bengin

Advanced Tools for Visualizing,

Measuring and Managing Intangibles
5th European Institute for Advanced Studies in Management (EIASM), Workshop on
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Visualizing, Measuring and Managing Intangibles and Intellectual Capital
Mapping values
bengin Dresden (Germany), 8-9 October 2009 – © 2009 peter.bretscher@bengin.com – 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: peter.bretscher@bengin.com,
Website: http://www.bengin.com/, Blog: http://www.bengin.net/wp/, Twitter: http://twitter.com/peterbretscher
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 Agenda

ƒ Development of Economy

ƒ Innovation of Products
- and Economic MindSet as a Product

ƒ Two Outpaced Paradigms

ƒ The Vector Solution

ƒ Conclusion and Outlook

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Development of economic assets

Relative significance
of economic goods

100

intangible goods
80

60

40

20 tangible goods

Low middle high state of economic development

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 Development of Business Offerings

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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

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.

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 Agenda

ƒ Development of Economy

ƒ Innovation of Products
- and Economic MindSet as a Product

ƒ Two Outpaced Paradigms

ƒ The Vector Solution

ƒ Conclusion and Outlook

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Idea to Innovation
Phase of innovation: 5%

Phase of invention: 25%

Phase of incubation: 70%

Examples:
Concrete 40 28 20 years
Inforced concrete 22 7 18 years
Aluminium 29 53 26 years
Telephone ? 14 2 years
Radio 56 13 2 years
Radar 29 2 1 years
TV 22 22 8 years
Computer 115 9 5 years
ICs 40 2 3 years

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 Development of Business Theory
(S-Curve of Product Development)
Rational MindSet II
Additional:
Intangible Assets
Subjective Value Metric

1782
Anna Goeldin Rational MindSet I
Last witch beheaded
(Switzerland)
Classic:
Tangible Assets
Monetary Value Metric

Mises
Adam Smith 64 Bit
Marx 32 Bit
Moral Wealth Keynes
Sentiments of Nations 16 Bit
Gauss
1759 1776 Schumpeter 8 Bit
4 Bit MS-DOS
Towne Taylor

1750 1800 1850 1900 1950 2000 2050

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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
«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.
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Agenda

ƒ Development of Economy

ƒ Innovation of Products
- and Economic MindSet as a Product

ƒ Two Outpaced Paradigms

ƒ The Vector Solution

ƒ Conclusion and Outlook

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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

Resources
Resources

Objects
Objects

Explicit Values Numbers

Numbers tangible
tangible
intangible
intangible

Real
Real
Numbers
Numbers
Unit:
CHF, $, € Objective Numbers
Imaginary
Imaginary
Numbers
Numbers
Unit:
Subjective Numbers
iCHF, i$, i€
Implicit Values Complex
Complex
Numbers
Numbers
Unit:
CHF/iCHF, $/i$, €/i€ Vector

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 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.)

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Agenda

ƒ Development of Economy

ƒ Innovation of Products
- and Economic MindSet as a Product

ƒ Two Outpaced Paradigms

ƒ The Vector Solution

ƒ Conclusion and Outlook

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 The Vector

y
4 vectors
Single 2D-Vector of objects

Value b

Vector = a + b

Adding
vectors

Value a

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Vector Type 1

More samples:
http://bh.bengin.com
http://www.bengin.net/soft/vektorbeispiele01_d.htm 20
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 Vector Type 1 (Aggregation and Drilldown)

Functionality
subjective qualitative / subjective
customer value Brand / Image
(of the product) ce
an

quantitative / financial
orm
P e rf
Body / n d)
Design ou
Î R&D o mp
effectiveness (C
tal
To Drill-
Down
Chassis

Engine

R&D expenditures / input ressources

Î R&D efficiency
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Vector Type 1 (Public Service Departments)

120

Public
Service )
nts
100

Departments me
art
Effects (subjective citizen perspective

ep
ed
9 Police&Justice vic
ser
80
lic
8 Others ub
(o fp
7 Healthcare ce
60
an
or m
6 Economy
P erf
5 Education 40

4 Infrastructure
20
3 Finance

2 Defense
0
1 Foreign Affairs 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000

Costs

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 Vector Type 1 (practical application)

Asking customer Decision cockpit

(Internet) (links internal economic data with answers of customers)

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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 price investor A

is willing to pay is willing to pay
objective (financial) view price
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 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 Value Vector

12000000000 9000000000
97 1990
97 8000000000
10000000000 1991
7000000000 96
1992
8000000000 96 6000000000 1993
98

Implicit Values
6000000000 5000000000 1994
99 98
4000000000 1995
4000000000
3000000000 1996
2000000000 2000000000 1997
1998
0 1000000000
1999
1997
1995
1996

1998
1990
1991
1992
1993
1994

1999
0 99
0 2E+0 4E+0 6E+0
9 9 9
Explicit Values

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14 types of industry (Sveiby)

iV
400.00

350.00

Food
300.00
Media
Services
Electronic
250.00
Information Technology
Mechanical Industries
Insurance
200.00
Steel
Electricity, Gas
Wood Industries
150.00
Bank
Automobil
Real estate
100.00
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

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 Intangible Assets or Shareholders Profit Expectation?

implicit
value
[i - Mia]

Coca-Cola
80

75

70 The explicit Value and the implicit

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Value together draw a complete
60
picture about the company’s value
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Microsoft IBM and its development.
50

45

40
The question remains:
35 Is the implicit Value given by the
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McDonald's
real Value of the company?
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Ford
Is it given by some marketing tricks?
20 Which part of it is made by the
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Shareholders Value Expectation?
10

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 explicit value
[Mia]

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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
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 Tracking the development of an enterprise

Pointer of vector for five years

1'400

92
Question:
1'200 95
"What happened in the year 1996?“
1'000
93 94 Answer:
implicit axis [ Mio iCHF]

800
Part of enterprise sold.
96
600 2nd Question:
Is this loss of intangible values compen-
400 sated by the price received for the sold
part of enterprise.
200

Answer: ?
0
0 200 400 600 800 1'000 1'200 1'400 1'600

explicit axis [Mio CHF] Æ 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

ƒ Development of Economy

ƒ Innovation of Products
- and Economic MindSet as a Product

ƒ Two Outpaced Paradigms

ƒ The Vector Solution

ƒ 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 Enhanced System of Measures
6 Primary-Resources that Integrates Intangibles
and Subjective Metrics

3. Strategy of Enterprise
4. Optimizing Value Net
Outside-In
and From
Inside-Out 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 „traditional“ business economics
„subjective“ Values, not tangible, but real „objective“ Values [$, £, ¥. €, CHF]
Imaginary P&L of potential Classic P&L

O I Rights O In
Rawmaterial -
Dismissals -
Tools, Means -
Engagements +
Outsourcing - Services Wagues Mind
Wagues Hand -
-

Absences -
Sales Rights +
Death --
Sales Services +
Intell. prop ++
Sales Products +
Profit-/Loss
P/L
----------------------------
Products

----------------------------
Sum + -
Summe + -

Imaginary Balance Classic balance of

intangible assets tangible assets
„subjective“ „objective“
Image
Flow of Information Current assets
Transparence
Know-How Fixed Assets
Goodwill
____
Sense, Climate
Identification
Outside capital
Work with joy
Patents
Equity capital
Copyrights
Brands

Design of products
(properties) Product calculation

Designed for Headwork

Handwork
production Tools
Manufacturing
Designed for Original cost
Hidden reserves Margin Hidden reserves
Intangible means of production quality Net SP
Margin
Security Praise, thank Designed for
------------------------
Education Enlightening Gross SP
Acceptance Transparence user’s needs

© 1985 / 2008 Peter Bretscher

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 Pricing Values?

Tangible and intangible Market for Papers

assets of an enterprise, (Stock-Exchange)

potential of an enterprise,

values of an enterprise

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

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Pricing Values?
Introducing

intangibles
axis for
Structure*)

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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.

peter.bretscher@bengin.com
Mobile: ++41 79 650 49 04

Eggersriet, Switzerland

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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/

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 backing slides
bengin

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The four Quadrants of Value generation

+ Intangibles [i$] Q I: Transform -T/+I
in New projects
Revisions of offerings
QI Q II Insourcing/merging
R&D ....

Q II: Generation +T/+I

Transformation Value Daily business
(T to I) Generation2 Selling, dispatch
(Re)Production
....
out in
- Tangibles [$] + Tangibles [$]
Q III: Transform -I/+T
Outsourcing
Leaner production
Value Transformation
....
Degeneration (I to T)

Q IV: Degeneration -I/-T

Graveyard
Q IV Q III ....
out
© 1996/2010 peter.bretscher@bengin.com
- Intangibles [i$] Part of Business Engineering Systems,
Registered Copyright TXu 512 154
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 Possible to
Development of (economic) Value-Metrics calculate with and
(Compound Value-Metric System with the subjective, implicit Value axis) visualize 2D-Values

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

$
4. Quantitative Metrics
Measures reduce need

$
(multidimensional)
for interpretation

3. Quantitative
$
Metrics (linear)
$

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

Metrics
Difficult to visualize.
Strong need for

No tools and rules

interpretation

for numerical or
graphical
1. Normative "Metrics"
calculations.
Principles, ....The xx "Commandments"

Axis of time

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Von verschiedenen Organisationen in verschiedenen Projekten

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 Innovating Business Models

Technologies

new

old

old new Bus. Techniques

Products Products
+ Services + Services
+ Rights (IP)
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Measuring performance

Creating Values Counting Values

i$ i$
implicit values

$ explicit values $
Invest

generated earnings

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http://www.performanceprofile.com Mapping values
http://www.balancedscoremap.com © 2009 bengin
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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)
1500
Initial Offer, March 24. 2000
Evening 1st Day
SPE

1000

648
551
500

97
0 0
mV
0 10 20 30 Mio

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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 Æ quantum leap in the
simulation and planning of todays economy.

Solutions
(Form & Content)

Applikations Applications

MindWare
SoftWare

Operating System Economic. Theory

Basics

Hardware

Real economy

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Basics of 2D-Value-Vector
x, y = two arbitrary properties of an object
y
Illustration 1 x y x y

Cost Price Turnover Volume [m3]

Transports Transports Deckungs-

Cost
initialized finished beitrag

Budget Rechnung Price Retouren

Medical Subjective Mitarbeiter-

Turnover
Properties condition zufriedenheit

Sparten Kunden-
x Turnover Retouren
gewichtet zufriedenheit

y [i$]

Illustration 2 x, y = explicite ("objective") and

implicite ("subjective") Value-Properties
as a Multi-Value-Compound.

x1 x2 Samples

Sum of Share
Sum of balance Shareholder Value
Price

x [$] Wagues Turnover Weighted added Value

x1 x2
Price VW Price Porsche Subjective Added Value 54
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