Tuesday, August 26, 2008

From numbers to Narrative

I attended a talk at the NSW KM forum last night by my research colleague from Sydney Uni, John Dumay on valuing intangibles. John talked about the 'accountingisation' of intangibles i.e.trying to turn everyting into numbers. John's theme was around the value of narrative in leveraging intangible value. Perhaps there is a complementary theme here. Conventional top town governance is numbers driven, compliance to benchmarks etc...however governing in a networked world is more about engagement through dialog, strategic conversations and narrative.

3 comments:

Mary Adams said...

There is a need for both perspectives in understanding intangibles (which account for 80% of corporate value today): financial measurement and stakeholder assessment. Financially, one of the most neglected measures is cost--see www.hybridvigor.net for a discussion of this. While narrative is valuable to get at the "soft" measurement of intangibles, using stakeholder interviews to assess intangibles strength is much more powerful than a "story" presented by management from their perspective--see www.icrating.com for an introduction to this approach.

Dr. Laurence Lock Lee said...

From what I can tell the 'numbers'for ICrating are scaled from structured interview/survey results and provides some degree of benchmarking, but within the closed community of those who have bought into the proprietary methodology. I personally have a problem with this as I believe it is important that any proposed IC benchmarking measure be transparent to be credible. This is not meant to be a reflection on the designers, but would the balance sheet and P&L statement have survived if their production was not made transparent?

That said, if either approach triggers an improvement activity then it has achieved its objective.

Mary Adams said...

I agree with you that the eventual solutions have to be open source. In the meantime, in depth interviews with stakeholders remains the best way I know of to get information that is as objective as possible. This is the methodology large firms like McKinsey use (see Mobilizing Minds). At least with IC Rating, you are standardizing the process and making it much more affordable for companies to do on a regular basis.