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Strategy In A Flat World

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Finance has an important role to play to help corporate stakeholders see and understand the importance of intangible knowledge assets to the future profitability and sustainability of the organization.

Published in: Economy & Finance, Business
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Strategy In A Flat World

  1. 1. Strategy in a Flat World How finance can contribute to breakthrough performance Mary Adams Intellectual Capital Advisors originally delivered to Financial Executives International (FEI) ICA-1
  2. 2. Forces leading to “flat” world • software enables new work flows • web reaches critical mass in 2000 • educated workforces in China, India and former Soviet Union • collaboration and work go global ICA-2
  3. 3. Components of S&P 500® Market Capitalization 14,000 Market Premium S& P 5 0 0 M ark et C ap ($ b illio n s) 12,000 Intangible Book Value Tangible Book Value 10,000 8,000 6,000 4,000 2,000 - 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Data: Ned Davis Research, Inc ICA-3
  4. 4. fei@75: what does the future hold for finance and CFO’s? “The greatest change that has to occur in the finance role involves the intangible assets of the corporation…....Failure to adopt new approaches will relegate financial executives to be truly bean counters…” -Mary Adams, December 2006 ICA-4
  5. 5. Accounting for tangible assets ICA-5
  6. 6. Types of financial information 1. cost/investment 2. accumulated value 3. performance 4. results necessary for intangibles too ICA-6
  7. 7. 1 - cost/investment* • people – recruiting – training • knowledge assets – process development/improvement – IT, software – R&D • relationship assets – branding – CRM – partnership development (JV’s, outsourcing) * also known as i-capex (intellectual capital expenditure) or discretionary operating expenses ICA-7
  8. 8. 2 - accumulated value* • people – do we have the right workforce and competencies to deliver on our strategy? • knowledge – will our processes and IT infrastructure enable us to deliver on our strategy? • relationships – do we have the right brand, partners and customers to deliver on our strategy? *intellectual capital/intangible evaluations ICA-8
  9. 9. 3 - ROI/performance* • people – satisfaction, engagement – production • knowledge assets – process effectiveness – IT, software availability, efficiencies – R&D output • relationship assets – brand strength – customer satisfaction – partnership health * tools include BPM (business performance measurement or management), dashboards ICA-9
  10. 10. 4 – results* • headcount/time allocation to innovation • idea generation • % to market • time to market • % revenue from new products • customer satisfaction/retention *the bottom line is still the bottom line ICA-10
  11. 11. Finance can support flat world strategies cost value performance results ICA-11
  12. 12. Resources • FEI@75 • roots of innovation • i-capex project for industry groups • www.i-capitaladvisors.com and www.icknowledgecenter.com Mary Adams adams@i-captialadvisors.com 781-729-9650 ICA-12

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