conferences
Untangling intangibles
Everyone agrees that information is valuable to organisations and to our economy.
But will we ever know how to put a price on it? Ralph Adam reports from the
latest conference trying to get a grip on ‘intangibles’.
‘I ntangibles’. Sound like
a dreary management
buzz-word to you? It
shouldn’t. Intangible asset
strategies are becoming an
increasingly important feature
of information policy. Go-
ahead organisations think of
the creation (and acquisition),
evaluation, development,
maintenance, enforcement
and exploitation of their
intangible assets as being as
crucial to their success as high-
quality business plans are for
the more tangible ones.
What are intangibles? Any-
thing that has a psychological,
knowledge or information
content and can be valued as
a company asset. The most
frequently-discussed are those
that can be protected legally:
intellectual property rights
(patents, trade-marks, regis-
tered designs, brands, copy-
right), licences and royalties,
as well as databases and soft-
ware. These, perhaps, are the
most ‘tangible’ of intangibles.
However, people bring
many other assets to an
organisation, such as know-
how (including R&D), links
with users/customers and
personal knowledge or skills.
Then there are business
methods and systems as well
as knowledge of ‘best prac-
tice’ to be considered. The
‘... he emphasised the need for
librarians, as information experts,
to promote themselves.
“Where are they?” he asked.’
nature of intangibles seems
to encourage vague thinking.
The Economist’s Frances
Cairncross emphasises this
uncertainty: ‘Although com-
panies bandy about the terms
“knowledge management”
and “intangible assets”, few
clearly articulate what either
concept means.’1
These issues have increas-
ingly exercised accountants
and auditors. We are all
familiar with the tangible
assets that they have tradition-
ally used to evaluate compa-
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Conference-Adam.indd 24
nies – labour, land and capital.
Now their rules need to be
changed to take account of the
growing concern for intan-
gible assets. July even saw
the launch of a new specialist
magazine – IAM (Intellectual
Asset Management).
Investors may not care
how such assets are described.
They do care that managers
understand the issues behind
anything that adds value to
a company both now and in
the future. The same goes for
public bodies – all of which
are accountable for their
assets and need to meet strict
auditing criteria.
It is widely accepted that
intangibles, based as they
are on the exploitation of
ideas (rather than on mate-
rial things), have become the
drivers of today’s knowledge
economy. Yet they remain
poorly understood. The 90s
answer was to seek ways of
measuring their impact – a
response, in part, to the rec-
ommendations of the influ-
ential Hawley Report, which
stressed the need for informa-
tion management to be seen as
a boardroom issue.2
WTO agreements
The search for a means of
putting a value on information
grew even more urgent once
the World Trade Organisa-
tion (WTO) set up its two key
agreements – Trade Related
Intellectual Property Rights
(Trips) and the General Agree-
ment on Trade and Services
(Gats). These agreements set
an agenda for controlling how
information is used, by whom
and on what terms. They have
changed everything. Water
may be the most vital resource
for life, but information is
being seen as the 21st centu-
ry’s most valuable one.3
For CILIP members, such
matters are of great impor-
tance, for they are informa-
tion and knowledge manage-
ment issues. However, few
commentators have, so far,
linked such debates to the
information industry. One
person who has done so is
Clive Holtham, Professor of
Information Management at
City University’s Cass Busi-
ness School.4
Can information be
measured?
A key difficulty with intan-
gibles is that they are notori-
ously hard to measure: no one
has come up with a satisfac-
tory method.
In 2001 the European Com-
mission’s Information Society
Technologies programme took
a step forward when it provided
support for a pan-European
multi-disciplinary research
project. In doing so, it brought
together eight leading busi-
ness schools, supported by an
advisory council from banks,
auditors, research centres,
multi-national companies and
the OECD, to examine how
intangible assets might be meas-
ured. This is the Prism consor-
tium. (The name was selected
partly because a prism allows
rays of light to be separated into
their constituent parts for better
observation and measurement,
and partly because the project’s
main themes are Policy-making,
Reporting, Intangibles, Skills
Development, Management/
Measurement.) The informa-
tion world is not included in
the list of its advisory council
members, neither does the
‘I’ in the acronym stand for
‘Information/Knowledge’!
Prism sees its task as raising
the profile of intangible assets
by evaluating management
policy and investigating new
measurement techniques.
On 4 July Prism held its
final conference – the 2003
European Intangibles Summit
– at Cass, under Holtham’s
aegis. The EU-sponsored
event, taking its lead from
Cairncross’s statement, was
subtitled ‘Accountability,
competitiveness and pro-
ductivity: understanding the
value of intangibles in 21st-
century organisations’. Its
purpose was to disseminate
Prism’s research findings to an
international audience and to
foster informed debate about
intangibles issues.
The meeting was planned
around three themes and
consisted of a morning packed
with brief presentations, fol-
lowed by two parallel sessions
and a closing panel.
Supporting documenta-
tion included a collection of
articles and ‘thought-pieces’
contributed by the speakers,
a DTI study of how ‘talented’
people use key intangible
resources to meet goals5 and
Prism’s Project Resource CD-
Rom. This contained research
papers, case studies and pro-
ceedings of previous confer-
ences as well as presentations,
reports and the project’s ‘time-
line’.
The three themes were:
■ understanding and meas-
uring value creation in the
21st century;
■ creating value challenges for
firms: how organisations are
adapting their strategies and
practices; how they evaluate
and track intangibles; and the
role of intellectual property in
the ‘new look’ world;
■ external viewpoints on
auditing and analysing value
creation in capital markets:
relevant (and missing) infor-
mation for financial reporting
to investors, and the needs
of providers of finance in the
context of intangibles.
A ‘thought-wall’, where
delegates could place post-
cards with their comments
and questions, was provided,
but little use was made of it.
The timetable was tough
and far from intangible:
with 30 or more speakers to
be heard, participants were
warned that the stop-clock
was paramount and sessions
would start on time whether
or not they were present.
There was even a time-warden
at the back of the audito-
rium, with a placard to warn
speakers of the number of
seconds remaining!
As a result, the day zipped
by. First came the opening
comments: Clark Eustace,
Prism’s Director, summarised
its headline findings, and the
Conference Director, Richard
Youngman, set the scene. In
2 (10) October 2003
12/9/03, 3:16:13 pm

questioning how we evaluate
information as an asset, he
emphasised the need for librar-
ians, as information experts, to
promote themselves. ‘Where
are they?’ he asked. But this is
an old story: readers of Laura
Swaffield’s back-page Media-
watching in Update will be
well aware of the difficulties of
changing the image.
The university’s Vice-Chan-
cellor, David Rhind, made a
plea for help to develop ways
of judging the value certain
assets (such as professors!) add
to his institution’s balance
sheet. Next, Oluf Nielsen, of
the European Commission’s
Information Society DG
(Directorate-General), con-
gratulated Prism on its success
in bringing together such a
range of stakeholders. He went
on to announce the EC’s plan
for a multi-sectoral ‘expert
group’ across three of its DGs
– Industry, Research and the
Information Society. Its task will
be to investigate intangibles and
knowledge management. Let us
hope that information profes-
sionals, who understand their
world, will make sure they are
involved from the start.
The value dilemma
The morning’s first theme
(understanding and measuring
value creation) included brief
presentations from OECD staff
(the management of intangible
assets in national statistics,
their impact on policy and
the need for improved data
sources). Prism members sug-
gested how national accounts
might be made more useful for
economic analysis.
The second theme tackled
value creation, with speakers
from BP, several Danish aca-
demics and financiers and
Sue Slipman of the Financial
Ombudsman Service. She dis-
cussed a wide range of topics,
including the importance of
corporate social responsibility
within modern companies,
the need for trust in multi-
nationals and the possibility of
measuring knowledge per se.
The afternoon began with
a wide range of papers covering
techniques for measuring intan-
gibles, as well as case studies.
Then, the conference divided
into two streams. One looked
at auditing and the types of
information needed for an effec-
tive understanding of company
performance. There was much
discussion on the role of audi-
tors and their ability to provide
sufficient information for intan-
gibles to be valued as assets. The
2 (10) October 2003
Conference-Adam.indd 25
general view was that, rather
than emphasise the need for pre-
cision, auditors should concen-
trate on more meaningful infor-
mation. How better to do that
than through storytelling? One
delegate claimed he had turned
up in order to get answers on
valuing intangibles, but was
feeling even less secure with all
the talk of narratives. But he was
in a minority.
The alternative stream was
designed to raise questions
on the ownership and ben-
efits of intellectual property
rights (IPR), but was a little
compressed due to timing
difficulties. The topic was dis-
cussed from three perspectives
– none of which came from the
information world. Edward
Truch (Henley Management
College) described how public
bodies increasingly identify
and generate intellectual
property as alternative sources
of finance, while Larry Cohen
talked about his experiences as
head of European intellectual
property for a large US legal
practice. Cohen outlined the
forthcoming European IPR
policy in relation to patents,
trade marks, designs, copyright
and confidential information.
He also attempted to distin-
guish between knowledge and
know-how. Finally, Stephen
Merrill, of the US National
Academies, commented on
what the EU can learn from
US patent policy and how
the US might develop a more
‘European’ agenda.
To measure is to know?
The meeting’s subject was
obviously a popular one:
nearly 250 people took part,
but many more had to be
turned away. The mix of par-
ticipants was broad – mostly
from industry, academia/
research and finance. Unfortu-
nately, very few came from the
information world and almost
none from government. The
event focused more on the
impact of valuing information
assets for the balance sheet, less
on exploring what it is about
information that makes it
important for improving busi-
ness performance.
The conference blurb had
quoted several versions of Lord
Kelvin’s dictum ‘to measure is
to know’ as if, despite Kelvin’s
own, more open, approach,
measurement were an end in
itself. This was reflected in the
discussion, as these comments
show:
‘If you can’t measure it, it
isn’t worth having’ (a DTI
statistician).
‘If we live in a world where
anything that moves can be
measured, we won’t live for
long!’ (Sue Slipman).
The backgrounds of those
present made for a fascinating
day’s discussion though, at
times, it was a case of preaching
‘Prism could encourage companies to
cultivate openness by sharing ideas,
rather than rushing to patent any novelty
that might produce future income.’
to the converted. Many inter-
esting snippets stayed with me:
‘Talk of a “new” economy
is more intuitive than rational’
(Clark Eustace).
‘We need to understand
how value is created in the
knowledge economy’ (Oluf
Nielsen).
‘How can the informa-
tion stored in libraries or
the knowledge absorbed by
individuals (and stored in
their brains) be recognised in
the national accounts?’ (Peter
Hill, Prism).
‘How can one give a value
to old inventions, such as the
wheel?’ (Dominique Guellec,
OECD).
‘Music downloading cre-
ates loads of wealth and is the
motor for broadband’ (Roger
Wallis, Royal Institute of
Technology, Sweden).
‘What are you paying for in
a bottle of wine: the content,
the brand, the enjoyment
or the effect? Similarly, is a
cobbler’s value in the shoe he
mends or his analysis of how
to mend it?’ (Leif Edvinsson,
Unic).
There was little discus-
sion of how the EU might
be encouraged to take a
more proactive approach to
IPR policy or how it might
cut patenting red tape. The
WTO was barely mentioned
at all. This was very much
a managerial and financial
event. Policy-makers were not
much in evidence. To have the
sort of impact it desires, Prism
(and its successor) needs to
conferences
think through the logic of its
existence, broaden its perspec-
tive and show government
that information has a key role
to play in the new economy.
It could also encourage com-
panies to cultivate openness
by sharing ideas, rather than
rushing to patent any novelty
that might produce future
income.
There is a need for the eco-
nomic importance of intan-
gible assets to be recognised. In
the 80s the government told us
that heavy industry and engi-
neering belonged to the ‘old’
economy and that our future
lay with the development of
the knowledge (and informa-
tion) industries. Reliance on
this sector implies the ability
to measure its value.
In his introduction David
Rhind had asked: what’s the
value of a professor’s mind? He
received no answer. Perhaps we
should substitute ‘librarian/
information manager’ for pro-
fessor. Then we will know that
intangibles are really being
taken seriously.
References
1 F. Cairncross. The Company of the Future:
meeting the management challenges of the
communications revolution. Profile Books,
2002.
2 Hawley Report. Information as an Asset.
KPMG Impact Group, 1994.
3 S. Shrybman. ‘Information, Commodifi-
cation and the World Trade Organisation.’
Paper (No.176-148-E) presented to 66th
IFLA Annual Conference, Jerusalem, 2000
(www.ifla.org/IV/ifla66/papers/176-148e.htm).
4 C. Holtham. ‘Valuation has its price.’ Library
Association Record, Vol. 103 (4), April 2001,
pp. 232-233.
5 Creating Value from Your Intangible
Assets: unlocking your true potential.
DTI Future and Innovation Unit, 2001
(www.innovation.gov.uk).
Ralph Adam is a freelance
journalist, and Reader at
City University, School of
Engineering (sd324@city.
ac.uk).
A summary of the confer-
ence proceedings and copies
of the speakers’ Powerpoint
presentations are available
at www.euintangibles.net/
conferences/proceedings/
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12/9/03, 3:16:45 pm