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"What is your organization's most important asset? CEOs often respond that the organization's people are its greatest asset. But if this is true, where are people accounted for in the financial statements? Today, people are generally classified as expenses on the income statement and liabilities on the balance sheet -- not as an investable asset. Thus, when CEOs seek to increase profit, they cut costs -- like people -- rather than investing in assets -- like people -- that can appreciate. "
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In fact, investment advisory firm Ocean Tomo estimates that in 1975 more than 80% of the value in the S&P 500 firms consisted of tangible assets -- like land, plant and equipment. In 2010, approximately 80% of the S&P500 market value is attributed to intangible assets. But, today's accounting systems and financial reporting are still using 20th century definitions, creating a "gap in GAAP" (the Generally Accepted Accounting Principles) on how value is created in the 21st century.
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- historical cost,
- replacement cost, and
- opportunity cost.
In January 1967, the Harvard Business Review published, "Put People on Your Balance Sheet," which discussed various methodologies for classifying human resources as assets, including:
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"The raw materials of the knowledge era are knowledge-based intangibles. You may be nodding your head as you read this. But do you really know what it means? If not, you are not alone. Knowledge continues to be seen as an amorphous, misunderstood part of business. This widespread ignorance isn’t helped by the vocabulary. The word intangibles itself is troubling because its very definition implies that an intangible is invisible, untouchable, and unknowable. The word knowledge is also very general and lacks a specific connotation for business value creation. Yet knowledge is the core asset of this century. "
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There are four basic types of knowledge assets that become the raw material for your value creation: human, relationship, structural and strategic capital.
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What has changed is that these knowledge intangibles have moved from a supporting to a star role in business models.
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"In a world of limited resources, the path the wealth is to control the resources. What about in a world of surplus? I’ve been trying to understand the nature of surplus and how it impacts the digital age. So I’m going to share and ask for your thoughts too."
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Most digital assets can be shared in a manner that does not result in loss. If I have a digital picture and email you the picture, then we both have the picture.
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Digital assets are much more like virtual assets in this sense.
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"Le modèle 2.0 accélère la croissance du volume de données disponibles mais il se développe autour de solutions de partage, de collaboration et de diffusion de l’information, est-ce pour autant un paradoxe ?"
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Ces données sont stockées dans les outils que nous utilisons, à savoir PC, tablettes et appareils mobiles.
Elles sont enregistrées à notre demande ou à notre insu et nous n’avons aucun contrôle sur leur durée de vie, leur utilisation par des tiers (programmes ou individus), leur exploitation et leur protection -
S’il est un problème avec les données, c’est bien qu’elles persistent dans les mémoires des systèmes (souvent sous forme dupliquée), quand bien même elles ne servent plus à grand chose,
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"The rise of the knowledge economy has broken this model. The balance sheet does not include intangibles. Investments in intangibles instead are mixed in with current year operating expenses. And no one knows how much is spent on building intangibles within an organization."
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A company can only put assets for which it has a clear ownership right on its balance sheet. Most intangibles don’t meet that test.
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Second, the value of intangibles is closely linked with related assets. You may have heard this one too. It is hard to separate the human from the relationship from the structural capital.
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"lmost all companies have a sign on a wall stating something similar to “Our employees are our most important asset.” The wording may be slightly altered, and “asset”’ may be replaced with “resource,” but usually there is such a sign posted somewhere on the premises. Regardless of the exact wording, the intent is the same: the organization is trying to say that it values its employees and the sign is a visible indicator of that value or belief. "
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First of all, assets don’t walk out if they are dissatisfied.
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Another reason the message is flawed involves the issue of creation. Assets don’t create; they modify (like a printing press) or shape (like a metal lathe.) They transform (like a computer) or direct (like an artificial intelligence software application), but assets don’t create something that was not there before. Creation is the territory of people.
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Times are changing. There’s no doubt about the fact that corps must change too, because employees (particularly younger ones) already did…And if you’re not able in your HR function to understand their moves and these new behaviors, you’ll be “out of the market” for them, leading you to fights, misunderstandings, and desertion. Human resources like stocks? No. But like assets, yes, and the ability to move with them empowers your role and the trust they’ll have, to drive their career (tip: zapping behavior is normal today, there’s no “career plans” anymore, in long term, by crisis and unknown situations). Even if you’re dealing with this, let’s consider it IN the corp, vs moves to competitors. Could you accept giving assets for nothing to competitors? No. Why would it be different with executives…?
“You have to think about your employees as your most important and valuable asset.”
Business analytics / business intelligence leader SAS is an incredible success story that owes its success to many factors, not the least of which is its employees:
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Employee tools at SAS:
• SAS Wide Web (intranet in multiple languages)
• Using SharePoint 2007 (MOSS)
• Employee Blogs
• Employee Wikis
• SAS Video portal (executive updates, podcasts, webcasts, town hall meetings)
• Two sound stages at SAS working every day -
Four Critical Dimensions (Insight into change):
1- Human Capital
2- Knowledge Processes
3- Culture
4- Infrastructure - 1 more annotation(s)...
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