Beyond Performance Management

10

INTANGIBLE ASSETS

What is this practice and how effective is it?

Intangible assets or capital represent not only patents and copyrights—which are often shown on the balance sheet—but also other assets, including leading brands, loyal customers, and key capabilities such as new product generation—which are not. Their value is usually understood to be the difference between a company’s market capitalization and its net tangible assets. Despite the ebbs and flows of share prices over the past twenty-five years, the value of intangibles has grown significantly, particularly in people businesses such as software, advertising, and financial services. Intangibles are increasingly seen as the key drivers of future success. We will examine how managers ...