Measuring and managing intangible value drivers

Abstract

PurposeIntangible assets are seen as critical drivers of future performance for most organizations. For this reason many managers endeavor to better measure and manage those intangible value drivers. This article explores the challenges of measuring and managing intangibles.Design/methodology/approachGuided by practical experiences, case examples, and theory, this article systematically outlines how to tackle the problems we face when measuring aspects of organizations that are inherently difficult to measure.FindingsThere are different reasons for measuring and managing intangibles in organizations. Some require objectivity (accounting, external reporting), whereas others focus on the informative value (internal reporting, strategic decision making). It is difficult, if not impossible, to derive meaningful and objective measures for intangible assets.Practical implicationsInstead of trying to quantify the unquantifiable for accounting and objective external reporting purposes, managers should design indicators that can be used to assess performance of intangible elements in order to guide management decision‐making and strategic learning.Originality/valueThis article, based the book Strategic Performance Management, outlines why striving for objectivity can yield meaningless performance indicators and dysfunctional behavior. The real value is derived from indicators that assist our day‐to‐day decision‐making and organizational learning.