Intangible capital getting paid twice 2011-04 (final)

Trek-1

Michael Oleksak

Getting Paid

Twice

Trek-2

1. Maximize performance today2. Build realizable value for tomorrow

How to get paid twice?

Focus on the intangibles…

Trek-3Research: Ned Davis

Components of

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Market Premium

Intangible Book Value

Tangible Book Value

Components of S&P 500® Market Capitalization

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

S&P 500 Market Cap ($ billions)

Market Premium

Intangible Book Value

Tangible Book Value

Intangible portion of corporate value

now >80%

Trek-4

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

HumanCapital

StructuralCapital

RelationshipCapital

StrategicCapital

Management Processes Customers Biz Model

Employees Mktg/Sales Network External

Technology Brand

Intangible Capital

Trek-5

Human Capital

Stories

• Staff to match growth

• Hire smart people and let them go!

• Train to prepare for future

Management

Employees

Profits today Value tomorrow

Trek-6

AA BBB A BBB

BBB

Customers

A

BBB

Human Capital

BBB AA BB A

Bus. Recipe

Intellectual Capital

Relational

I.P Process Management Employees Network Brand

Organisational

Bus. Recipe

Intellectual Capital

Relational

I.P Process Management Employees Network Brand

Organisational

BBB

Customers

BB

BBB

Human Capital

BB CC B AA

BBB BBB CCC BBB

R R R R

No value R

Customers

R

Human Capital

RR R RR R

Bus. Recipe

Intellectual Capital

Relational

I.P Process Management Employees Network Brand

Organisational

Current strength

Preparation for future

Risk

Trek-7

Structural Capital

Stories• Technology and IP

make revenue scalable

• Systems and processes key to scaling operations

• Make them visible

Profits today Value tomorrow

Processes

Marketing/Sales

Technology/IP

Trek-8

Motivating Referral

Closing Sale

Developing Program

Relationships

Developing HCO Relationships

ID four core processes

Trek-9

Relationship Capital

Stories• Finding the right

customers • Leverage partners• Reputation supports

pricing

Profits today Value tomorrow

Customers

Network

Brand

Trek-10

Visualization of a six- inch methodology

notebook

Trek-11

Strategic Capital

Stories• Listen to your

customers when they ask for more

• Watch your market and adapt to changes

Profits today Value tomorrow

Business Model

External Factors

Trek-12

Human Structural Relationship Strategic

Low

Average

Best 8x

4x

2x

Map value multiples against IC

Trek-13

• Use IC as a lens for improving performance today

• Use IC visuals to communicate what you are doing internally and externally

• Pull it all together when you are ready to transition ownership

Profits today Value tomorrow

Trek-14

ResourcesBook IntangibleCapitalBook.com

Blogs TheEndGameBlog.com

SmarterCompaniesBlog.com

Community XPXBoston.com

ICKnowledgeCenter.com

Mike Oleksak 781-729-1008

oleksak@trekconsulting.com