Connecting intangible assets to the bottom line. (Foundation Findings).If a tree falls in the forest, does it make a sound? That's a classic question for philosophical pondering pon·der
v. pon·dered, pon·der·ing, pon·ders
To weigh in the mind with thoroughness and care.
To reflect or consider with thoroughness and care. . How about this one: If an asset is intangible, does it make an impact on the corporate bottom line? Of course it does. But how can this impact be captured, quantified or valued in the financial analysis?
The IABC IABC International Association of Business Communicators
IABC Indo-Americans for Better Community Research Foundation's latest research project, debuting at the 2003 Toronto international conference, will help communication practitioners help their clients connect intangible assets Intangible Asset
An asset that is not physical in nature.
Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. to the corporate bottom line. "Intangible Assets and Communication," by the research team of Hanno Roberts, Peggy Peggy may refer to:
DEFINING TANGIBLE AND INTANGIBLE ASSETS
According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. "The New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times Dictionary of Money and Investing," an intangible asset is "a legal claim to some future benefit, typically a claim to future cash." Simply put, an intangible asset (also known as intellectual assets, intellectual capital, intellectual property or knowledge capital) is an asset that is not physical in nature. Examples include copyrights, patents, intellectual property, goodwill, brands, trademarks, ideas and relationships. The list can be extended to include elements like creativity, innovation, professionalism professionalism
the upholding by individuals of the principles, laws, ethics and conventions of their profession. and loyalty. On the opposite end of the spectrum are tangible assets Tangible Asset
An asset that has a physical form such as machinery, buildings and land.
This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. , which are typically thought of as things that determine a company's value, such as equipment, facilities and inventory.
The ABC ABC
in full American Broadcasting Co.
Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. Research Foundation's research team organizes intangible assets (goods and competencies) in three categories that correlate with the corporate bottom line: human capital (experiences and expertise of people who produce knowledge), relational capital (the connectivity and exchange process-knowledge production) and structural capital (organizational infrastructure that allows connectivity to take place--the knowledge production process enabler). The jump from relational capital to structural capital is where the knowledge production process becomes an organizational process.
Today, many companies derive their value from more than just things. Their worth and future success depend on intangible assets, as the new study makes clear: "From a communication point of view, intangible assets have become important as a result of the general higher level of knowledge in society. Stakeholders Stakeholders
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. such as consumers, political authorities Political authorities hold positions of power or influence within a system of government. Although some are exclusive to one or another form of government, many exist within several types. , interest organizations and potential employees are more conscious of where they stand and what they want."
USING RESOURCES EFFECTIVELY
The research team defines companies by their use of knowledge. But they remind the reader that "all organizations are knowledge organizations and they range from knowledge-intensive service providers to high-tech manufacturers. All organizations build on knowledge work as their primary valueadding process and, therefore, are exemplary showcases of the challenges of the new economy."
The authors point out that firms always have had knowledge as one of their resources, but its competitive relevance and intensity has dramatically increased over the last decade.
According to the study, knowledge organizations can be categorized cat·e·go·rize
tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es
To put into a category or categories; classify.
cat on the basis of their knowledge utilization--the way they deploy their knowledge resource. Within the knowledge economy, firms can be either:
* knowledge-intensive or
The authors explain the differences this way: Knowledge-based firms, such as consultancies or educational institutions, have knowledge as the only outcome of their transformation processes. Knowledge-intensive firms, such as software development or car manufacturing, have knowledge as one of their outcomes in parallel to their manufacturing or service production. Knowledge-driven firms do not have knowledge as their main output but rather as their input, nor have they centered their transformation process on it. An example of a knowledge-driven firm is an electrical installation firm where the professional training of the operators is the main knowledge input.
MAKING KNOWLEDGE PAY
This concept of knowledge intensity is a continuum Continuum (pl. -tinua or -tinuums) can refer to:
Often, communication is reflected in financial documentation only as an expense. Yet the research team shows through this study that managing communication is a key to creating value and to revealing the value of other intangible assets.
The researchers suggest that elements of the communication function must be acknowledged as assets for the company in financial documentation because the company's structural and tangible assets would not exist without it. Without intangibles such as human capital and relational capital, the company would not have profit-producing tangible products and services.
How can the value of these intangible assets be reported? The research team developed three screening devices to help communicators assess the relational, structural and human capital components of intellectual capital within an organization. The study also provides formulas for identifying these assets on a financial balance sheet.
The authors' research supports the concept of intangible asset reporting and intellectual capital statements. Similar to the corporate annual report, these statements provide financial analysis of intangible assets backed up by a narrative report. "An intellectual capital statement focuses on an extended resource definition and, consequently, on an extended definition of what value actually is and encompasses," according to the study.
The authors continue: "Knowledge resource is specifically included in that extended resource definition and what drives that knowledge resource is usually expressed as knowledge work and knowledge sharing, network cooperation and non-financial information. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , measurement in terms of value drivers covers many non-financial areas."
TELLING THE FULL ASSET STORY
In this model, communicators are doing what they do best-telling the story of the company through its intangible assets.
Through "Intangible Assets and Communication," Roberts, Bronn and Breunig provide the steps for identifying and communicating the value of intangible assets for companies and organizations. The study offers screening tools and intellectual capital statements that communicators can use not only to help organizations explain the value of their intangible assets but also to identify and position communication challenges surrounding sur·round
tr.v. sur·round·ed, sur·round·ing, sur·rounds
1. To extend on all sides of simultaneously; encircle.
2. To enclose or confine on all sides so as to bar escape or outside communication.
n. this knowledge frontier.
RELATED ARTICLE: ABOUT THE FOUNDATION
The IABC Research Foundation contributes to a body of knowledge that advances the practice, perception and effectiveness of communication. It serves IABC, its members and others in the profession through research on organizational communication Organizational communication, broadly speaking, is: people working together to achieve individual or collective goals.  Discipline History
The modern field traces its lineage through business information, business communication, and early mass communication .
* The "INTANGIBLE ASSETS AND COMMUNICATION" report will be available in July 2003. To order online, visit www.iabc.com/store or call 800-776-4222 or +1 415-544-4700.
Tamara Gillis, ABC, Ed.D., is an associate professor
and department chairman at Elizabethtown College Elizabethtown College is a small comprehensive college located in Elizabethtown, Pennsylvania in Lancaster County. The school was founded in 1899 by members of the Church of the Brethren. It is commonly referred to as "E-town.
in Elizabethtnwn, Pa.,
and past chairman
of the ABC Research inundation INUNDATION. The overflow of waters by coming out of their bed.
2. Inundations may arise from three causes; from public necessity, as in defence of a place it may be necessary to dam the current of a stream, which will cause an inundation to the upper lands; . She can be reached at