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Critical Analysis Of The Academic Work d Measuring The Strategic Readiness ...


Critical Analysis of the Academic Work Titled
Measuring the Strategic Readiness of Intangible Assets
Authored by Robert S. Kaplan and David P. Norton
Table of Content
Executive Summary3
Introduction3
Analysis of Situation4
Discussions and Findings4
Conclusions and Recommendations5
References6
Executive Summary
In 2000, the market-to-book value, or in other words, the ratio of the stock-market value to accounting value of the largest 500 companies in the U.S, increased to 6.3. In simple words this means that for every six dollars of market value, only one dollar appeared on the balance sheet as a physical or financial asset. The cause of this large difference has been attributed to the rise in value of intangible assets. (Source: Getting a grip on Intangible Assets, Harvard Management Update)
In the past decade, there has been an increasing academic and corporate focus on the subject of intangible assets offering clarity to business leaders on the ways to measure and manage these assets in context of a business's strategic goals. On regulatory front, European Union is soon to introduce standards for reporting on intangible assets.
Our report aims to analyse one such academic framework, developed by Robert S. Kaplan and David P. Norton, which highlights the importance of strategic readiness of intangible assets. The methodology of this conceptual framework is creation of a Strategy Map on which intangible assets have been mapped and measured.
Three key things that emerge from the analysis of this work named Measuring the Strategic Readiness of Intangible Assets and written for Harvard Business Review in 2004 are:
Identification of the important intangible assets in a business organization.
Mapping these intangible assets to a business's strategy.
Understanding the factors that enable these intangible assets to contribute to the success of the business.
Introduction
It is increasingly clear from the example at the beginning, that, in 21st century's knowledge-driven, services-dominated, economy, it is the intangible assets, and not so much the physical and financial assets, which are playing an increasingly important role in shaping a business's success. At the same time, it is realized by management, that there is a need to objectively evaluate the readiness of these intangible assets in enabling a business to achieve its strategy.
For the benefit of analysis, we start by defining intangible assets as any nonphysical assets that can produce economic benefits. These cover intellectual capital, knowledge assets, human capital and organizational capital as well as more specific attributes like quality of corporate governance and customer loyalty. (Zadrozny, Wlodrek).
So what is required to map and manage these assets for the success of a business's strategy?


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