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2009 benginMapping values

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Advanced Tools for Visualizing,Measuring and Managing Intangibles

5th European Institute for Advanced Studies in Management (EIASM), Workshop on

Visualizing, Measuring and Managing Intangibles and Intellectual CapitalDresden (Germany), 8-9 October 2009 2009 [email protected] www.bengin.net

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Speaker

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Peter Bre tscher ,

Founder and ow ner,Engineering Off ice for Business DevelopmentIngenieurbro fr Wir tschaf tsentwick lung, Eggersr iet / Swi tzer land

Function in the Ing.Bro: Advisor to organizations in the design of economic steering and managementsystems that integrate the intangible perspective

Engineering background (worked 20 years in several functions along the whole value chain of an international R&D and

manufacturing company based in Switzerland)

Developed over the last 20 years the Business Engineering System(Tools for Business Administration)a MindSet and models for structuring and quantifying the tangible and intangible resources.

In addition he is supporting companies, consultants, and other organizations in innovation and project management, in

intellectual property and patent management, and in setting up business plans and defining enterprise strategy

He has initiated and is leading the bengin project. Its mission is to facilitate the awareness for and further development ofmanagement concepts that enhance the traditional economic model

Since 1994 he is teaching business engineering und business planning at the University of Applied Sciences in St. Gallen,Switzerland.

E-Mail: [email protected],Website:http://www.bengin.com/, Blog: http://www.bengin.net/wp/, Twitter: http://twitter.com/peterbretscher


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Agenda

Development o f Econom y

Innovat ion o f Product s - and Economic MindSet as a Product

Tw o Outpac ed Parad igms

The Vect or So lu t ion

Conclusion and Out look

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Development of economic assets

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Relative significanceof economic goods

100

60

80

40

Low middle high state of economic development

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intangible goods

tangible goods


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Development of Business Offerings

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Summary

This are two developments we see in the real reality.

Intangiblesare (and will be) more and more important.

Intangiblesin a form of knowledge(use-how, make-how, think-how)

andin a form of intellectual property rights.

In order to enable a sustainable development we need an enhanced

theory that has the means for structuring and quantifying this (new)

reality.

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Many of the patterns of nature wecan discover only afterthey have

been constructed by our mind.

Friedrich von Hayek


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Agenda






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Idea to Innovation

Phase of incubation: 70%

Phase of invention: 25%

Phase of innovation: 5%

Examples:Concrete 40 28 20 yearsInforced concrete 22 7 18 yearsAluminium 29 53 26 yearsTelephone ? 14 2 yearsRadio 56 13 2 yearsRadar 29 2 1 yearsTV 22 22 8 yearsComputer 115 9 5 yearsICs 40 2 3 years

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Development of Business Theory(S-Curve of Product Development)

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1750 1800 1850 1900 1950 2000 2050

MoralSentiments

1759

Wealthof Nations1776

Adam SmithMarx

Gauss

To wne T ayl orMS-DOS

Keynes

Schumpeter

Classic:

Tangible AssetsMonetary Value Metric

Additional:

Intangible AssetsSubjective Value Metric

Mises

1782Anna Goeldin

Last witch beheaded(Switzerland)

64 Bit32 Bit

16 Bit

8 Bit

4 Bit

Rational MindSet I

Rational MindSet II

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Three Worlds trigger for invention?

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World 3: Six interdependent fields

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World 3: Six interdependent fields

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Summary

Tools for mapping economy and the rules for planning and reasoning

business objects are divised in six interdependent specialized fields

of profession.

In order to have an reasonable impact all areas/fields have to work on

solutions.

Even if a coordinator would be an idea....

I expect, that the development will follow a swarm behaviour.

The direction is driven by the need for:

(i) a framework that structures the intangibles and

(ii) a value-metric that allows calculation with subjective values.

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Count whats countable.Measure whats measurable.Make measurable whats not measurable.

Galileo Galilei

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Agenda






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Enhancing Paradigms

Deeply ingrained assumptions, teaching programs, mental

models, taken as granted. They determine how we are aware

of the reality and influence our behaviour.

At least 17 paradigms to be revised.

1.Ground, Work, Capital (as resources)

... to be substituted by a framework that is based on tangible and

intangible resources.

2.Value paradigm

Value as a result of a valuation process has

objective AND subjective aspects / dimensions.

A scientifically correct value metric system has to reflect this

necessity. Therefore it has to be multidimensional.(Linear measure vaporises the essence.)

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Objects, Attributes, Value-Measures

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ImaginaryNumbers

ImaginaryNumbers

Unit:iCHF, i$, i

Subjective Numbers

RealNumbers

RealNumbers

Unit:CHF, $, Objective Numbers

ResourcesResources

ObjectsObjects

NumbersNumbers tangibletangible intangibleintangible

ComplexNumbers

ComplexNumbers

Unit:CHF/iCHF, $/i$, /i Vector

Implicit Values

Explicit Values

combined


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Summary

Enhancing this two overhauled paradigms is possible.

(Even if it takes some time.)

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It is the theory which determineswhat we can observe.

Albert Einstein

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Agenda






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The Vector

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Value b

Value a

Vector = a + b

Single 2D-Vector4 vectorsof objects

Addingvectors

y

x

y

x

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Vector Type 1

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More samples:http://bh.bengin.comhttp://www.bengin.net/soft/vektorbeispiele01_d.htm


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Vector Type 1 (Aggregation and Drilldown)

Engine

Chassis

Body /Design

Brand / Image

Functionalitysubjectivecustomer value(of the product)

R&Deffectiveness

R&D expenditures / input ressourcesR&D efficiency

qualitative / subjective

quantitative/financial

Total

(Comp

ound)Pe

rform

ance

Drill-

Down

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Vector Type 1 (Public Service Departments)

0

20

40

60

80

100

120

0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000

9 Police&Justice

PublicServiceDepartments

Effec

ts(su

bjec

tivec

itizenper

spec

tive

Costs

Perfor

mance

(ofpublic

servic

edepa

rtment

s)

8 Others

7 Healthcare

6 Economy

5 Education

4 Infrastructure

3 Finance

2 Defense

1 Foreign Affairs

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Vector Type 1 (practical application)

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Asking customer(Internet)

Decision cockpit(links internal economic data with answers of customers)

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book value

use value ofinvestment for

investor A

price investor Bis willing to pay

price investor Ais willing to pay

subjective(intangible) view

objective (financial) view

use value ofinvestment for

investor B

intrinsic value

price

uv B = (p B)2 (bv)2uv B = (p B)2 (bv)2

uv A = (p A)2 (bv)2uv A = (p A)2 (bv)2

Vector Type 2: Linking objective with subjective axis

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Overpriced Papers? Is the Vector a prognostic tool?

Stock Exchange Value

0

2000000000

4000000000

6000000000

8000000000

10000000000

12000000000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

96

97

98

99

Value Vector

0

10000000002000000000

3000000000

4000000000

5000000000

6000000000

7000000000

8000000000

9000000000

0 2E+0

9

4E+0

9

6E+0

9

Explicit Values

Im

plicitValues

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

96

97

98

99

....a year before the downturn of the classic curve.......the Vector Map indicated a change of Coca Cola Amatil.........

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0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 mV

Food

Media

Services

Electronic

Information Technology

Mechanical Industries

Insurance

Steel

Electricity, Gas

Wood Industries

Bank

Automobil

Real estate

Health

iV

Source: Morgan & Stanley Capital International World Index; Cited in: Sveiby, Wissenskapital; Seite 23; Mi-Verlag 1998

14 types of industry (Sveiby)

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Intangible Assets or Shareholders Profit Expectation?

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80

80

75

70

65

60

55

50

45

40

35

30

25

20

15

10

5

implicitvalue[i -Mia]

explicit value[Mia]

-

McDonald's

Microsoft IBM

Ford

CocaCola

The explicit Value and the implicitValue together draw a completepicture about the companys valueand its development.

The question remains:Is the implicit Value given by thereal Value of the company?Is it given by some marketing tricks?

Which part of it is made by theShareholders Value Expectation?

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A better model for new decisions

Value Points of 75 enterprises

0

1'000

2'000

3'000

4'000

5'000

6'000

7'000

8'000

9'000

10'000

0 1'000 2'000 3'000 4'000 5'000 6'000 7'000 8'000 9'000 10'000

explicit Values

imp

licitVa

lues

Investors: Attention!

Management could use thepotential more effective.

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Tracking the development of an enterprise

Pointer of vector for five years

0 200 400 600 800 1'000 1'200 1'400 1'600

explicit axis [Mio CHF]

0

200

400

600

800

1'000

1'200

1'400

implicitaxis[MioiCHF]

96

93 94

92 95Question:"What happened in the year 1996?

Answer:Part of enterprise sold.

2nd Question:Is this loss of intangible values compen-sated by the price received for the soldpart of enterprise.

Answer: ?

Ask Auditor if hes still available.

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Summary

With Vector 1 it is possible to show any desired values in context.

With Vector 2 it is possible to introduce a standard for subjective values.

After the relativity of timefor the physicists100 years ago, an analogical

step can be made by economistswith the relativity of value.

It will enable a more sustainable economy.

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When you can measure what you are speaking about and express it in numbers,you know something about it; but when you cannot measure it, when you cannot

express it in Numbers, your knowledge is of meagre and unsatisfactory kind.Lord Kelvin


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Agenda






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Summary

I am very optimistic, that the economic theory will reach a higher level of

applicability.

An enhanced economic paradigm (in that intangibles and subjective

values will count) will improve the reasoning and decision process

and in its consequences will enable a new dimension of wealth.

Tree samples of influence we see at that time:

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Many of the patterns of nature wecan discover only afterthey have

been constructed by our mind.

Friedrich von Hayek


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Four Main Points

1. Structure of Enterprise

3 Offerings7 Processes

6 Primary-Resources

2. Measures and Metrics

Enhanced System of Measuresthat Integrates Intangibles

and Subjective Metrics

3. Strategy of Enterprise

Outside-Inand

Inside-Out

4. Optimizing Value Net

Fromsupplier of supplier

tocustomer of customer

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Four Main Points

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Back- and Frontside of the Economics MindSet

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Subjective Experiences,

Values and Believes

Classic Rules,

Standards and

Value Metrics and Measures

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Back- and Frontside of the Economics MindSet

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Image

Flow of InformationTransparenceKnow-HowGoodwillSense, ClimateIdentificationWork with joyPatentsCopyrightsBrands

Intangible means of production

Imaginary Balanceintangible assets

subjective

O I

Dismissals -

E nga ge men ts +

O ut so ur ci ng -

Absences -

Death --

Intell. prop ++

Profit-/Loss

----------------------------

Sum + -

O In

R aw ma te ri al -

T oo ls , M ea ns -

Wag ue s M in d -

Wag ue s Ha nd -

S ales Rights +

Sal es Servi ce s +

Sal es P ro du ct s +

P/L

----------------------------

Summe + -

Headwork

Handwork

Tools

Manufacturing

Original cost

Margin

Net SP

Margin

------------------------

Gross SP

Hidden reserves

Current assets

Fixed Assets

____

Outside capital

Equity capital

Sec ur it y P ra is e, t ha nkEducation EnlighteningAcceptance Transparence

production

Designed for

Designed for

Designed for

users needs

qualityHidden reserves

Classic balance oftangible assets

objective

subjective Values, not tangible, but real objective Values [$, ,. , CHF]

Imaginary P&L of potential Classic P&L

imaginary business economics traditional business economics

Design of products(properties) Product calculation

Rights

Products

Services

1985 / 2008 Peter Bretscher


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Pricing Values?

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Tangible and intangible

assets of an enterprise,

potential of an enterprise,

values of an enterprise

Market for Papers

(Stock-Exchange)

How to determine fair value (price) for a paper?

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Pricing Values?

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Struc

ture

*)

Intro

duc

ing

ax

isfor

intang

ibles


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And now?

You are welcome and invited to take part of that journey.

[email protected]

Mobile: ++41 79 650 49 04

Eggersriet, Switzerland

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A long journey begins with just one step.

Chinese

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Thank YouWeb http://www.bengin.com

Blog http://www.bengin.net/wp/Twitter http://twitter.com/peterbretscher

Special Website http://www.bengin.net/dresden/

benginBeyond Limits of Classic Business Paradigms

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backing slides

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Q I: Transform -T/+INew projectsRevisions of offeringsInsourcing/merging....

Q II

Transformation(I to T)

The four Quadrants of Value generation

Q IV Q III

Q I

ValueGeneration2

Transformation(T to I)

ValueDegeneration

R&D

+ Intangibles [i$]

- Intangibles [i$]

in

out in

out

+ Tangibles [$]- Tangibles [$]

Q II: Generation +T/+IDaily businessSelling, dispatch(Re)Production

....

Q III: Transform -I/+TOutsourcingLeaner production....

Q IV: Degeneration -I/-TGraveyard....

1996/2010 [email protected] of Business Engineering Systems,

Registered Copyright TXu 512 154


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$

% i$

2. QualitativeMetrics

hot, cold ...... AAA, A+, B, C

4. Quantitative Metrics(multidimensional)

$

Why Metrics?- comparing, comprehensible, reproducible- Making rationale (and indirect) communication easier.

1. Normative "Metrics"

Principles, ....The xx "Commandments"

Axis of time

Measuresre

ducenee

d

for

interpre

tation

Strongnee

dfor

interpreta

tion

$

% i$

$

Possible tocalculate with and

visualize 2D-Values

Difficult to visualize.No tools and rules

for numerical orgraphicalcalculations.

Development of (economic) Value-Metrics(Compound Value-Metric System with the subjective, implicit Value axis)

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3. QuantitativeMetrics (linear)

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Von verschiedenen Organisationen in verschiedenen Projekten

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Bus. Techniquesnew

new

old

old

Technologies

Innovating Business Models

Products+ Services

Products+ Services+ Rights (IP)

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Measuring performance

http://www.performanceprofile.comhttp://www.balancedscoremap.com 2009 bengin

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Creating Values

i$

Invest

generated earnings

$

Counting Values

i$

$explicit values

imp

licitva

lues


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2000

00

551

97

648

97

0

500

1000

1500

2500

3000 Mio

0 10 20 30 MiomV

iV

SPE

Initial Base (Value estimation)

Initial Offer, March 24. 2000

Evening 1st Day

1969

2'520

SPE

Share

ho

lders

Pro

fitExpec

tation

Value (Price) Development of Paper

(Shareholders view)

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Explained world

Value

Nach: Marle Marks,

Manager Magazin 3/85

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Color measures

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1D 2D rulers, metrics

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Vector: Velocity

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Next step: Focus on economic MindSetting / Paradigms

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Real economy

Solutions(Form & Content)

Hardware

So

ftWare

Applikations

Operating System MindWare

Applications

Economic. TheoryBasics

New MindWare & SoftWare quantum leap in the

simulation and planning of todays economy.

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Basics of 2D-Value-Vector

x, y = two arbitrary properties of an object

y [i$]

x [$]x1 x2

y

x

Illustration 1

Illustration 2

x y x y

Cost Price Turnover Volume [m3]

Transports

initialized

Transports

finishedCost

Deckungs-

beitrag

Budget Rechnung Price Retouren

Medical

Properties

Subjective

conditionTurnover

Mitarbeiter-

zufriedenheit

Turnover Spartengewichtet

Retouren Kunden-zufriedenheit

x, y = explicite ("objective") andimplicite ("subjective") Value-Propertiesas a Multi-Value-Compound.

x1 x2 Samples

Sum of balanceSum of Share

PriceShareholder Value

Wagues Turnover Weighted added Value

Price VW Price Porsche Subjective Added Value

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