An Excerpt From:
Intangibles, Human Capital and Options Value
By Eleanor Bloxham
Published in the Journal of Cost Management November, 2000
"When time is taken to measure the impacts of intangibles, the truly astounding part is their magnitude."
"The market quantifies the future value of intangibles. R & D, learning and innovation core competencies make critical options possible for the organization. If an organization stumbles, it can be a reflection of its inability to tap into the value of intangibles or to exercise the options that have been created."
"For some organizations, the market believes the time horizon for reinvention is very short. For others, a strong belief exists that they can and will continue to reinvent themselves over the long term."
"In a step forward, one recent advancement is that options valuation techniques once hidden in MBA textbooks are now starting to be used by organizations."
"Currently, many managers remain focused on pay as the solution to employee dissatisfaction. Although variable compensation is often cited as the solution to management/employee ills, focusing
solely on pay is a holdover from the industrial age."
"Changed attitudes are one component for success. Another is a step by step approach. Because the changes include mindset as well as measurement challenges, just getting started, in some form is key."
"Options approaches can aid in the evaluation of when to shut down or revise certain learning programs. Timing is critical, and options valuation helps to quantify the alternatives."
"Intangibles often reduce the risk to the organization."
"To supplement work environmental changes, other forms of compensation must recognize the valuation benefits of intangibles as well. At the corporate level, this is relatively simple. Drilling down, however, can be more difficult. With experience, organizations can learn not only to capitalize the investment, but to value it as well."