This Case is about FINANCIAL ANALYSIS, FINANCIAL MANAGEMENT, PRICING
PUBLICATION DATE: September 01, 2008 PRODUCT #: ROT075-PDF-ENG
In this article, the writers – both of McKinsey & Company – propose a daring notion: that organizations should totally redesign their internal fiscal performance measurements for the digital age. The time has come, they claim, for organizations to take measure of the actual engines of wealth creation in the 21st century: standings, relationships, the knowledge and other ‘intangibles’ created by gifted individuals. Businesses create wealth by converting these raw intangibles into intellectual capital, patents, brands, applications, customer bases, the institutional abilities and networks that raise profits per worker and yields on invested capital. The writers reveal how intangibles are authentic ‘capital’ in the sense they generate cash yields that are actual, and a company can begin in altering its systems to reveal the realities of modern wealth development. The post is an excerpt from the writers’ book, Marshalling Thoughts: Creating Wealth from Gift in the 21st Century Organization (McGraw Hill, 2007).