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Advanced Tools for Visualizing,Measuring and Managing Intangibles
5th European Institute for Advanced Studies in Management (EIASM), Workshop on
Visualizing, Measuring and Managing Intangibles and Intellectual CapitalDresden (Germany), 8-9 October 2009 2009 [email protected] www.bengin.net
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Speaker
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Peter Bre tscher ,
Founder and ow ner,Engineering Off ice for Business DevelopmentIngenieurbro fr Wir tschaf tsentwick lung, Eggersr iet / Swi tzer land
Function in the Ing.Bro: Advisor to organizations in the design of economic steering and managementsystems that integrate the intangible perspective
Engineering background (worked 20 years in several functions along the whole value chain of an international R&D and
manufacturing company based in Switzerland)
Developed over the last 20 years the Business Engineering System(Tools for Business Administration)a MindSet and models for structuring and quantifying the tangible and intangible resources.
In addition he is supporting companies, consultants, and other organizations in innovation and project management, in
intellectual property and patent management, and in setting up business plans and defining enterprise strategy
He has initiated and is leading the bengin project. Its mission is to facilitate the awareness for and further development ofmanagement concepts that enhance the traditional economic model
Since 1994 he is teaching business engineering und business planning at the University of Applied Sciences in St. Gallen,Switzerland.
E-Mail: [email protected],Website:http://www.bengin.com/, Blog: http://www.bengin.net/wp/, Twitter: http://twitter.com/peterbretscher
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Agenda
Development o f Econom y
Innovat ion o f Product s - and Economic MindSet as a Product
Tw o Outpac ed Parad igms
The Vect or So lu t ion
Conclusion and Out look
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Development of economic assets
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Relative significanceof economic goods
100
60
80
40
Low middle high state of economic development
20
intangible goods
tangible goods
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Development of Business Offerings
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Summary
This are two developments we see in the real reality.
Intangiblesare (and will be) more and more important.
Intangiblesin a form of knowledge(use-how, make-how, think-how)
andin a form of intellectual property rights.
In order to enable a sustainable development we need an enhanced
theory that has the means for structuring and quantifying this (new)
reality.
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Many of the patterns of nature wecan discover only afterthey have
been constructed by our mind.
Friedrich von Hayek
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Agenda
Development o f Econom y
Innovat ion o f Product s - and Economic MindSet as a Product
Tw o Outpac ed Parad igms
The Vect or So lu t ion
Conclusion and Out look
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Idea to Innovation
Phase of incubation: 70%
Phase of invention: 25%
Phase of innovation: 5%
Examples:Concrete 40 28 20 yearsInforced concrete 22 7 18 yearsAluminium 29 53 26 yearsTelephone ? 14 2 yearsRadio 56 13 2 yearsRadar 29 2 1 yearsTV 22 22 8 yearsComputer 115 9 5 yearsICs 40 2 3 years
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8Mapping values
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Development of Business Theory(S-Curve of Product Development)
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1750 1800 1850 1900 1950 2000 2050
MoralSentiments
1759
Wealthof Nations1776
Adam SmithMarx
Gauss
To wne T ayl orMS-DOS
Keynes
Schumpeter
Classic:
Tangible AssetsMonetary Value Metric
Additional:
Intangible AssetsSubjective Value Metric
Mises
1782Anna Goeldin
Last witch beheaded(Switzerland)
64 Bit32 Bit
16 Bit
8 Bit
4 Bit
Rational MindSet I
Rational MindSet II
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Three Worlds trigger for invention?
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World 3: Six interdependent fields
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World 3: Six interdependent fields
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Summary
Tools for mapping economy and the rules for planning and reasoning
business objects are divised in six interdependent specialized fields
of profession.
In order to have an reasonable impact all areas/fields have to work on
solutions.
Even if a coordinator would be an idea....
I expect, that the development will follow a swarm behaviour.
The direction is driven by the need for:
(i) a framework that structures the intangibles and
(ii) a value-metric that allows calculation with subjective values.
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Count whats countable.Measure whats measurable.Make measurable whats not measurable.
Galileo Galilei
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Agenda
Development o f Econom y
Innovat ion o f Product s - and Economic MindSet as a Product
Tw o Outpac ed Parad igms
The Vect or So lu t ion
Conclusion and Out look
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Enhancing Paradigms
Deeply ingrained assumptions, teaching programs, mental
models, taken as granted. They determine how we are aware
of the reality and influence our behaviour.
At least 17 paradigms to be revised.
1.Ground, Work, Capital (as resources)
... to be substituted by a framework that is based on tangible and
intangible resources.
2.Value paradigm
Value as a result of a valuation process has
objective AND subjective aspects / dimensions.
A scientifically correct value metric system has to reflect this
necessity. Therefore it has to be multidimensional.(Linear measure vaporises the essence.)
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Objects, Attributes, Value-Measures
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ImaginaryNumbers
ImaginaryNumbers
Unit:iCHF, i$, i
Subjective Numbers
RealNumbers
RealNumbers
Unit:CHF, $, Objective Numbers
ResourcesResources
ObjectsObjects
NumbersNumbers tangibletangible intangibleintangible
ComplexNumbers
ComplexNumbers
Unit:CHF/iCHF, $/i$, /i Vector
Implicit Values
Explicit Values
combined
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Summary
Enhancing this two overhauled paradigms is possible.
(Even if it takes some time.)
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It is the theory which determineswhat we can observe.
Albert Einstein
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Agenda
Development o f Econom y
Innovat ion o f Product s - and Economic MindSet as a Product
Tw o Outpac ed Parad igms
The Vect or So lu t ion
Conclusion and Out look
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The Vector
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Value b
Value a
Vector = a + b
Single 2D-Vector4 vectorsof objects
Addingvectors
y
x
y
x
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Vector Type 1
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More samples:http://bh.bengin.comhttp://www.bengin.net/soft/vektorbeispiele01_d.htm
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Vector Type 1 (Aggregation and Drilldown)
Engine
Chassis
Body /Design
Brand / Image
Functionalitysubjectivecustomer value(of the product)
R&Deffectiveness
R&D expenditures / input ressourcesR&D efficiency
qualitative / subjective
quantitative/financial
Total
(Comp
ound)Pe
rform
ance
Drill-
Down
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Vector Type 1 (Public Service Departments)
0
20
40
60
80
100
120
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
9 Police&Justice
PublicServiceDepartments
Effec
ts(su
bjec
tivec
itizenper
spec
tive
Costs
Perfor
mance
(ofpublic
servic
edepa
rtment
s)
8 Others
7 Healthcare
6 Economy
5 Education
4 Infrastructure
3 Finance
2 Defense
1 Foreign Affairs
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Vector Type 1 (practical application)
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Asking customer(Internet)
Decision cockpit(links internal economic data with answers of customers)
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book value
use value ofinvestment for
investor A
price investor Bis willing to pay
price investor Ais willing to pay
subjective(intangible) view
objective (financial) view
use value ofinvestment for
investor B
intrinsic value
price
uv B = (p B)2 (bv)2uv B = (p B)2 (bv)2
uv A = (p A)2 (bv)2uv A = (p A)2 (bv)2
Vector Type 2: Linking objective with subjective axis
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Overpriced Papers? Is the Vector a prognostic tool?
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
10000000002000000000
3000000000
4000000000
5000000000
6000000000
7000000000
8000000000
9000000000
0 2E+0
9
4E+0
9
6E+0
9
Explicit Values
Im
plicitValues
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
96
97
98
99
....a year before the downturn of the classic curve.......the Vector Map indicated a change of Coca Cola Amatil.........
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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)
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Intangible Assets or Shareholders Profit Expectation?
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
implicitvalue[i -Mia]
explicit value[Mia]
-
McDonald's
Microsoft IBM
Ford
CocaCola
The explicit Value and the implicitValue together draw a completepicture about the companys valueand its development.
The question remains:Is the implicit Value given by thereal Value of the company?Is it given by some marketing tricks?
Which part of it is made by theShareholders Value Expectation?
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A better model for new decisions
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 6'000 7'000 8'000 9'000 10'000
explicit Values
imp
licitVa
lues
Investors: Attention!
Management could use thepotential more effective.
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Tracking the development of an enterprise
Pointer of vector for five years
0 200 400 600 800 1'000 1'200 1'400 1'600
explicit axis [Mio CHF]
0
200
400
600
800
1'000
1'200
1'400
implicitaxis[MioiCHF]
96
93 94
92 95Question:"What happened in the year 1996?
Answer:Part of enterprise sold.
2nd Question:Is this loss of intangible values compen-sated by the price received for the soldpart of enterprise.
Answer: ?
Ask Auditor if hes still available.
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Summary
With Vector 1 it is possible to show any desired values in context.
With Vector 2 it is possible to introduce a standard for subjective values.
After the relativity of timefor the physicists100 years ago, an analogical
step can be made by economistswith the relativity of value.
It will enable a more sustainable economy.
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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
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Agenda
Development o f Econom y
Innovat ion o f Product s - and Economic MindSet as a Product
Tw o Outpac ed Parad igms
The Vect or So lu t ion
Conclusion and Out look
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Summary
I am very optimistic, that the economic theory will reach a higher level of
applicability.
An enhanced economic paradigm (in that intangibles and subjective
values will count) will improve the reasoning and decision process
and in its consequences will enable a new dimension of wealth.
Tree samples of influence we see at that time:
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Many of the patterns of nature wecan discover only afterthey have
been constructed by our mind.
Friedrich von Hayek
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Four Main Points
1. Structure of Enterprise
3 Offerings7 Processes
6 Primary-Resources
2. Measures and Metrics
Enhanced System of Measuresthat Integrates Intangibles
and Subjective Metrics
3. Strategy of Enterprise
Outside-Inand
Inside-Out
4. Optimizing Value Net
Fromsupplier of supplier
tocustomer of customer
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Four Main Points
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Back- and Frontside of the Economics MindSet
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Subjective Experiences,
Values and Believes
Classic Rules,
Standards and
Value Metrics and Measures
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Back- and Frontside of the Economics MindSet
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36Mapping values
Image
Flow of InformationTransparenceKnow-HowGoodwillSense, ClimateIdentificationWork with joyPatentsCopyrightsBrands
Intangible means of production
Imaginary Balanceintangible assets
subjective
O I
Dismissals -
E nga ge men ts +
O ut so ur ci ng -
Absences -
Death --
Intell. prop ++
Profit-/Loss
----------------------------
Sum + -
O In
R aw ma te ri al -
T oo ls , M ea ns -
Wag ue s M in d -
Wag ue s Ha nd -
S ales Rights +
Sal es Servi ce s +
Sal es P ro du ct s +
P/L
----------------------------
Summe + -
Headwork
Handwork
Tools
Manufacturing
Original cost
Margin
Net SP
Margin
------------------------
Gross SP
Hidden reserves
Current assets
Fixed Assets
____
Outside capital
Equity capital
Sec ur it y P ra is e, t ha nkEducation EnlighteningAcceptance Transparence
production
Designed for
Designed for
Designed for
users needs
qualityHidden reserves
Classic balance oftangible assets
objective
subjective Values, not tangible, but real objective Values [$, ,. , CHF]
Imaginary P&L of potential Classic P&L
imaginary business economics traditional business economics
Design of products(properties) Product calculation
Rights
Products
Services
1985 / 2008 Peter Bretscher
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Pricing Values?
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Tangible and intangible
assets of an enterprise,
potential of an enterprise,
values of an enterprise
Market for Papers
(Stock-Exchange)
How to determine fair value (price) for a paper?
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Pricing Values?
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38Mapping values
Struc
ture
*)
Intro
duc
ing
ax
isfor
intang
ibles
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And now?
You are welcome and invited to take part of that journey.
Mobile: ++41 79 650 49 04
Eggersriet, Switzerland
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A long journey begins with just one step.
Chinese
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Thank YouWeb http://www.bengin.com
Blog http://www.bengin.net/wp/Twitter http://twitter.com/peterbretscher
Special Website http://www.bengin.net/dresden/
benginBeyond Limits of Classic Business Paradigms
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backing slides
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Q I: Transform -T/+INew projectsRevisions of offeringsInsourcing/merging....
Q II
Transformation(I to T)
The four Quadrants of Value generation
Q IV Q III
Q I
ValueGeneration2
Transformation(T to I)
ValueDegeneration
R&D
+ Intangibles [i$]
- Intangibles [i$]
in
out in
out
+ Tangibles [$]- Tangibles [$]
Q II: Generation +T/+IDaily businessSelling, dispatch(Re)Production
....
Q III: Transform -I/+TOutsourcingLeaner production....
Q IV: Degeneration -I/-TGraveyard....
1996/2010 [email protected] of Business Engineering Systems,
Registered Copyright TXu 512 154
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$
% i$
2. QualitativeMetrics
hot, cold ...... AAA, A+, B, C
4. Quantitative Metrics(multidimensional)
$
Why Metrics?- comparing, comprehensible, reproducible- Making rationale (and indirect) communication easier.
1. Normative "Metrics"
Principles, ....The xx "Commandments"
Axis of time
Measuresre
ducenee
d
for
interpre
tation
Strongnee
dfor
interpreta
tion
$
% i$
$
Possible tocalculate with and
visualize 2D-Values
Difficult to visualize.No tools and rules
for numerical orgraphicalcalculations.
Development of (economic) Value-Metrics(Compound Value-Metric System with the subjective, implicit Value axis)
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3. QuantitativeMetrics (linear)
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Von verschiedenen Organisationen in verschiedenen Projekten
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Bus. Techniquesnew
new
old
old
Technologies
Innovating Business Models
Products+ Services
Products+ Services+ Rights (IP)
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Measuring performance
http://www.performanceprofile.comhttp://www.balancedscoremap.com 2009 bengin
46Mapping values
Creating Values
i$
Invest
generated earnings
$
Counting Values
i$
$explicit values
imp
licitva
lues
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2000
00
551
97
648
97
0
500
1000
1500
2500
3000 Mio
0 10 20 30 MiomV
iV
SPE
Initial Base (Value estimation)
Initial Offer, March 24. 2000
Evening 1st Day
1969
2'520
SPE
Share
ho
lders
Pro
fitExpec
tation
Value (Price) Development of Paper
(Shareholders view)
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Explained world
Value
Nach: Marle Marks,
Manager Magazin 3/85
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Color measures
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1D 2D rulers, metrics
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Vector: Velocity
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Next step: Focus on economic MindSetting / Paradigms
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Real economy
Solutions(Form & Content)
Hardware
So
ftWare
Applikations
Operating System MindWare
Applications
Economic. TheoryBasics
New MindWare & SoftWare quantum leap in the
simulation and planning of todays economy.
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Basics of 2D-Value-Vector
x, y = two arbitrary properties of an object
y [i$]
x [$]x1 x2
y
x
Illustration 1
Illustration 2
x y x y
Cost Price Turnover Volume [m3]
Transports
initialized
Transports
finishedCost
Deckungs-
beitrag
Budget Rechnung Price Retouren
Medical
Properties
Subjective
conditionTurnover
Mitarbeiter-
zufriedenheit
Turnover Spartengewichtet
Retouren Kunden-zufriedenheit
x, y = explicite ("objective") andimplicite ("subjective") Value-Propertiesas a Multi-Value-Compound.
x1 x2 Samples
Sum of balanceSum of Share
PriceShareholder Value
Wagues Turnover Weighted added Value
Price VW Price Porsche Subjective Added Value
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