About the Institute

The Hybrid Vigor Institute is dedicated to rigorous critical thinking and the establishment of better methods for understanding and solving society’s most difficult problems. Our particular emphasis is on cross-sector and collaborative approaches; we seek out experts and stakeholders from a range of fields for their perspectives or to work together toward common goals.
Principals | Advisors | What We Offer

 

hybridvigor.net

hybridvigor.net houses the work of critical thinkers, researchers and practitioners who conduct cross-sector and cross-disciplinary explorations and collaborations.
Blog | Contributors | Topics

  Subscribe to Hybrid Vigor’s RSS Feed

 

Disclosure

Privacy | Funding

 

Contact Us

 


 

Intervention by Denise Caruso Read Intervention by Denise Caruso, Executive Director of the Hybrid Vigor Silver Award Winner, 2007 Independent Publisher Book Awards; Best Business Books 2007, Strategy+Business Magazine

archive for July, 2008

NATIONAL ACADEMIES V:
INTANGIBLES AND THE GOVERNMENT

by ~ July 21, 2008

More of my observations on the U.S. National Academies conference on Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth and the presentations made that day.

There were two panel discussions on the role of government around intangibles. Many of the presentations were rich with data, and I recommend them to those interested in the macroeconomic aspects of intangibles.

Douglas Lippoldt, Organization for Economic Cooperation and Development (OECD) made a clear case for governments and organizations like the OECD to focus on intellectual assets as:

  • They are central to value creation, economic growth and competitiveness in a modern economy.
  • Continued shortfalls in measurement and understanding of intangibles has implications for decision making
  • IA relationship to innovation, as inputs and outputs needs to be understood
  • There are significant possibilities to leverage these assets for acceleration in development

R&D was the focus of presentations by John Jankowski, Science Resources Statistics Division of the National Science Foundation, and Steve Landefeld, Bureau of Economic Analysis at the Department of Commerce. Continue reading »

NATIONAL ACADEMIES: IV:
INTANGIBLES IN THE FIRM AND THE MARKETS

by ~ July 21, 2008

More of my observations on the U.S. National Academies conference on Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth and the presentations made that day.

This was the discussion of the day closest to my experience and practice so I was especially interested in these presentations.

I recommend the discussions by Laurie Bassi, McBassi & Company, and James Malackowski, Ocean Tomo, whose companies are encouraging market development for intangibles. McBassi offered data on the value of investment in human capital. Malackowski’s firm made its name by developing public auctions of patents and is now developing investment units tied to licensing rights. The work of companies like this will provide an important validation to markets and managers of the value of intangibles in business.

Baruch Lev of New York University’s Stern School, reported that “shares of intangibles-intensive companies are systematically undervalued, causing excessive cost of capital as well as suboptimal investment and growth.” Lev rejects the value of many intangibles indicators and advocates Continue reading »

NATIONAL ACADEMIES II:
INTRO TO INTANGIBLES

by ~ July 21, 2008

More of my observations on the U.S. National Academies conference on Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth and the presentations made that day.

The introduction to the day’s proceedings was made by Cynthia Glassman, Under Secretary for Economic Affairs at the U.S. Department of Commerce. Ms. Glassman’s remarks distilled lessons from the 2008 Report of the Secretary’s Advisory Committee on Measuring Innovation in the 21st Century Economy.

Irving Wladawsky-Berger, IBM and MIT, gave one of the best presentations of the day. He gave a thoughtful but entertaining view of the importance of intangibles, saying the “moment of shift” was in the mid-1990s with the rise of the Internet. He also predicted that most innovation will be in market-facing technology, which reminded me again of Lean Solutions, the book which I discussed in my post on Manufacturing’s Intangible Future. This book is a great introduction on focusing on the enterprise from the consumption/market perspective.

Wladawsky-Berger pointed out that so much of the work in information technology done to date was in the back office, where you are dealing with machines and products. In market-facing solutions, you are dealing with people and services — a much more complex and intangible task. This is also an important reminder of why relationship capital — networks, relationships and brand — will continue to grow in importance.

For the economists in the audience, Wladawsky-Berger connected intangibles with three concepts from Adam Smith Continue reading »

NATIONAL ACADEMIES III:
INTANGIBLES AND MACROECONOMICS

by ~ July 21, 2008

More of my observations on the U.S. National Academies conference on Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth and the presentations made that day.

The discussion of the challenges and approaches to macroeconomic measurement of intangibles was greatly strengthened by the presentations of perspectives from not only the U.S., from Carol Corrado, The Conference Board and Brent Moulton, Bureau of Economic Analysis, but also from Jonathan Haskel from Queen Mary College, University of London, and Kyoji Fukao of Hitotsuboshi University and RIETI. I recommend the individual presentations for more detail but thought I would highlight a couple points that struck me.

Corrado pointed out that many of the expenditures in intangibles are co-investments in IT. This emphasizes the role of technology as a catalyst for change in organizations as well as a tool for accomplishing that change. Process improvement, increased employee competencies, improved customer service, are all inter-related. This comment was also interesting in light of Wladawsky-Berger’s presentation based on his experience at IBM on the role of intangibles in business.

Using the approaches developed by Corrado, Hulten and Sichel in 2006 on Intangible Capital and Economic Growth, it appears the intangibles investment in the UK and Japan is much lower than in the U.S. But then Fukao dug into the numbers. Continue reading »

INTANGIBLES AT THE NATIONAL ACADEMIES

by ~ July 21, 2008

I recently attended the conference at the U.S. National Academies entitled Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth.

For those of us that have been working in the field, it was a gratifying moment to hear the keynote from Senator Jeff Bingaman (from my home state of New Mexico) challenging the audience to help the Congress and our nation in general understand this critical issue — and develop recommendations that can translate into good policy, where necessary, to support the intangible strength of our economy.

Many of the participants were economists from the U.S. government; a few academics and a small number of consultants and business people attended as well. You can scan all the presentations yourself, if you’d like.

In this and following posts, I thought that I would add my two cents on some of the content. Remember that my experience and interest is at the organizational level, so my comments reflect that bias. I’ve broken the notes into sections for each session of the day.

A TALE OF TWO NETWORKS

by ~ July 8, 2008

I have been following the story of the Tata Nano car for a number of years now. Tata is an amazing Indian conglomerate that operates in seven business sectors through dozens of companies.

The goal of the Nano team is to develop the world’s lowest cost car with a sticker price of roughly $2,500. A recent peak Inside the Tata Nano Factory in Business Week explains the role that diverse suppliers have played in creating component parts of the car that are better and cheaper than those used in other cars. Bosch supplies the computer inside the engine. Rane, the steering system. Ran, the driveshaft. Coordinating with vendors to bring together all these innovations in a coherent whole is a big part of the work of the Tata team.

This story is similar to the story about the Boeing 787 recounted in Wikinomics by Don Tapscott and Anthony D. Williams. To build this next generation of the 700 series, Boeing made a radical shift from the past. Power to innovate and design the components of the 787 was pushed down to the vendors as never before. As with Tata, Boeing’s role is more focused on coordination of the design and production than on doing it all themselves.

Networks of suppliers are one of the critical intangibles in almost every business today. Computing power and the internet itself are the drivers of this trend. The easier it is to connect with partners and vendors, the less important it is to keep a function inside the corporation. With growing importance, networks become something that must be managed as carefully as internal businesses. The health, performance and results of network partners are all relevant. But this kind of information is not picked up by management information systems that are built to monitor internal operations. Are you monitoring the health of your network?

MANUFACTURING’S INTANGIBLE FUTURE

by ~ July 1, 2008

Ken Jarboe at the Athena Alliance has had two great posts recently about manufacturing. In Reversing the Offshoring Trend,he makes the point that high energy costs and the knowledge intensity of manufacturing are important factors that can outweigh the low labor costs that have moved so much production out of the U.S. In Workforce as an Intangible Asset he describes how the experienced workforce of Danville, Virginia was a key factor that, along with energy prices, recently has lead to the decision by two companies to open two new furniture plants in Danville.

Jarboe’s arguments made me think of the wonderful cases laid out in Lean Solutions a few years ago by James P. Womack and Daniel T. Jones. The book looks at value from the customer’s point of view — one that is getting increasing attention in today’s Web 2.0 world. Although the analysis of the management of doctors’ offices is also memorable, I call your attention to the case of shoe manufacturing. This type of manufacturing was moved off shore long ago and certainly yields a lower cost per shoe.

But the authors point out potential limits to the total cost and earnings related to offshoring. The distances and complexities of offshoring usually imply long lead times so product mix and quantities have to be decided as much as a year in advance. Long lead times mean that new product cannot be produced if a shoe turns out to be a bestseller or if one size sells out before others. Shoes that don’t turn out well end up being sold off through discounting channels. This leads to an overall profit that is lower than that which might be obtained with more flexible, shorter-run production were available. I don’t remember energy costs being part of this argument but they would certainly tip the balance in favor of looking at more creative production that is closer to home.

This is yet another illustration of the power of intangibles to turn business models on their head. Cost of production was paramount in the industrial economy. Although factors like flexibility, quality and customer service are intangible, they can have real bottom line impact. The faster we learn to evaluate intangibles, the better off our economy will be.