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.

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)
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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
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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
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1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Data: Ned Davis Research, Inc
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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
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5. Accounting for tangible assets
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6. Types of financial information
1. cost/investment
2. accumulated value
3. performance
4. results
necessary for intangibles too
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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
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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
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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
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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
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11. Finance can support
flat world strategies
cost value performance results
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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
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