Intellectual capital and return on assets.

Return on Asset calculations as a realistic basis of performance measurement for many firms is rapidly going out the window.

On one hand we do the financial calculations, based on the accounting notion of tangible assets in the business, whilst on the other, saying that the primary assets of the business walk out the gate every night and go home.

This  paradox should radically change the ways we measure the return on assets, it creates the need to find ways to consistently measure Intellectual Capital, not an easy challenge, but one that Directors and management need to start grappling with.

Consider, physical assets depreciate with use, but intellectual assets appreciate with use, so perhaps there is a measurement matrix in there somewhere, but probably fashioned by psychologists and anthropologists, rather than accountants.

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
This entry was posted in Governance, Management, OE, Strategy and tagged , . Bookmark the permalink.

2 Responses to Intellectual capital and return on assets.

  1. jonrh.is says:

    Way cool! Some very valid points! I appreciate
    you penning this post plus the rest of the website is very good.

  2. Pingback: The 1,000th StrategyAudit post. | StrategyAudit

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