Athena Alliance is pleased to release a new working paper on Intangible Assets as a Framework for Sustainable Value Creation.
To become and remain successful, companies have come to understand that they need to follow a strategy of seek sustainable value creation. As a recent report notes, "Sustainable Value Creation is a core business strategy focused on addressing fundamental societal issues by identifying new, scalable sources of competitive advantage that generate measurable profit and community benefit." The ultimate goal is for the company to achieve growth and high performance.
Intangibles are key value creating assets that need to be developed and utilized in order to achieve growth--and to successfully implement a strategy of sustainable value creation. This new paper explores the various frameworks for viewing intangible assets and the possible roles of the frameworks within a company.
There are five differing approaches and frameworks highlighted in this survey:
• Accounting framework -- financial control
including financial and value creation models
• C-H-S framework -- macroeconomic growth accounting/theory, including productivity
• Integrated reporting -- corporate reporting
including Sustainable Accounting Standards
• ICounts -- management
• OECD Knowledge-based assets -- public policy
Different parts of an organization will utilize different frameworks. CEOs need to understand how various parts and functions within the organization look at and talk about intangibles. Otherwise, what the CEO will see will be a cacophony of concepts that will more resemble noise than information.
While the different frameworks have different uses, an overall high-level conceptualization is needed to guide CEO thinking. That high-level archetype might best start with an integration of the and ICounts frameworks and weave in the C-H-S framework (for understanding inputs and macroeconomic affects) and expanded accounting models (for financial controls). Putting together such a high-level view that operates with the more specific models would be a useful undertaking. For a CEO's perspective, it would be a valuable tool in creating and implementing a strategy of sustainable value creation.
[This paper was originally commissioned by The Conference Board for their use. It is published here in a slightly modified version with their permission. The author would like to thank The Conference Board for their financial support.]