Dresden 016beta2 20100421 2 Slides Per Page e
Content
bengin
Advanced Tools for Visualizing, Measuring and Managing Intangibles
5th European Institute for Advanced Studies in Management (EIASM), Workshop on
Mapping values Visualizing, Measuring and Managing Intangibles and Intellectual Capital 1
bengin
Dresden (Germany), 8-9 October 2009 – © 2009 [email protected] –
www.bengin.net © 2009 bengin
Speaker Peter Bretscher,
Founder and owner, Engineering Office for Business Development
Ingenieurbüro für Wirtschaftsentwicklung, Eggersriet / Switzerland
Function in the Ing.Büro: Advisor to organizations in the design of economic steering and management systems 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 of management 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
2 Mapping values © 2009 bengin
bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
3
bengin
Mapping values © 2009 bengin
Development of economic assets
Relative significance of economic goods
100 80 60 40 20 tangible goods intangible goods
Low
middle
high
state of economic development
4 Mapping values © 2009 bengin
bengin
Development of Business Offerings
5
bengin
Mapping values © 2009 bengin
Summary
«Many of the patterns of nature we can discover only after they have been constructed by our mind.» Friedrich von Hayek
This are two developments we see in the real reality. Intangibles are (and will be) more and more important. Intangibles in a form of knowledge (use-how, make-how, think-how) and in 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.
6
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
7
bengin
Mapping values © 2009 bengin
Idea to Innovation
Phase of innovation: 5%
Phase of invention: 25% Phase of incubation: 70%
Examples:
Concrete Inforced concrete Aluminium Telephone Radio Radar TV Computer ICs 40 22 29 ? 56 29 22 115 40 28 7 53 14 13 2 22 9 2 20 18 26 2 2 1 8 5 3 years years years years years years years years years
8
bengin
Mapping values © 2009 bengin
Development of Business Theory
(S-Curve of Product Development)
Rational MindSet II Additional: Intangible Assets Subjective Value Metric
1782
Anna Goeldin Last witch beheaded (Switzerland)
Rational MindSet I Classic: Tangible Assets Monetary Value Metric
Mises Marx Gauss Towne Keynes Schumpeter Taylor
Adam Smith
Moral Sentiments 1759 Wealth of Nations 1776
64 Bit 32 Bit 16 Bit 8 Bit 4 Bit MS-DOS
1750
1800
1850
1900
1950
2000
2050
9
bengin
Mapping values © 2009 bengin
Three Worlds – trigger for invention?
10
bengin
Mapping values © 2009 bengin
World 3: Six interdependent fields
11
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Mapping values © 2009 bengin
World 3: Six interdependent fields
12
bengin
Mapping values © 2009 bengin
Summary
«Count what’s countable. Measure what’s measurable. Make measurable what’s not measurable.» Galileo Galilei
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.
13
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
14
bengin
Mapping values © 2009 bengin
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.)
15 Mapping values © 2009 bengin
bengin
Objects, Attributes, Value-Measures
Resources Resources
Objects Objects
Explicit Values
Numbers Numbers
tangible tangible
intangible intangible
Real Real Numbers Numbers
Unit: CHF, $, €
Objective Numbers
Imaginary Imaginary Numbers Numbers
Unit: iCHF, i$, i€
Subjective Numbers
Implicit Values
Complex Complex Numbers Numbers
Unit: CHF/iCHF, $/i$, €/i€
Vector
16 Mapping values © 2009 bengin
combined
bengin
Summary
«It is the theory which determines what we can observe.» Albert Einstein
Enhancing this two overhauled paradigms is possible.
(Even if it takes some time.)
17
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
18
bengin
Mapping values © 2009 bengin
The Vector
y 4 vectors of objects
Single 2D-Vector
Value b
Vector = a + b
x y Adding vectors
Value a
x
19
bengin
Mapping values © 2009 bengin
Vector Type 1
More samples: http://bh.bengin.com http://www.bengin.net/soft/vektorbeispiele01_d.htm bengin
Mapping values © 2009 bengin
20
Vector Type 1 (Aggregation and Drilldown)
subjective customer value (of the product)
qualitative / subjective
Functionality
Brand / Image
R&D effectiveness
Body / Design
o (C tal To
n ou mp
d)
P
orm e rf
ce an
quantitative / financial
DrillDown
Chassis Engine
R&D expenditures / input ressources
R&D efficiency
21 Mapping values © 2009 bengin
bengin
Vector Type 1 (Public Service Departments)
120
Effects (subjective citizen perspective
Public Service Departments
100
9 Police&Justice 8 Others 7 Healthcare 6 Economy 5 Education 4 Infrastructure 3 Finance 2 Defense 1 Foreign Affairs
80
60
P
an or m erf
(o ce
lic ub fp
vic ser
art ep ed
) nts me
40
20
0 0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Costs
22
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Mapping values © 2009 bengin
Vector Type 1 (practical application)
Asking customer (Internet) Decision cockpit (links internal economic data with answers of customers)
23
bengin
Mapping values © 2009 bengin
Vector Type 2: Linking „objective“ with „subjective“ axis
subjective (intangible) view
intrinsic value
use value of investment for investor A
uv A = (p A)2 – (bv)2
use value of investment for investor B
uv B = (p B)2 – (bv)2
book value price investor B is willing to pay
price investor A is willing to pay
objective (financial) view bengin
price
24 Mapping values © 2009 bengin
Overpriced Papers? Is the Vector a prognostic tool?
....a year before the downturn of the classic curve.... ...the Vector Map indicated a change of Coca Cola Amatil.........
Stock Exchange Value
12000000000 10000000000 8000000000 6000000000 4000000000 2000000000 1995 1996 1997 1990 1991 1992 1993 1994 1998 1999 0 9000000000
Value Vector
97 96
Implicit Values
8000000000 7000000000 6000000000
97 96
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
98 99
5000000000 4000000000 3000000000 2000000000 1000000000 0 0
98
99
2E+0 4E+0 6E+0 9 9 9
Explicit Values
25
bengin
Mapping values © 2009 bengin
14 types of industry (Sveiby)
iV
400.00
350.00
Food 300.00 Media Services 250.00 Electronic Information Technology Mechanical Industries 200.00 Insurance Steel Electricity, Gas 150.00 Wood Industries Bank Automobil 100.00 Real estate Health
50.00
0.00 0.00 20.00 40.00 60.00 80.00 100.00 120.00
mV
Source: Morgan & Stanley Capital International World Index; Cited in: Sveiby, Wissenskapital; Seite 23; Mi-Verlag 1998
26
bengin
Mapping values © 2009 bengin
Intangible Assets or Shareholders Profit Expectation?
implicit value [i - Mia] 80 75 70 65 60 55 50 45 40 35 30 25 Ford 20 15 10 5 McDonald's Microsoft IBM Coca Cola -
The explicit Value and the implicit Value together draw a complete picture about the company’s value and its development. The question remains: Is the implicit Value given by the real Value of the company? Is it given by some marketing tricks? Which part of it is made by the Shareholders Value Expectation?
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
explicit value [Mia]
27
bengin
Mapping values © 2009 bengin
A better model for new decisions
Value Points of 75 enterprises
10'000
9'000
Investors: Attention!
8'000
7'000
implicit Values
6'000
5'000
4'000
3'000
2'000
Management could use the potential more effective.
1'000
0 0 1'000 2'000 3'000 4'000 5'000 6'000 7'000 8'000 9'000 10'000
explicit Values
28 Mapping values © 2009 bengin
bengin
Tracking the development of an enterprise
Pointer of vector for five years
1'400
1'200
92
95
Question: "What happened in the year 1996?“
94
1'000 implicit axis [ Mio iCHF]
93
800
96
Answer: Part of enterprise sold. 2nd Question: Is this loss of intangible values compensated by the price received for the sold part of enterprise. Answer: ?
600
400
200
0 0 200 400 600 800 1'000 1'200 1'400 1'600
explicit axis [Mio CHF]
Ask Auditor – if he’s still available….
29
bengin
Mapping values © 2009 bengin
Summary
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
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 time for the physicists 100 years ago, an analogical step can be made by economists with the relativity of value. It will enable a more sustainable economy.
30
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
31
bengin
Mapping values © 2009 bengin
Summary
«Many of the patterns of nature we can discover only after they have been constructed by our mind.» Friedrich von Hayek
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 it‘s consequences will enable a new dimension of wealth. Tree samples of influence we see at that time:
32
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Mapping values © 2009 bengin
Four Main Points
1. Structure of Enterprise 2. Measures and Metrics 3 Offerings
7 Processes 6 Primary-Resources Enhanced System of Measures that Integrates Intangibles and Subjective Metrics
3. Strategy of Enterprise 4. Optimizing Value Net
Outside-In and Inside-Out From supplier of supplier to customer of customer
33
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Mapping values © 2009 bengin
Four Main Points
34
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Mapping values © 2009 bengin
Back- and Frontside of the Economics MindSet
Classic Rules, Subjective Experiences, Standards and Values and Believes Value Metrics and Measures
35
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Mapping values © 2009 bengin
Back- and Frontside of the Economics MindSet
„imaginary“ business economics
„subjective“ Values, not tangible, but real
Imaginary P&L of potential
„traditional“ business economics
„objective“ Values [$, £, ¥. €, CHF]
Classic P&L
Imaginary Balance intangible assets „subjective“
Image Flow of Information Transparence Know-How Goodwill Sense, Climate Identification Work with joy Patents Copyrights Brands
Products
Dismissals Engagements Outsourcing Absences Death Intell. prop Profit-/Loss ---------------------------Sum + -
O I + -++
Rights Services
O In Rawmaterial Tools, Means Wagues Mind Wagues Hand Sales Rights + Sales Services + Sales Products + P/L ---------------------------Summe + -
Classic balance of tangible assets „objective“
Current assets Fixed Assets ____ Outside capital Equity capital
Design of products (properties)
Designed for production Designed for Intangible means of production
Security Praise, thank Education Enlightening Acceptance Transparence
Product calculation
Headwork Handwork Tools Manufacturing Original cost Margin Net SP Margin -----------------------Gross SP
Hidden reserves
quality Designed for user’s needs
Hidden reserves
© 1985 / 2008 Peter Bretscher
36
bengin
Mapping values © 2009 bengin
Pricing Values?
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?
37
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Mapping values © 2009 bengin
Pricing Values?
Structure*)
Introducing axis for intangibles
38
bengin
Mapping values © 2009 bengin
And now?
A long journey begins with just one step. Chinese
You are welcome and invited to take part of that journey.
[email protected] Mobile: ++41 79 650 49 04
Eggersriet, Switzerland
39
bengin
Mapping values © 2009 bengin
bengin
Beyond Limits of Classic Business Paradigms
Thank You
Web http://www.bengin.com Blog http://www.bengin.net/wp/ Twitter http://twitter.com/peterbretscher Special Website http://www.bengin.net/dresden/
40 Mapping values © 2009 bengin
bengin
backing slides
bengin
41 Mapping values © 2009 bengin
bengin
The four Quadrants of Value generation
+ Intangibles [i$] in QI Q I: Transform -T/+I Q II
New projects Revisions of offerings Insourcing/merging ....
R&D
Transformation (T to I) out - Tangibles [$] Value Degeneration
Value Generation2 in + Tangibles [$] Transformation (I to T)
Q II: Generation +T/+I
Daily business Selling, dispatch (Re)Production ....
Q III: Transform -I/+T
Outsourcing Leaner production ....
Q IV: Degeneration -I/-T Q IV out - Intangibles [i$] Q III
Graveyard ....
© 1996/2010 [email protected] Part of Business Engineering Systems, Registered Copyright TXu 512 154
42
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Mapping values © 2009 bengin
Development of (economic) Value-Metrics
(Compound Value-Metric System with the subjective, implicit Value axis)
Why Metrics? - comparing, comprehensible, reproducible - Making rationale (and indirect) communication easier. % i$
Possible to calculate with and visualize 2D-Values
% i$
$
Measures reduce need for interpretation
4. Quantitative Metrics (multidimensional) 3. Quantitative Metrics (linear) 2. Qualitative Metrics
hot, cold ...... AAA, A+, B, C
$
$ $
Strong need for interpretation
1. Normative "Metrics"
Principles, ....The xx "Commandments"
Difficult to visualize. No tools and rules for numerical or graphical calculations.
Axis of time
43
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Mapping values © 2009 bengin
Von verschiedenen Organisationen in verschiedenen Projekten
44
bengin
Mapping values © 2009 bengin
Innovating Business Models
Technologies
new
old
old
Products + Services
new
Bus. Techniques
Products + Services + Rights (IP)
45 Mapping values © 2009 bengin
bengin
Measuring performance
Creating Values i$
Counting Values i$
implicit values
$
Invest generated earnings
http://www.performanceprofile.com http://www.balancedscoremap.com
explicit values
$
46 Mapping values © 2009 bengin
bengin
Value (Price) Development of Paper
(Shareholders view)
iV
3000 Mio
2500
2'520
2000
1969
Shareholders Profit Expectation
SPE Initial Base (Value estimation) Initial Offer, March 24. 2000 Evening 1st Day
1500
SPE
1000
500
648 551
0 0
97 0 10 20 30 Mio
mV
47 Mapping values © 2009 bengin
bengin
Explained world
Value
Nach: Marle Marks, Manager Magazin 3/85
48
bengin
Mapping values © 2009 bengin
Color measures
49
bengin
Mapping values © 2009 bengin
1D – 2D rulers, metrics
50
bengin
Mapping values © 2009 bengin
Vector: Velocity
51
bengin
Mapping values © 2009 bengin
Next step: Focus on economic MindSetting / Paradigms
52
bengin
Mapping values © 2009 bengin
New MindWare & SoftWare quantum leap in the simulation and planning of todays economy.
Solutions
(Form & Content)
SoftWare
Operating System
Economic. Theory
Basics
Hardware Real economy
MindWare
Applikations
Applications
53
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Mapping values © 2009 bengin
Basics of 2D-Value-Vector
y Illustration 1
x, y = two arbitrary properties of an object
x Cost Transports initialized Budget Medical Properties y Price Transports finished Rechnung Subjective condition Sparten gewichtet x Turnover Cost Price Turnover Retouren y Volume [m3] Deckungsbeitrag Retouren Mitarbeiterzufriedenheit Kundenzufriedenheit
x y [i$] Illustration 2
Turnover
x, y = explicite ("objective") and implicite ("subjective") Value-Properties as a Multi-Value-Compound.
x1 Sum of balance x2 Sum of Share Price Turnover Price Porsche Samples Shareholder Value Weighted added Value Subjective Added Value Mapping values © 2009 bengin 54
x [$] x1 x2
Wagues Price VW
bengin
Advanced Tools for Visualizing, Measuring and Managing Intangibles
5th European Institute for Advanced Studies in Management (EIASM), Workshop on
Mapping values Visualizing, Measuring and Managing Intangibles and Intellectual Capital 1
bengin
Dresden (Germany), 8-9 October 2009 – © 2009 [email protected] –
www.bengin.net © 2009 bengin
Speaker Peter Bretscher,
Founder and owner, Engineering Office for Business Development
Ingenieurbüro für Wirtschaftsentwicklung, Eggersriet / Switzerland
Function in the Ing.Büro: Advisor to organizations in the design of economic steering and management systems 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 of management 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
2 Mapping values © 2009 bengin
bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
3
bengin
Mapping values © 2009 bengin
Development of economic assets
Relative significance of economic goods
100 80 60 40 20 tangible goods intangible goods
Low
middle
high
state of economic development
4 Mapping values © 2009 bengin
bengin
Development of Business Offerings
5
bengin
Mapping values © 2009 bengin
Summary
«Many of the patterns of nature we can discover only after they have been constructed by our mind.» Friedrich von Hayek
This are two developments we see in the real reality. Intangibles are (and will be) more and more important. Intangibles in a form of knowledge (use-how, make-how, think-how) and in 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.
6
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
7
bengin
Mapping values © 2009 bengin
Idea to Innovation
Phase of innovation: 5%
Phase of invention: 25% Phase of incubation: 70%
Examples:
Concrete Inforced concrete Aluminium Telephone Radio Radar TV Computer ICs 40 22 29 ? 56 29 22 115 40 28 7 53 14 13 2 22 9 2 20 18 26 2 2 1 8 5 3 years years years years years years years years years
8
bengin
Mapping values © 2009 bengin
Development of Business Theory
(S-Curve of Product Development)
Rational MindSet II Additional: Intangible Assets Subjective Value Metric
1782
Anna Goeldin Last witch beheaded (Switzerland)
Rational MindSet I Classic: Tangible Assets Monetary Value Metric
Mises Marx Gauss Towne Keynes Schumpeter Taylor
Adam Smith
Moral Sentiments 1759 Wealth of Nations 1776
64 Bit 32 Bit 16 Bit 8 Bit 4 Bit MS-DOS
1750
1800
1850
1900
1950
2000
2050
9
bengin
Mapping values © 2009 bengin
Three Worlds – trigger for invention?
10
bengin
Mapping values © 2009 bengin
World 3: Six interdependent fields
11
bengin
Mapping values © 2009 bengin
World 3: Six interdependent fields
12
bengin
Mapping values © 2009 bengin
Summary
«Count what’s countable. Measure what’s measurable. Make measurable what’s not measurable.» Galileo Galilei
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.
13
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
14
bengin
Mapping values © 2009 bengin
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.)
15 Mapping values © 2009 bengin
bengin
Objects, Attributes, Value-Measures
Resources Resources
Objects Objects
Explicit Values
Numbers Numbers
tangible tangible
intangible intangible
Real Real Numbers Numbers
Unit: CHF, $, €
Objective Numbers
Imaginary Imaginary Numbers Numbers
Unit: iCHF, i$, i€
Subjective Numbers
Implicit Values
Complex Complex Numbers Numbers
Unit: CHF/iCHF, $/i$, €/i€
Vector
16 Mapping values © 2009 bengin
combined
bengin
Summary
«It is the theory which determines what we can observe.» Albert Einstein
Enhancing this two overhauled paradigms is possible.
(Even if it takes some time.)
17
bengin
Mapping values © 2009 bengin
Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
18
bengin
Mapping values © 2009 bengin
The Vector
y 4 vectors of objects
Single 2D-Vector
Value b
Vector = a + b
x y Adding vectors
Value a
x
19
bengin
Mapping values © 2009 bengin
Vector Type 1
More samples: http://bh.bengin.com http://www.bengin.net/soft/vektorbeispiele01_d.htm bengin
Mapping values © 2009 bengin
20
Vector Type 1 (Aggregation and Drilldown)
subjective customer value (of the product)
qualitative / subjective
Functionality
Brand / Image
R&D effectiveness
Body / Design
o (C tal To
n ou mp
d)
P
orm e rf
ce an
quantitative / financial
DrillDown
Chassis Engine
R&D expenditures / input ressources
R&D efficiency
21 Mapping values © 2009 bengin
bengin
Vector Type 1 (Public Service Departments)
120
Effects (subjective citizen perspective
Public Service Departments
100
9 Police&Justice 8 Others 7 Healthcare 6 Economy 5 Education 4 Infrastructure 3 Finance 2 Defense 1 Foreign Affairs
80
60
P
an or m erf
(o ce
lic ub fp
vic ser
art ep ed
) nts me
40
20
0 0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Costs
22
bengin
Mapping values © 2009 bengin
Vector Type 1 (practical application)
Asking customer (Internet) Decision cockpit (links internal economic data with answers of customers)
23
bengin
Mapping values © 2009 bengin
Vector Type 2: Linking „objective“ with „subjective“ axis
subjective (intangible) view
intrinsic value
use value of investment for investor A
uv A = (p A)2 – (bv)2
use value of investment for investor B
uv B = (p B)2 – (bv)2
book value price investor B is willing to pay
price investor A is willing to pay
objective (financial) view bengin
price
24 Mapping values © 2009 bengin
Overpriced Papers? Is the Vector a prognostic tool?
....a year before the downturn of the classic curve.... ...the Vector Map indicated a change of Coca Cola Amatil.........
Stock Exchange Value
12000000000 10000000000 8000000000 6000000000 4000000000 2000000000 1995 1996 1997 1990 1991 1992 1993 1994 1998 1999 0 9000000000
Value Vector
97 96
Implicit Values
8000000000 7000000000 6000000000
97 96
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
98 99
5000000000 4000000000 3000000000 2000000000 1000000000 0 0
98
99
2E+0 4E+0 6E+0 9 9 9
Explicit Values
25
bengin
Mapping values © 2009 bengin
14 types of industry (Sveiby)
iV
400.00
350.00
Food 300.00 Media Services 250.00 Electronic Information Technology Mechanical Industries 200.00 Insurance Steel Electricity, Gas 150.00 Wood Industries Bank Automobil 100.00 Real estate Health
50.00
0.00 0.00 20.00 40.00 60.00 80.00 100.00 120.00
mV
Source: Morgan & Stanley Capital International World Index; Cited in: Sveiby, Wissenskapital; Seite 23; Mi-Verlag 1998
26
bengin
Mapping values © 2009 bengin
Intangible Assets or Shareholders Profit Expectation?
implicit value [i - Mia] 80 75 70 65 60 55 50 45 40 35 30 25 Ford 20 15 10 5 McDonald's Microsoft IBM Coca Cola -
The explicit Value and the implicit Value together draw a complete picture about the company’s value and its development. The question remains: Is the implicit Value given by the real Value of the company? Is it given by some marketing tricks? Which part of it is made by the Shareholders Value Expectation?
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
explicit value [Mia]
27
bengin
Mapping values © 2009 bengin
A better model for new decisions
Value Points of 75 enterprises
10'000
9'000
Investors: Attention!
8'000
7'000
implicit Values
6'000
5'000
4'000
3'000
2'000
Management could use the potential more effective.
1'000
0 0 1'000 2'000 3'000 4'000 5'000 6'000 7'000 8'000 9'000 10'000
explicit Values
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Tracking the development of an enterprise
Pointer of vector for five years
1'400
1'200
92
95
Question: "What happened in the year 1996?“
94
1'000 implicit axis [ Mio iCHF]
93
800
96
Answer: Part of enterprise sold. 2nd Question: Is this loss of intangible values compensated by the price received for the sold part of enterprise. Answer: ?
600
400
200
0 0 200 400 600 800 1'000 1'200 1'400 1'600
explicit axis [Mio CHF]
Ask Auditor – if he’s still available….
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Summary
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
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 time for the physicists 100 years ago, an analogical step can be made by economists with the relativity of value. It will enable a more sustainable economy.
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Agenda
Development of Economy Innovation of Products - and Economic MindSet as a Product Two Outpaced Paradigms The Vector Solution Conclusion and Outlook
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Summary
«Many of the patterns of nature we can discover only after they have been constructed by our mind.» Friedrich von Hayek
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 it‘s consequences will enable a new dimension of wealth. Tree samples of influence we see at that time:
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Four Main Points
1. Structure of Enterprise 2. Measures and Metrics 3 Offerings
7 Processes 6 Primary-Resources Enhanced System of Measures that Integrates Intangibles and Subjective Metrics
3. Strategy of Enterprise 4. Optimizing Value Net
Outside-In and Inside-Out From supplier of supplier to customer of customer
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Four Main Points
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Back- and Frontside of the Economics MindSet
Classic Rules, Subjective Experiences, Standards and Values and Believes Value Metrics and Measures
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Back- and Frontside of the Economics MindSet
„imaginary“ business economics
„subjective“ Values, not tangible, but real
Imaginary P&L of potential
„traditional“ business economics
„objective“ Values [$, £, ¥. €, CHF]
Classic P&L
Imaginary Balance intangible assets „subjective“
Image Flow of Information Transparence Know-How Goodwill Sense, Climate Identification Work with joy Patents Copyrights Brands
Products
Dismissals Engagements Outsourcing Absences Death Intell. prop Profit-/Loss ---------------------------Sum + -
O I + -++
Rights Services
O In Rawmaterial Tools, Means Wagues Mind Wagues Hand Sales Rights + Sales Services + Sales Products + P/L ---------------------------Summe + -
Classic balance of tangible assets „objective“
Current assets Fixed Assets ____ Outside capital Equity capital
Design of products (properties)
Designed for production Designed for Intangible means of production
Security Praise, thank Education Enlightening Acceptance Transparence
Product calculation
Headwork Handwork Tools Manufacturing Original cost Margin Net SP Margin -----------------------Gross SP
Hidden reserves
quality Designed for user’s needs
Hidden reserves
© 1985 / 2008 Peter Bretscher
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Pricing Values?
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?
Structure*)
Introducing axis for intangibles
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And now?
A long journey begins with just one step. Chinese
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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Beyond Limits of Classic Business Paradigms
Thank You
Web http://www.bengin.com Blog http://www.bengin.net/wp/ Twitter http://twitter.com/peterbretscher Special Website http://www.bengin.net/dresden/
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backing slides
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The four Quadrants of Value generation
+ Intangibles [i$] in QI Q I: Transform -T/+I Q II
New projects Revisions of offerings Insourcing/merging ....
R&D
Transformation (T to I) out - Tangibles [$] Value Degeneration
Value Generation2 in + Tangibles [$] Transformation (I to T)
Q II: Generation +T/+I
Daily business Selling, dispatch (Re)Production ....
Q III: Transform -I/+T
Outsourcing Leaner production ....
Q IV: Degeneration -I/-T Q IV out - Intangibles [i$] Q III
Graveyard ....
© 1996/2010 [email protected] Part of Business Engineering Systems, Registered Copyright TXu 512 154
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Development of (economic) Value-Metrics
(Compound Value-Metric System with the subjective, implicit Value axis)
Why Metrics? - comparing, comprehensible, reproducible - Making rationale (and indirect) communication easier. % i$
Possible to calculate with and visualize 2D-Values
% i$
$
Measures reduce need for interpretation
4. Quantitative Metrics (multidimensional) 3. Quantitative Metrics (linear) 2. Qualitative Metrics
hot, cold ...... AAA, A+, B, C
$
$ $
Strong need for interpretation
1. Normative "Metrics"
Principles, ....The xx "Commandments"
Difficult to visualize. No tools and rules for numerical or graphical calculations.
Axis of time
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Von verschiedenen Organisationen in verschiedenen Projekten
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Innovating Business Models
Technologies
new
old
old
Products + Services
new
Bus. Techniques
Products + Services + Rights (IP)
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Measuring performance
Creating Values i$
Counting Values i$
implicit values
$
Invest generated earnings
http://www.performanceprofile.com http://www.balancedscoremap.com
explicit values
$
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Value (Price) Development of Paper
(Shareholders view)
iV
3000 Mio
2500
2'520
2000
1969
Shareholders Profit Expectation
SPE Initial Base (Value estimation) Initial Offer, March 24. 2000 Evening 1st Day
1500
SPE
1000
500
648 551
0 0
97 0 10 20 30 Mio
mV
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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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New MindWare & SoftWare quantum leap in the simulation and planning of todays economy.
Solutions
(Form & Content)
SoftWare
Operating System
Economic. Theory
Basics
Hardware Real economy
MindWare
Applikations
Applications
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Basics of 2D-Value-Vector
y Illustration 1
x, y = two arbitrary properties of an object
x Cost Transports initialized Budget Medical Properties y Price Transports finished Rechnung Subjective condition Sparten gewichtet x Turnover Cost Price Turnover Retouren y Volume [m3] Deckungsbeitrag Retouren Mitarbeiterzufriedenheit Kundenzufriedenheit
x y [i$] Illustration 2
Turnover
x, y = explicite ("objective") and implicite ("subjective") Value-Properties as a Multi-Value-Compound.
x1 Sum of balance x2 Sum of Share Price Turnover Price Porsche Samples Shareholder Value Weighted added Value Subjective Added Value Mapping values © 2009 bengin 54
x [$] x1 x2
Wagues Price VW
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