Projects & Why they Matter: Captur ing Intangible Value

1. . Projects & Why they Matter: Capturing Intangible Value Lea Symonds June 2007

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4. Fundamental Message What applies at the macro level also applies at the micro level

5. The Intangibles Challenge NEW YORK ; Jan 29, 2004 According to Accenture global survey “Half of senior executives believe that managing intangible assets is one of the top three management issues facing their companies today.”

6. Fundamental question What is an intangible?

7. What are Intangibles ? Anything in an organisation thatgenerates value that you cannotdrop on your foot!” The Economist

8. Name the Intangibles

9. About Intangibles Aren’t articulated in numbers (but make up what is behind them) Are ambiguous Easy to miss the opportunity they offer Long to build/quick to lose Need gifted and insightful leadership to realise the benefits on behalf of the business

10. Fundamental question What measures are currently being used?

11. Balanced Scorecard Kaplin & Norton’s balanced scorecard is a useful performance measurement framework well known to business. 4 Dimensions are: -Financial -Customer -Internal -Innovation & Learning

12. Balanced Scorecard Financial – return on capital, return on sales, sales growth, return on assets etc (desiredoutcome) Customer Perspective – satisfaction,growth of customer base, service delivery (project driver) Internal Process Perspective – order taking, fulfilment & delivery, client information ( project driver) Innovation & Learning – performance mgt, career development, knowledge capture ( intangible)

13. The invisible balance sheet Karl- Erik Sveibytalks of an invisible balance sheet for measuring intangible assets Internal structure: patents concepts, models, computer & admin systems. Created by employees and“owned” by the organisation. Culture or esprit d’corpsbelongs here too. External structure: relationships, stakeholder/customer satisfaction, strategic partnerships, brand names, trademarks, reputation, image. Individual competence: skills, education experience, values, leadership and social skills.

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15. . Question: Did Nokia really “lose” US $86 billion worth of intangible assets (or intellectual capital) in a year? Answer: Share price is a perception about future– will fluctuate with general economy

16. Fundamental Message “I don’t believe any numbers I haven’t already massaged myself!” Gerhard Cerny CIO of Siemens Business Services

18. Fundamental Message In a knowledge economy the tangibles & the“intangibles” are all about people as the organisation’s sole profit generators… peoples’ actions as revenue creators peoples’ knowledge & competence as wealth creators people who create & maintain value

19. How is this relevant to projects ?

20. Fundamental Questions What is this project’s value to the business? How should we measure value…. and what should we know about “intangibles” ?

21. Fundamental Message Value is defined by receiver more than the giver

22. Projects & organisational value Project deliverables (tangibles)are only a start. What intangibles do projects offer?

23. Where to find intangibles in the project space.

24. Name the Intangibles Build Organisational Capability(innovation,new ways to do business, more complex projects extend competence) Competitiveness(speed to market,speed to change) Support Brand & Reputation Goodwill(customer/stakeholder) Investor Confidence(flagship projects) Support Strategic Intent Strategic Alliances/Partnerships

25. What other intangibles? At your table groupidentify 2 more.

26. Name the Intangibles Talent(incubator, extender, attractor) Knowledge Management (transfer knowledgefrom experienced to the inexperienced) Career Building (talent spotters, networks) Employee Development & Extension(skills building, mentoring, coaching) Leader Development Translate Organisation Values into Practice Change Agents (experience in facilitating change)

27. Name the Intangibles Workforce Recruitment & Retention Incentives, Rewards & Recognition Diversity ( Generational mix) Culture (Organisation & Team) Collaborative Cross Business Synergies Intellectual Capital Relationship Building & Networks(External & Internal)

28. Warning Dysfunctional projects will fail to capture the value of the intangibles!

29. How can you use this? The elevatorspeech…

30. The elevatorspeech… Our project is on track to deliver identified tangible benefits. You might also be interested to know how else it is supporting strategic intent and building organisational capability in areas such as talent management, career planning and brand enhancement……. Yeah!!!

31. Business Realities - People Skills shortages – recruiting & retaining Mobile workforce – meeting career needs Diversity in workforce – Gen X Y & BB Markets–Global vs traditional Where work is done – alternate locations/virtual work sites Labour Cost - “cheap” labour source options

32. Useful quotes

33. Quote Many firms have intangible assets – knowledge, relationships, reputations and people. However, only some firms succeed in converting these assets into intangible capital. Intangible assets only create value when captured asintellectual property, networks, brand, and talent. These four intangibles are the scarce resources of the intangible economy. The Intangible Economy and Australia By John Daley Australian Journal of Management, Vol. 26, Special Issue, August 2001, © The Australian Graduate School of Management

34. Intangibles “The effectiveness of your intangible assets (knowledge, relationships, motivation and speed), determines organisational performance, retention, returns, loyalty, service and satisfaction. Underperforming organisations have underperforming intangible assets.” Dr Ken Standfield,Chairman International Intangible Management Standards Institute. 􀁏

35. References • Karl-Erik Sveiby: The Invisible Balance Sheet • Murphy & Simon: The Intangible benefits valuation in ERP Projects, Florida International University

36. A Final Word… You know …. That absenteeism, sick leave, accidents, all reduce productivity, revenue, and earnings as well as result in cost wastage - but what is the financial value? That when people do not share their knowledge or have low-quality knowledge, that productivity, revenue, and earnings are lost as well as costs being wasted - but what is the financial value? That ineffective collaboration results in lost productivity, revenue, and earnings as well as wasted costs - but what is the financial value? That knowledge is valuable, but what is the contribution of knowledge to revenue, costs, and earnings? That collaboration is valuable, but what is the contribution of collaboration to revenue, costs, and earnings? That organizational culture is valuable, but what is the contribution of culture to revenue, costs, and earnings? Its hard to put a financial value on staff engagement or disengagement. Its hard to determine the costs and benefits associated with strategic execution - the project related operational activities that either create or prevent strategic success.