#PaiRED: Digial Platforms Are the Game Changer
There is no question that intangible assets add value to an organization. The challenge is how to measure it. The grouping of intangible assets can vary greatly. Systematic collection and storage of data, management of processes and production control can be groups of assets. So can images, trademarks and patents that help promote the company’s market presence. Market Value Added is used because it correlates to the value of the company’s shares. Without getting into financial statements, it is key to remember that innovations like AI integration can directly impact financial stability. There are many terms and no one definition for intangible assets. The question is how to evaluate more and more companies with a growing focus on intangible assets.
Companies are spending more on intangible assets. Studies show there is a correlation between intangible investing and growth. This is true regardless of industry sector. Investments in intangible assets are increasing in technology, healthcare, manufacturing, financial services, telecommunications, media and retail. There is a shift towards an economy based not on things but on knowledge. Eric Hazen from McKinsey said, “In the 19th century, the tools of growth were industrial machines; the tools of the knowledge economy will be intangible assets. We could well be seeing a new stage in the history of capitalism based on learning, knowledge, and intellectual capital” (Poerter, 2021).
Digital Platforms
Investments in technology will be repositioned from an expense to an investment in the future. Everything needs to be able to be scaled and monetized. Looking forward more than five or ten years is almost impossible with intangible assets. Certainly, platforms and algorithms are key to this expansion. Digital platforms are rapidly becoming the leading business model for the 21st century. They are essential for building intangible assets. In addition to driving revenue, platforms draw in more customers. They spin off more data and create new data opportunities. These can become intangible assets in other areas. A platform is essentially a multi-sided marketplace that connects parties on each side. Its network effects create a magnetic circle that attracts ever more producers and consumers to the platform. This connection is enabled by the digital world. It empowers platforms from the individual level all the way up to global.
Couple platforms with algorithms and it’s a game changer. An algorithm is a set of rules for solving a problem. They use a finite number of steps and when computerized bring greater consistency to the findings. Computers can use large amounts of data and can increase the speed of decision making. In the intangible economy, algorithms will be one of the most valuable assets. ML and AI algorithms allow computers to create their own rules. This progressively improves the decision-making process. Algorithms, especially using ML and AI, need to be monitored. Someone needs to be watching the shop. An AI Auditor monitors the findings. The auditor works with managers and builders to understand the performance of the algorithm, bias and all. Bias is a normal part of algorithms. Knowing what the bias is and how it influences results requires understanding both how a model works and how individual decisions are made. Critical too are metrics for the performance of algorithms and the impact on business objectives. Data is at the heart of all this. Any time there is data involved, questions about privacy, regulation and compliance are too.
#PaiRED, #BobbeBaggio, #AI@Work, #WFH, #ThePajamaEffect, #Touchpoints, #Visual Connection
