Reshaping business and the world by leveraging knowledge intangibles
What is IC?
Here's the definition we have been using in our "About" section:
IC is the unique set of knowledge assets held by a person or a group (a team, an organization, a corporation, a city, a
state, a nation). Today roughly 70% of the average company's value
and performance is attributable to IC.
What does the "I" stand for? Depends on whom you ask. Some use it as "Intangible" or "Intellectual" or even "Innovation."
In all cases, the focus in on the knowledge that is the critical
driver of growth and innovation in the 21st Century.
What does the "C" stand for? Usually is stands for "Capital" as in wealth, as in assets, as in productive capacity and value.
What makes up IC? Most people use the following three or four categories of assets:
- Human Capital: the competencies, experience and knowledge of people
- Relationship Capital: the shared knowledge and understanding of networks of people or groups
- Structural Capital: the knowledge captured in the form of databases, processes, documents, IT systems and intellectual property (patents, trademarks, trade secrets and copyrights)
- Strategic Capital: how the prior three kinds of capital are combined to solve a problem for a customer or a stakeholder
The future of business is in learning to measure, manage and leverage IC for profit and the greater good.
What do you think? Do you use this definition? If so, what do you like about it? If not, what do you prefer and why?
Tags: IC, capital, definition, intangible, intellectual
Views: 14
Replies to This Discussion
-
Permalink Reply by Galen McPherson on -
My personal IC definition is: "knowledge derived from individuals that can be converted into value for the corporation". This definition has been crafted to emphasize each of four main points:
- Knowledge is the main engine of organizational performance for the future
- All knowledge originates from individuals within the organization
- Knowledge that cannot be converted into value for the organization is not "capital"
- Corporate responsibility drives the conversion of individual knowledge to corporate intellectual assets
I have developed a model of five basic "knowledge operations" [www.galenmcpherson.com/knexus.php] that implement this definition, each with underlying principles, specific functions and discrete outputs, which I will gladly share [and submit to review and critique] with any who ask.
My premise in approaching companies is this: all companies have a knowledge system; it is often a haphazard construct that emerged over time rather than being actively and intentionally designed; the prime function of an Intellectual Capitalist is make sense of, and improve, a company's knowledge systems
My most current project is an assessment process [www.galenmcpherson.com/icrisk.php] that established a "desired" profile and measures a "current" profile for any organization, allowing them readily to see where their knowledge system is not performing as expected.
Asking for continued dialog on any and all of these subjects,
Galen McPherson
www.galenmcpherson.com
-
Permalink Reply by Mary Adams on
-
Galen - I'm curious whether you view relationship capital as part of this or is your definition internally focused? Mary
-
-
There are a number of really intriguing questions here.
Does knowledge have to be rare to be considered an intangible asset? Aren't some intangibles common but still critical to the successful operation of a company?
If an intangible does become a financial asset, is it no longer intangible? Why finite?
I like the distinction between value creation intangible ("linked to company's products and services") But isn't there also important knowledge related to support services like finance, legal, operations, etc.?
Dr Gerhard Kristandl said:Mary, I like the definition you are providing. It fits quite snugly into the definition, which we proposed in our Management Decision paper, based on the resource-based view of the firm (available from the resources section, as well as my profile here on ICKC):
Intangibles are strategic firm resources that enable an organization to create sustainable value, but are not available to a large number of firms (rarity). They lead to potential future benefits which cannot be taken by others (appropriability), and are not imitable by competitors, or substitutable using other resources. They are not tradeable or transferable on factor markets (immobility) due to corporate control. Because of their intangible nature, they are non-physical, non-financial are not included in financial statements, and have a finite life. In order to become an intangible asset included in financial statements, these resources need to be clearly linked to a company's products and services, identifiable from other resources, and become a traceable result of past transactions.
-
Permalink Reply by Galen McPherson on
-
absolutely I consider relationship capital in all of this; in fact, that is the primary area in which Intellectual Capital "crosses the boundary" to go outside the company; however, as clarification, I also consider internal relationships, the working arrangements, to be part of relationship capital as well; in my discussion that all knowledge resides with individuals, I am "location-agnostic"; it is very possible for an "external" individual to provide new knowledge to a company, especially in the form of customer feedback; was that the aim or concern in the question, or do I need to try another run at it?
Mary Adams said:Galen - I'm curious whether you view relationship capital as part of this or is your definition internally focused? Mary
-
Permalink Reply by Galen McPherson on
-
Mary and Dr. Kristandl:
I agree with you, Mary, about the Doctor's definition; it seems to me to be a distinct [and important] subset of Intellectual Capital, but there are certainly pieces of Intellectual Capital that fall outside these parameters. In my own assessment, we grade several of the items Dr. Kristandl mentions, because it is possible that a process be replicable "to a degree" or "in part" and is still of value, that is an asset. Some Intellectual Capital assets are in fact common to many operators or producers, but they are assets nonetheless. I felt that the definition provided dealt more with, and aimed more at, protected Intellectual Property than the broader scope of Intellectual Capital.
The seven "factors" on which I grade IC assets or processes are: efficiency, effectiveness, degree of risk, replicability, renewability, degree of exploitation and degree of exploration, as these are all factors in the characterization of any particular asset. Many of these factors overlap those mentioned by Dr. Kristandl.
Mary Adams said:There are a number of really intriguing questions here.
Does knowledge have to be rare to be considered an intangible asset? Aren't some intangibles common but still critical to the successful operation of a company?
If an intangible does become a financial asset, is it no longer intangible? Why finite?
I like the distinction between value creation intangible ("linked to company's products and services") But isn't there also important knowledge related to support services like finance, legal, operations, etc.?
Dr Gerhard Kristandl said:Mary, I like the definition you are providing. It fits quite snugly into the definition, which we proposed in our Management Decision paper, based on the resource-based view of the firm (available from the resources section, as well as my profile here on ICKC):
Intangibles are strategic firm resources that enable an organization to create sustainable value, but are not available to a large number of firms (rarity). They lead to potential future benefits which cannot be taken by others (appropriability), and are not imitable by competitors, or substitutable using other resources. They are not tradeable or transferable on factor markets (immobility) due to corporate control. Because of their intangible nature, they are non-physical, non-financial are not included in financial statements, and have a finite life. In order to become an intangible asset included in financial statements, these resources need to be clearly linked to a company's products and services, identifiable from other resources, and become a traceable result of past transactions.
-
-
So maybe you should modify this statement: "All knowledge originates from individuals within the organization"....
Galen McPherson said:absolutely I consider relationship capital in all of this; in fact, that is the primary area in which Intellectual Capital "crosses the boundary" to go outside the company; however, as clarification, I also consider internal relationships, the working arrangements, to be part of relationship capital as well; in my discussion that all knowledge resides with individuals, I am "location-agnostic"; it is very possible for an "external" individual to provide new knowledge to a company, especially in the form of customer feedback; was that the aim or concern in the question, or do I need to try another run at it?
Mary Adams said:Galen - I'm curious whether you view relationship capital as part of this or is your definition internally focused? Mary
-
Permalink Reply by Jay Deragon on -
Very interesting exchange here.
If I knew what you know and you knew what I know what would we know? Now consider what we do on line. We share what we know or think we know. In sharing what we think we know our knowledge gets vetted by others who use what we know or changes what we thought we knew. We are all learning from each other and if you approach all this social stuff as a learning medium then you gain access to a huge "knowledge inventory" of what people know or think they know. Subsequently we are indeed building "capital" that is being used by others.
As social technology grows users tend to "cluster" around an affinity of activities, topics and people with each representing a knowledge domain of interest. The cluster effect creates an increase in interest and exchange of ideas, thoughts and sometimes wasteful chatter depending on whom and what you are "clustering around".
The cluster effect is similar to (but not the same as) the network effect. It is similar in the sense that the affinity preferences of both the medium and its participants are based on each ones perception of the other rather than the medium simply being the sum of all its participants actions as is usually the case. Thus, by being an effect greater than the sum of its causes, and as it occurs spontaneously, the cluster effect is a usually cited example of emergence of knowledge. Said knowledge can be categorized into a taxonomy similar to an Encyclopedia. Knowledge becomes capital when it is used and applied. Can we measure its use and application? If so then are we not making knowledge tangible and if so can we trade it? If yes then are we witnessing the emergence of knowledge as an asset that when used and aplied could increase productivity?
The emergence of social networks as the revolutionary wave of consumer generated content and "connections" is controversial to say the least. The media sends a stream of opinions on "how" the systemic dynamics of networking works and the impact of what it produces for businesses and society in general. Upon discovery of anything new everyone thinks they understand the new phenomena but few are able to truly comprehend the long term implications since there is no one historical reference to explain the dynamics in an orderly fashion.
What we are experiencing is the convergence of three scientific theories: clusters, emergence and social interaction being influenced and transformed by a technological medium. This convergence, coined as the networking effect, has a long tail of discovery with ongoing analysis and development of new intellectual properties being defined to explain the phenomena.
A network effect is a characteristic that causes a person, content or technology to have a value to another person or person(s) which depends on the number of other people who know the person or follow that persons content. In other words, the number of related connections is a term in the value available to the next connection. Isn't valuable tangible if considered worthy of use by one or more people?
Could all this mean that what lies between our ears could become a tangible asset that could be traded for economic value? Could the value become a new currency of trade?
I am not smart enough to answer the questions just curious enough to ask them and let smarter people find the answers. In doing so I hope to increase my own knowledge inventory which then I can share and trade with others. Ummm sounds like something that represents intellectual capital at work.
What say you?
-
Permalink Reply by Galen McPherson on
-
Caught me - you are correct, and I misspoke on that item; contextually, I was thinking"within the organization" and it came out in my typing; thank you
Mary Adams said:So maybe you should modify this statement: "All knowledge originates from individuals within the organization"....
Galen McPherson said:absolutely I consider relationship capital in all of this; in fact, that is the primary area in which Intellectual Capital "crosses the boundary" to go outside the company; however, as clarification, I also consider internal relationships, the working arrangements, to be part of relationship capital as well; in my discussion that all knowledge resides with individuals, I am "location-agnostic"; it is very possible for an "external" individual to provide new knowledge to a company, especially in the form of customer feedback; was that the aim or concern in the question, or do I need to try another run at it?
Mary Adams said:Galen - I'm curious whether you view relationship capital as part of this or is your definition internally focused? Mary
-
-
I agree Gerhard. I will try to get Jim Catty to join in here. He once told me that from an accounting and valuation perspective, there is: intangibles that go on the balance sheet, intellectual property that has legal definition and protection and [his word] intellectual capital as everything else.
What I want to avoid is that we end up with competing definitions that divide us. Catty's approach is practical. Maybe it speaks to the need for an over-arching definition that does not conflict with specific guidelines needed by people in disciplines such as accounting, IP, IT, strategy, etc.
We need to think of how we will do this. I will add them to the first discussion about the idea of Guides.
Dr Gerhard Kristandl said:Galen McPherson saidI felt that the definition provided dealt more with, and aimed more at, protected Intellectual Property than the broader scope of Intellectual Capital.
The definition approaches the terminology from the resources-based view of the firm, as well as the accounting perspective. I agree, it is also able to include intellectual property, but not exclusively.
It is more a definition from a specific point of view, and other definitions can be (and are more than encouraged to) be tested against it. Another aim of this definition is also to introduce a hierarchy between the terms "intangible" and "intangible asset" ... again, mainly from the accounting point of view.
What we basically see here is the same problem ever since IC became of major interest in the academic and corporate world; it's the difficulty to find a common definition.
I would see - as I said before - several definitions according to the use of intangibles. I would see Galen's definition from a stronger knowledge management-point of view, for instance. A set of "working definitions", depending how a corporation wants to use and apply the term and related methods. What we may be able to work on is, that the definitions as such are not contradictory.
-
-
Jay-
I think that the definition of personal IC is an important part of this discussion--especially because you and a lot of other folks are helping us understand that social media and 2.0 technologies create the possibility of knowledge markets.
I wonder whether there would be an interesting group here--around the definition of personal IC markets--something everyone should pay attention to given its potential for disrupting our current understanding of corporations and human capital....
Jay Deragon said:Very interesting exchange here.
If I knew what you know and you knew what I know what would we know? Now consider what we do on line. We share what we know or think we know. In sharing what we think we know our knowledge gets vetted by others who use what we know or changes what we thought we knew. We are all learning from each other and if you approach all this social stuff as a learning medium then you gain access to a huge "knowledge inventory" of what people know or think they know. Subsequently we are indeed building "capital" that is being used by others.
As social technology grows users tend to "cluster" around an affinity of activities, topics and people with each representing a knowledge domain of interest. The cluster effect creates an increase in interest and exchange of ideas, thoughts and sometimes wasteful chatter depending on whom and what you are "clustering around".
The cluster effect is similar to (but not the same as) the network effect. It is similar in the sense that the affinity preferences of both the medium and its participants are based on each ones perception of the other rather than the medium simply being the sum of all its participants actions as is usually the case. Thus, by being an effect greater than the sum of its causes, and as it occurs spontaneously, the cluster effect is a usually cited example of emergence of knowledge. Said knowledge can be categorized into a taxonomy similar to an Encyclopedia. Knowledge becomes capital when it is used and applied. Can we measure its use and application? If so then are we not making knowledge tangible and if so can we trade it? If yes then are we witnessing the emergence of knowledge as an asset that when used and aplied could increase productivity?
The emergence of social networks as the revolutionary wave of consumer generated content and "connections" is controversial to say the least. The media sends a stream of opinions on "how" the systemic dynamics of networking works and the impact of what it produces for businesses and society in general. Upon discovery of anything new everyone thinks they understand the new phenomena but few are able to truly comprehend the long term implications since there is no one historical reference to explain the dynamics in an orderly fashion.
What we are experiencing is the convergence of three scientific theories: clusters, emergence and social interaction being influenced and transformed by a technological medium. This convergence, coined as the networking effect, has a long tail of discovery with ongoing analysis and development of new intellectual properties being defined to explain the phenomena.
A network effect is a characteristic that causes a person, content or technology to have a value to another person or person(s) which depends on the number of other people who know the person or follow that persons content. In other words, the number of related connections is a term in the value available to the next connection. Isn't valuable tangible if considered worthy of use by one or more people?
Could all this mean that what lies between our ears could become a tangible asset that could be traded for economic value? Could the value become a new currency of trade?
I am not smart enough to answer the questions just curious enough to ask them and let smarter people find the answers. In doing so I hope to increase my own knowledge inventory which then I can share and trade with others. Ummm sounds like something that represents intellectual capital at work.
What say you?
-
Permalink Reply by Galen McPherson on
-
This emerging concept is exactly the kind of world market that has been outlined in Thomas Friedman's "The World is Flat" series of books: the old "countries as economic agents" was replaced by "companies as economic agents" and is now being replaced by "individuals as economic agents". The explosion of technology and the emergence of intellectual capital as the engine/powerhouse of the economy has caused/allowed individual intellectual capital to become a powerful driving force. Corporations that manage their intellectual/intangible capital will master the delicate balance of encouraging individual creativity while converting the products of such creativity to corporate assets.
Intellectual capital cannot be considered without recognizing the monopoly that each individual holds on the creation of new knowledge. No committee, task force or work team ever generated a new idea: it has always been the inspiration of an individual to make a connection not made earlier to "jump the chasm", while the team converts the new individual idea into corporate utility.
Human capital is nothing but the voluntary contribution of the individual to the corporate effort, and each human will begin to realize the quantity and value of the capital that he or she brings to the workplace.
Mary, you are correct: this will be completely disruptive to our current understanding and processes which are centered on the corporation as the "provider" of capital, now that individuals have emerged as more powerful contributors in this arena.
Mary Adams said:Jay-
I think that the definition of personal IC is an important part of this discussion--especially because you and a lot of other folks are helping us understand that social media and 2.0 technologies create the possibility of knowledge markets.
I wonder whether there would be an interesting group here--around the definition of personal IC markets--something everyone should pay attention to given its potential for disrupting our current understanding of corporations and human capital....
Jay Deragon said:Very interesting exchange here.
If I knew what you know and you knew what I know what would we know? Now consider what we do on line. We share what we know or think we know. In sharing what we think we know our knowledge gets vetted by others who use what we know or changes what we thought we knew. We are all learning from each other and if you approach all this social stuff as a learning medium then you gain access to a huge "knowledge inventory" of what people know or think they know. Subsequently we are indeed building "capital" that is being used by others.
As social technology grows users tend to "cluster" around an affinity of activities, topics and people with each representing a knowledge domain of interest. The cluster effect creates an increase in interest and exchange of ideas, thoughts and sometimes wasteful chatter depending on whom and what you are "clustering around".
The cluster effect is similar to (but not the same as) the network effect. It is similar in the sense that the affinity preferences of both the medium and its participants are based on each ones perception of the other rather than the medium simply being the sum of all its participants actions as is usually the case. Thus, by being an effect greater than the sum of its causes, and as it occurs spontaneously, the cluster effect is a usually cited example of emergence of knowledge. Said knowledge can be categorized into a taxonomy similar to an Encyclopedia. Knowledge becomes capital when it is used and applied. Can we measure its use and application? If so then are we not making knowledge tangible and if so can we trade it? If yes then are we witnessing the emergence of knowledge as an asset that when used and aplied could increase productivity?
The emergence of social networks as the revolutionary wave of consumer generated content and "connections" is controversial to say the least. The media sends a stream of opinions on "how" the systemic dynamics of networking works and the impact of what it produces for businesses and society in general. Upon discovery of anything new everyone thinks they understand the new phenomena but few are able to truly comprehend the long term implications since there is no one historical reference to explain the dynamics in an orderly fashion.
What we are experiencing is the convergence of three scientific theories: clusters, emergence and social interaction being influenced and transformed by a technological medium. This convergence, coined as the networking effect, has a long tail of discovery with ongoing analysis and development of new intellectual properties being defined to explain the phenomena.
A network effect is a characteristic that causes a person, content or technology to have a value to another person or person(s) which depends on the number of other people who know the person or follow that persons content. In other words, the number of related connections is a term in the value available to the next connection. Isn't valuable tangible if considered worthy of use by one or more people?
Could all this mean that what lies between our ears could become a tangible asset that could be traded for economic value? Could the value become a new currency of trade?
I am not smart enough to answer the questions just curious enough to ask them and let smarter people find the answers. In doing so I hope to increase my own knowledge inventory which then I can share and trade with others. Ummm sounds like something that represents intellectual capital at work.
What say you?
-
Permalink Reply by Andrea Gasperini on -
The framework that Association of Italian Financial Analyst (AIAF) has come up with to analyse the quality of reporting procedures for intangible assets.
The framework adopted is three-dimensional:
It splits information into actual data and forecast data
It analyses information on the basis of five dimensions typical of Intellectual Capital
It classifies companies based on how complete the information that they divulge is.
The model has been created with a view to analysing the behaviour of companies on the reporting front, and therefore, since it is applied to companies belonging to different sectors, it has been devised with a view to making it as flexible as possible whenever it is used.
For this reason, although we agree with the more widespread set-up devised for Intellectual Capital, which is based on a three-way split (human resources, relationships and structure), it was felt that using the five dimensions of reporting referred to above might allow the empirical analysis of the quality of company information to be carried out in a more complete and flexible manner.
Another feature peculiar to the AIAF model is the presence of strategy as one of the pillars of information. Strategy is a fundamental element that allows us to interpret and assess more effectively all information that may be disclosed by companies in respect of intangible assets assuming a more pervasive nature if compared with all other dimensions of the reporting process.
The usual content of the five dimensions referred to, with reference to the minimum level of disclosure that will be identified below with the first level, is as follows:
Strategy
Most of the information is of the qualitative kind. The content of this section tackles, in descriptive terms, the following topics:
products and life cycle
clients
markets
main competitors
market positioning and market share
leaning towards internal/external growth policies and alliances.
In terms of prospects, the main lines of development foreseen for the particular market in which the company operates are outlined.
Clients and market
The company provides a description of the sales structure adopted (direct, representatives, chains, sales outlets ….), indicating the relative importance assumed by the various channels. The information disclosed focuses on the element regarded crucial for the sector to which the company belongs: clients, sales outlets, promoters, audience, visitors, users …. The company’s description of its market position may be exemplified by a number of figures, such as number of clients, retention rate, average client acquisition costs and number of sales outlets ….
Human resources
This section provides a description of structure, in terms of staff categories and average cost per employee. The running of human resources also needs to be described, with information regarding staff turnover and a breakdown (functional/divisional) by activities carried out both being provided.
Those internal structures regarded to be strategic are identified and disclosed, with further specific notes of a descriptive nature also being provided in respect of such structures (make-up of research units, average age, level of education for search units, length of time served with company, length of working life).
This section is also used to highlight the connection and consistency existing between internal bonus and incentive schemes, intangible value drivers and performance ratios.
Processes and innovation
The description of this area may take on a role with different degrees of relevance, depending on the actual businesses of interest.
Specifically, the following must be indicated:
the importance assumed by innovation with regard to the company’s business, providing for example the composition of sales for products with a similar age and for those recently introduced
the propensity of the company towards innovation, which might be backed up with statistics for projects embarked upon and investments made
a description of the technologies used, along with any competing technologies
those processes deemed important, accompanied where appropriate by specific indicators
Organisation
The dimension “Organisation” lends itself predominantly to qualitative information regarding locations, sites and information systems. This section is enriched with the presence of group, division and operation organisation charts. This section may include information (qualitative or otherwise) regarding the company’s relationships with its suppliers, the management policies assumed in this regard, the stability of relationships, etc…
In the presence of an extremely dynamic macroeconomic scenario in which companies are summoned to compete, a sixth dimension for the reporting of intangible resources is acquiring ever-increasing relevance. This is not part of the dimension “strategy” or the dimension “organisation”, and instead bears special features typical of an institutional asset. This dimension concerns the issue of “corporate governance”, intended in its broader description as a management and control system on a par with one of the more powerful value drivers available to the company itself.
This dimension includes, first and foremost, all of the more traditional elements of corporate governance, such as:
a set of rules, whose purpose is to control the activities of management and steers its efforts in the direction of creating value, for both shareholders and stakeholders,
interaction between executive organs,
an adequate internal audit system,
communication between controlling shareholders and management.
Also part of this dimension is a range of more detailed aspects, such as:
a system for the delegation of powers and authorities, providing balance, in respect of responsibilities and roles, between management and the Board of Directors,
remuneration processes,
the quality of internal and external reporting regarding business performance and the company’s relationship with the financial community,
attention to the interests of the company’s stakeholders (e.g. production of environmental and social reports, etc.),
the focus on intangible resources included in other dimensions, such as the adequacy of the company’s human resources and the business organisation to attain the degree of innovation imposed by the sector in which the company operates, such that it can overcome business risks and make the most of business opportunities, therefore optimising its performance as well.
The information belonging to the five categories referred to above may contain actual or forecast data, depending on the nature of the information concerned. It is a known fact that the forecasting dimension assumes considerable importance in the valuation of intangible assets. Indeed, intangible assets are “intangible”, their size and amount being based on their predicted ability to guarantee stable economic benefits in the future.
In view of the pronounced leaning towards the future shown by the information needed to value intangible assets, the actual/forecast character of information has been given an important role in the analysis carried out.
The completeness of information with regard to the five dimensions described, the wealth of detail associated with the level of reporting provided (in respect of future-oriented factors as well), characterises the level of reporting for a company’s intangible elements. For the purposes of the analysis three levels of reporting, under which companies may be classified, have been defined.
Actually, we should point out that a “zero level” situation may also exist, where that is to say reporting activities do not cover, even to the minimal level, the five dimensions described and do not therefore enable an outside reader to understand what the central elements are in order for the intangible portion of the company being analysed to be valued and appreciated. In this case, the analyst – having a partial view of the phenomenon – is not in a position to form his own independent opinion.
The levels of reporting identified, and in keeping with which companies may be classified, are as follows:
Level 1- “minimal” information
A Level 1 company must ensure at least minimum coverage of the five dimensions identified: this means providing at least the information referred to above in summary form, in respect of each of the five dimensions described. The information in this case is predominantly of a qualitative nature, and relates to actual data.
This type of information may be included in a company’s financial statements in different parts of its report on operations and explanatory notes or – better still – in a specially created section within the report on operations.
Level 2 – “reasoned” information.
Level 2 requires the company to be favourable towards the disclosure of intangible assets: in this case the company has set up an ad hoc project for the analysis and disclosure of Intellectual Capital.
The document used for reporting purposes is again the company’s sole financial statements, in which a chapter will be created, as part of the report on operations, to provide information regarding intangible assets.
This section also involves a summary schedule being produced, as a kind of “control panel”. This “panel”, updated on a periodical basis, enables the company’s performance to be compared over time and encourages dynamic analysis. The information provided is similar to Level 1 information; its forecasting component must be accentuated. Specifically, for each of the five dimensions referred to, information (including qualitative information) must be provided in respect of the projected evolution of the company’s size and strategy, along with the usual related objectives that may be defined for the key figures used to measure company performance, for each figure generating value.
Level 3 – extended information: statement of intangible assets
Level 3 is used for those companies that publish a statement for intangible assets. This document is separate from a company’s sole financial statements. It may be structured by following the five sections of reference already described, with the addition of a section that sets out economic/financial targets. This section, by reporting the results obtained in relation to forecasts, also provides a picture of the company’s background in terms of strategies established and subsequently implemented.
Each section covers issues that are important for the business area being considered, and defines the benchmarks to be referred to in order to measure its performance.
Each paragraph contains a level of extended information with respect to the following:
qualitative descriptions
quantitative data
© 2012 Created by Mary Adams.
