Measuring and managing intangible value drivers

Intangible 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.

Guided 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.

There 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.

Instead 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.

This 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.