0 7'000 8'000 9'000 10'000 explicit Values implicit Values Investors: Attention! Management could use the potential more effective.

Tracking the development of an enterprise Question: "What happened in the year 1996?“ Answer: Part of enterprise sold. 2 nd Question: Is this loss of intangible values compen-sated by the price received for the sold part of enterprise. Answer: ?  Ask Auditor – if he’s still available…. © 2009 bengin Mapping values Pointer of vector for five years 0 200 400 600 800 1'00 0 1'2 0 0 1'4 0 0 1'600 explicit axis [Mio CHF] 0 200 400 600 800 1'000 1'200 1'400 implicit axis [ Mio iCHF] 96 93 94 92 95

Summary ,[object Object],[object Object],[object Object],[object Object],© 2009 bengin Mapping values When you can measure what you are speaking about and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in Numbers, your knowledge is of meagre and unsatisfactory kind. Lord Kelvin

Four Main Points © 2009 bengin Mapping values 1. Structure of Enterprise 3 Offerings 7 Processes 6 Primary-Resources 2. Measures and Metrics Enhanced System of Measures that Integrates Intangibles and Subjective Metrics 3. Strategy of Enterprise Outside-In and Inside-Out 4. Optimizing Value Net From supplier of supplier to customer of customer

Pricing Values? © 2009 bengin Mapping values Tangible and intangible assets of an enterprise, potential of an enterprise, values of an enterprise Market for Papers (Stock-Exchange) How to determine „fair value“ (price) for a paper?

Thank You Web http://www.bengin.com Blog http://www.bengin.net/wp/ Twitter http://twitter.com/peterbretscher Special Website http://www.bengin.net/dresden/ bengin Beyond Limits of Classic Business Paradigms © 2009 bengin Mapping values

The four Quadrants of Value generation © 2009 bengin Mapping values Transformation (M to I) Q I Q I: Transform -M / +I - New projects - Revisions of offerings - Insourcing/merging - +M in +I -M in out -I out R&D Q II Q II:Generation +M / +I - Daily business - Selling, dispatch - (Re)Production - Value Generation Q III Q III: Transform -I / +M - Outsourcing - Leaner production - Transformation (I to M) Q IV Q IV:Degeneration -I / -M - Graveyard - Value Degeneration

Development of (economic) Value-Metrics (Compound Value-Metric System with the subjective, implicit Value axis) (2, 3, n-dimensional) 2. Qualitative Metrics hot, cold ...... AAA, A+, B, C 3. Quantitative Metrics (linear) Why Metrics? - comparing, comprehensible, reproducible - Making rationale (and indirect) communication easier. 1. Normative "Metrics" Principles, ....The xx "Commandments" Axis of time Measures reduce need for interpretation Strong need for interpretation $ % i$ $ Possible to calculate with and visualize 2D-Values Difficult to visualize. No tools and rules for numerical or graphical calculations. © 2009 bengin Mapping values $ % i$ $

2000 0 0 551 97 648 97 0 500 1000 1500 2500 3000 Mio 0 10 20 30 Mio mV iV SPE Initial Base (Value estimation) Initial Offer, March 24. 2000 Value (Price) Development of Paper (Shareholders view) © 2009 bengin Mapping values Evening 1st Day 1969 2'520 SPE Shareholders Profit Expectation Enterprise Value

Real economy New MindWare & SoftWare  quantum leap in the simulation and planning of todays economy. © 2009 bengin Mapping values Solutions (Form & Content) Hardware SoftWare Applikations Operating System MindWare Applications Economic. Theory Basics

Basics of 2D-Value-Vector x, y = two arbitrary properties of an object y x Illustration 1 Illustration 2 x, y = explicite ("objective") and implicite ("subjective") Value-Properties as a Multi-Value-Compound. © 2009 bengin Mapping values y [i$] x [$] x 1 x 2 x y x y Cost Price Turnover Volume [m 3 ] Transports initialized Transports finished Cost Deckungs-beitrag Budget Rechnung Price Retouren Medical Properties Subjective condition Turnover Mitarbeiter-zufriedenheit Turnover Sparten gewichtet Retouren Kunden-zufriedenheit x 1 x 2 Samples Sum of balance Sum of Share Price Shareholder Value Wagues Turnover Weighted added Value Price VW Price Porsche Subjective Added Value

Advanced tools for Visualizing, Measuring and Managing Intangibles

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