Planning & Budget:Measuring by Return On IntangibleAn IBCM© Research Presentation                                    1
Overhaul Budgeting by 180°Corporates and Governments have come to depend on Budgets as a  primary tool for setting growth ...
Opposite Value - at 180°Truth involves completely opposite values; then only, it can be Truth.In the subject-object distin...
Resource energyNotwithstanding the accounting convention of asset or liability, inanimate objects that occupy a Balance Sh...
Value ~ ValuelessInfinite succession of finite Inanimate objects give an impression of   being in motion but indeed they c...
Intangible - A hole-in-one                      St. Augustine: "What art thou doing,                      my child?"      ...
Planning & Budget1. Budgeting - Balance Sheeti. Variance analysis - Advance itii. RoI - Return on Intangibleiii. Emotional...
1. Budgeting - Balance Sheeti.   Variance analysis - Advance it                                                           ...
1. Budgeting - Balance Sheetii.   RoI - Return on Intangible1.Between 1998 when Grand Metropolitan and Rank Hovis McDougal...
1. Budgeting - Balance Sheetiii.   Emotional Value Capital - Action ProcessBudgets, by corporates as well as governments, ...
2. Planning - Intellectual Value Capitali.   Creative Process1. Budgeting - Quantitative Elements - is an Action Process o...
2. Planning - Intellectual Value Capitalii. Corporate Atomic StructureIntellectual Value Capital: is fixed assets or      ...
2. Planning - Intellectual Value Capitaliii. Rating (0 - 5)1. Policies                                 2 Value System  Man...
3. Intangible Value Capitali. what really matters is m the mass1. Intangible Value Capital: Rating of 0 to 5 indicates the...
3. Intangible Value Capital                                       Resource Team                                           ...
4. Knowledge Management                                  Process Areas:                                                   ...
4. Knowledge Managementii. Occupy Wall Street1.RoI - Return on Intangible - by Subject - Object distinction brings home   ...
Thank YouAll the rating agencies have uniformly declared: “A rating, very simply   put, is an opinion -- an independent op...
ReferenceRef. 1: Accounting for brands in ED50 of IASC [Intangible Assets] compared with French and German practices –    ...
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Planning and budget measuring by return on intangible

  1. 1. Planning & Budget:Measuring by Return On IntangibleAn IBCM© Research Presentation 1
  2. 2. Overhaul Budgeting by 180°Corporates and Governments have come to depend on Budgets as a primary tool for setting growth targets.Reeling under Corporate Toxic assets and government impaired assets, people are looking for a way out.People contribution to Provident Funds, Mutual Funds, Pension Funds of hard earned money of over 40 years constitute the biggest chunk of funds available for market investment.Only a few corporates have sustainable energy on whose capability Market rests.Overhaul Budgeting by 180° is to bring to fore capable trustworthy companies where People can invest confidently, at a time investments in public equities are at historical lows. How? By measuring RoI of companies: turning 180° from Return on-Investment to Return on- Intangible. 2
  3. 3. Opposite Value - at 180°Truth involves completely opposite values; then only, it can be Truth.In the subject-object distinction of corporate management Balance Sheet represents the man-made objects and their characteristics. The subject responsible for creating them comes as a footnote of a signature.Both subject - object have energy - pulsating energy of the subject and non-pulsating energy of the inanimate objects, one is creative and the other inert.Market dances according to the tunes set by inanimate objects that slip into oblivion by the closing bell. Market stability is attained by measuring the opposite values i.e. pulsating energy of corporate management.Truth is Balance Sheet hides it. 3
  4. 4. Resource energyNotwithstanding the accounting convention of asset or liability, inanimate objects that occupy a Balance Sheet, inert, sitting smugly unaware of the rest, are bound up with huge energy waiting to be liberated.By itself an object cannot liberate the energy unless a collision takes place triggered by the pulsating-energy. That pulsating-energy is common from a potter to a nuclear scientist, the cause that would trigger the release of the respective non-pulsating energy.Corporate Management has only one source of energy which is pulsating-energy. That energy is Intangible.Intangible job description is a. Create Infrastructure, i. Policies, ii. Value System and iii. Inanimate objects and b. liberate energy from inanimate objects in infinite succession of finite purposes.Intangible is the only resource area for creative process as well as action process of corporate management. 4
  5. 5. Value ~ ValuelessInfinite succession of finite Inanimate objects give an impression of being in motion but indeed they change from one static frame to another, by the impact of Intangible.Huge energy is bound up in every object, bigger the mass bigger the energy. A toxic or impaired asset has no mass and has no energy.Balance Sheet is a convoluted process of exhibiting self-deception.What is crucial is to bring the abstractions into reality, acknowledge value where value is due, and deconstruct what is valueless. 5
  6. 6. Intangible - A hole-in-one St. Augustine: "What art thou doing, my child?" "I mean to empty the sea into the hole," answered the child, busily going backwards and forwards with his spoon. By Subject - Object distinction of Management, entire data of World Economy is compacted in a small hole of Intangible, arriving at a single rating (0-5), where the rating represents m mass in the equation e = mc² where e is the Intangible, the energy force. Objects (Subject) 6
  7. 7. Planning & Budget1. Budgeting - Balance Sheeti. Variance analysis - Advance itii. RoI - Return on Intangibleiii. Emotional Value Capital - Action Note: Planning & Budget is the third in the series of Intangible Value Capital by IBCM© Process Research:2. Planning - Intellectual Value Capitali. Creative Process 1. DIY - Corporate Rating:(http://bit.ly/QCo88r) Three Principles - i. Real-time Monitoring, ii.ii. Corporate Atomic Structure Study of Cost Consequence and iii.iii. Rating (0 - 5) Participation of Society.3. Intangible Value Capital 2. Investment Decisions for Pension Funds byi. What really matters is m the mass Intangible Value Capital:ii. People ( http://slidesha.re/PP945v) - Corporate4. Knowledge Management Critical Density demands sustainability of i. Return on Intangible three components - i. Efficiency, ii. Value System and iii. Profits, to ensure that justii. Occupy Wall Street everything is just right.Remarks, Reference 7
  8. 8. 1. Budgeting - Balance Sheeti. Variance analysis - Advance it Resource Team1: Budget - Breakdown to Daily Balance Sheet 1. People 2. Managerial2. Resource Team for each block of 5 KPIs. KPIs 3. Technology 4. Operational3. Day 1: Opening Bell to start material events. 5. FinanceMaterial Event is when Intangible collides with tangible object.4. On Closing Bell Day 1: Rating by IBCM©, for each block, by relative efficiency to Budget Day 1 figures, to arrive at 0 - 5 rating of block(s).5. Optimal rating (5) consistently by each block, Annual Budget targets are met. Shortfall of even 1 KPI brings down the rating from 5 to 4.7. Variance analysis: real-time, each object, study of cost consequence, decision making advanced, corrective action effected, Accountability measured - extrapolate to Annual Budget.8. Each block ensures compliance to ethical and regulatory standards, by resource team of (1. People) led by CSR-in-charge. 8
  9. 9. 1. Budgeting - Balance Sheetii. RoI - Return on Intangible1.Between 1998 when Grand Metropolitan and Rank Hovis McDougall, decided to include the value of brand names in their consolidated Balance Sheets, [Ref. 1], through Sep. 1998 when IAS 38 was published and the financial crisis in 2008, in May 2011 frustration was evident: “It is not clear that the so-called GAAP standard is even particularly meaningful anymore: companies continue to search for beneficial ways in which to disclose information about themselves with or without formal sanction.” [Ref. 2].2. RoI - Return on Investment is: Numerator - inanimate object & denominator - same = 0 (zero)/ 0 (zero) = 0 (zero)3. RoI - Return on Intangible: Numerator - Intangible present or absent (1 or 0) & Denominator - Intangible (1) = 1 or 0 (zero)4. A Corporate or a Government is an inanimate object by itself. Material events result in adding mass to the organisation. 9
  10. 10. 1. Budgeting - Balance Sheetiii. Emotional Value Capital - Action ProcessBudgets, by corporates as well as governments, that are prepared with lot of care, focus on objects.Not surprisingly in the competitive spirit of corporates emotions run high and in majority of cases create toxic assets than adding mass. Governments on the other hand convert good intentions to wasteful expenditure and broken promises, for the lack of any emotion.Return on Intangible turns the attention on the action process of management of objects. Optimal rating does not guarantee the non- existence of toxic assets or impaired assets. What is needed is the Intellectual Value Capital, a firm footing on Quality, to ensure RoI is reliable.Without Quality Corporates will find stranded in Emotional Value Capital bereft of value, as many many are. 10
  11. 11. 2. Planning - Intellectual Value Capitali. Creative Process1. Budgeting - Quantitative Elements - is an Action Process of Management, measured by Emotional Value Capital.2. Planning - Qualitative Elements - pertains to creative process of Management, measured by Intellectual Value Capital. • The end product of a creative process is a tangible substance: The beginning, subtle and non-existence.3. Intellectual Value Capital. – Intellectual Value Capital represents Quality of Corporate Management and the cause of Emotional Value Capital, establishing unique relationship with every single Object. – Policies are rated by Intellectual Value Capital. – Practices are rated by Emotional Value Capital. 11
  12. 12. 2. Planning - Intellectual Value Capitalii. Corporate Atomic StructureIntellectual Value Capital: is fixed assets or Corporate Atomic Structure proton of Corporate Atomic Structure. Intellectual Value Capital• IPRs, Patents, Policies created are the basis - of Practices to follow. +• has the same Resource Team of 5 categories but of managerial emphasis. + -• 6 stages to become a substance. Nucleus + Proton Policies• like Proton that has 1836 times the rest mass of an electron, has huge energy Neutron People• has the same characteristics waiting to be - Electron Practices liberated to release the energy - that rests on Intangible. Emotional Value Capital 12
  13. 13. 2. Planning - Intellectual Value Capitaliii. Rating (0 - 5)1. Policies 2 Value System Management Quality Human Rights Accounting Quality Labour Rights Corporate Governance Environmental Risk Management Anti-Corruption Resource Team Material Events 1. People 2. Managerial 3. Technology KPIs Creative Process Action Process 4. Operational Intellectual Value Capital Emotional Value Capital 5. Finance Measuring Policies & Measuring adherence to Value System Policies & Value System 13
  14. 14. 3. Intangible Value Capitali. what really matters is m the mass1. Intangible Value Capital: Rating of 0 to 5 indicates the mass added, from bottom-up granular data for each Block of 5 KPIs.2. Derived from Emotional Value Capital and Intellectual Value Capital.3. Policies and Value System rated independently give strength to Practices.4. A company with optimised level of Profits at 5, by Madoffing and Enroning will find Intellectual Value Capital at 0 (Policies at 0 and Value System at 0). Intangible Value Capital will result in rating of 1. Resource Team Intangible Value Capital 1. People 2. Managerial 3. Technology KPIs Creative Process Action Process 4. Operational Intellectual Value Capital Emotional Value Capital 5. Finance Measuring Policies & + Measuring adherence to /2 Value System Policies & Value System 14
  15. 15. 3. Intangible Value Capital Resource Team 1. Peopleii. People 2. Managerial KPIs 3. Technology 4. Operational 5. Finance1. Material Energy: Is the energy liberated by Intangible, the only source to a Corporate Management.2. People from Society do not influence the Corporate Identity but add mass to it, by their presence in each block of 5 KPIs.3. Profits, Policies and Value System averaged together form the optimum Rating of 5 as Intangible Value Capital.4. Pension Funds of USD20.1 trillion built by individuals contribution of 40 years savings would necessarily sway the Fund Managers to invest in corporate equity in the market on companies with a rating of 4 above of Intangible Value Capital, in order to improve from the current negative return of -3. 15
  16. 16. 4. Knowledge Management Process Areas: Financial Accounting, Managementi. Return on Intangible Accounting, Human Resources, Manufacturing, Supply Chain Management, Project Management, Marketing, Data Services1. Integrate Profits to Policies and Value System, measuring EPS, Management Quality, Accounting quality, Risk Management and Corporate Governance.2. Relate each process area to Resource Team of 5 KPIs in a single block. i.e. each goal is shared by 5 member team.3. RoI - by each block, by i. Resource Area and ii. Process Area4. Relate Valuation and Compensation by mass added to each block. Resource Team Intangible Value Capital 1. People 2. Managerial 3. Technology KPIs Creative Process Action Process 4. Operational Intellectual Value Capital Emotional Value Capital 5. Finance Measuring Policies & + Measuring adherence to /2 Value System Policies & Value System 16
  17. 17. 4. Knowledge Managementii. Occupy Wall Street1.RoI - Return on Intangible - by Subject - Object distinction brings home where energy is created.2. People Participation - Balance Sheet data provided to the public encourages insider trading and hides toxic assets. Intangible Value Capital brings in People Participation by recognising in each block the importance of People as the numero uno of investment in Corporate Equity, directly as well as through Pension Funds.3. Public Reporting: Higher RoI companies will take the place in Wall Street pushing the lesser mortals however big they are now. Intellectual Value Capital Rating will dominate, assuring sustainability of business growth and profits.4. 3 Ps - Policies, Profits, People will move forward, together.5. Occupy Wall Street: With Pension Funds looking at Intellectual Value Capital at optimised rating of 5, companies with Intangible Value Capital rated 4 & 5 shall inevitably, Occupy Wall Street. 17
  18. 18. Thank YouAll the rating agencies have uniformly declared: “A rating, very simply put, is an opinion -- an independent opinion”.[Ref.3] Similarly accounting firms have opined: “ It is management‘s responsibility, with the oversight of those charged with Governance, to ensure that the entity‘s operations are conducted in accordance with laws and regulations.” [Ref.4]Pension Funds who reconsider their alternative investments (hedge funds, private equity, commodities, etc.) should add selected 4 & 5 rated companies of Intangible Value Capital, for Market revival.Corporates are sure to gain by Return on Intangible that should infuse public confidence. As a corollary of their products. As a benefit a long list of confident customers. Advertise high ratings.To reorganise - write to: IBCM© ResearchJayaraman Rajah Iyer, jayar.ibcm@gmail.com 18
  19. 19. ReferenceRef. 1: Accounting for brands in ED50 of IASC [Intangible Assets] compared with French and German practices – An illustration of the difficulty of International harmonization.; For Presentation at the 19th Annual Congress of the European Accounting Association Bergen, Norway, May 2-4, 1996; Dr. HerveL Stolowy and Dr. Axel Haller page 7Ref. 2: “Global Competition and Collaboration” New Building Blocks for Jobs and Economic Growth: [Conference sponsored by OECD, Athena Alliance, Kauffman, The Conference Board, McDonough School of Business Georgetown University and the National Academics] 4.16 Page 5Ref. 3: CRISILs Roopa Kudva: It Is Very Important for Rating Agencies to Be Transparent, Published: June 02, 2011 in India Knowledge@Wharton, http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4613Ref. 4: Review of the OECD antibribery instruments: compilation of responses to consultation paper: 31 March 2008, Deloitte Touche Tohmatsu 19

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