Intangible Assets: Where Do E-learning and Social Media Fit In

E-learning and social media assets do not generally get the weight they deserve on an organization’s balance sheet.

First:

Blog Spottings and Other News

An Introduction to e-Learning: The A to Z for Getting Started
Readers seeking an accelerated introduction to online learning or who would like to offer one to other members of their organization may be interested in this online event from the eLearning Guild scheduled for September 20 and 21, 2007

Now:

Intangible Assets

There have been a handful of headlines in the New York Times online edition over the past few days that I believe could serve as the basis for posts for many weeks to come. If you are advocating for creation or expansion of e-learning or social media strategies within your organization, it may pay to keep them in mind.

Readers in the medical world, for instance, may have already noticed that Reed Elsevier, one of the world’s largest science and medicine publishers, has launched a new site for oncologists where, in exchange for submitting personal demographic data, they can immediately access the most recent cancer-related articles from key journals. As the Times article puts it:

Elsevier hopes to sign up 150,000 professional users within the next 12 months and to attract advertising and sponsorships, especially from pharmaceutical companies with cancer drugs to sell. The publisher also hopes to cash in on the site’s list of registered professionals, which it can sell to advertisers.

In addition to publishing journals, Elsevier has any number of fingers in the continuing medical education (CME) pie, both online and off. It is a logical and relatively easy step for the new OnclologyStat portal (and future portals in other medical specialties) to become a destination for Oncology CME. Pharmaceutical companies are already well versed in sponsoring CME derived from journal articles. The Times suggests that Elsevier is “taking a risk that its readers will drop their paid subscriptions and switch their allegiance to the new Web site.” It seems clear enough, though, that even if this does happen, Elsevier is well-positioned to “monetize” all of those new Web site registrants.

In the Mission to Learn world of connections and comparisons, the Elsevier news becomes even more meaningful when viewed in the light of another Times article: “When Balance Sheets Collide with the New Economy” The main thrust of this article is that, increasingly, the financial value of organizations cannot be measured using traditional balance sheet practices. “For example,” the article notes,

the most valuable assets of an innovation-based company today — its intellectual property, software investments, staff and managerial expertise, research and development, advertising and market research, and business processes — have no natural home on the balance sheet.

I am not an accountant, nor have I spent time pouring over Reed Elsevier’s financial statements, but I am willing to bet that the value the massive store of journal articles the company possesses is not adequately captured on its balance sheet. And even using the traditional accounting concept of “good will,” I am guessing that the balance sheet does not tell the story of how Elsevier’s strong brand in the medical publishing market mixes with new Web strategies to increase shareholder equity.

If you are an investor attempting to make wise investments in a company, understanding the dynamics of these sorts of intangible factors can be highly valuable. If you are a manager or board member trying to increase—or simply sustain—the value of your company—whether or not your stock is publicly traded—it is critical. Arguably even nonprofit organizations, which do not typically think in terms of market valuation, can benefit greatly from a fuller understanding of how intangible assets contribute to the fulfillment of mission.

So where do online learning and social media fit into this picture? If your organization is selling offerings in these areas as products, there may be aspects of them that can be capitalized and captured on the balance sheet. In most cases, though, activities in these areas simply end up in the expense area of your income statement. Because social media activities, in particular, may not be directly tied to revenue producing activities (including fundraising) at this point in their history, it is easy to write them off as “nice-to-have” activities that can be cut at the first sign of financial downturn. The same is largely true of online learning that is used for internal training activities rather than sold as a product.

If you are an organizational leader trying to fathom how social media and online learning technologies should factor into your strategy, you must establish a clear understanding of the intangible value of the activities associated with these technologies. Similarly, no matter what your level within an organization, if you are advocating initial adoption or expanded use of online learning or social media, your case will be stronger if you can describe the output from these activities in terms of intangible asset value. (And continually asking the question posted in my last posting—What would happen if my organization’s online learning program disappeared?—fits right into this line of thinking.)

Establishing the value of intangible assets may seem like a tall order, but there are logical ways to approach the issue. One of the simplest is to carve our some time to stay abreast of financial activities in your industry and monitor the ways in which intangibles like brand, intellectual property, and capacity for innovation seem to impact an organization’s value. For nonprofit organizations, or privately held companies, this may mean watching appropriate publicly traded companies closely, as stock valuation, for better or worse, remains the most visible measure for value fluctuation. Certainly, if I were working at the American Society of Clinical Oncology or any other medical specialty organization right now, I would be watching what happens with Elsevier.

I more formal approach is to implement a tool like the Balanced Scorecard—something I have written about before here at Mission to Learn. The Balanced Scorecard is specifically geared towards measurement of intangible value in an organization, and it can be applied effectively in both for profit and nonprofit situations. As the Times article notes, the Balanced Scorecard had been adopted by approximately 57 percent of international companies by 2004—a clear sign that these organizations recognize the value of intangible assets.

At the very least, organizations need to look beyond the pure expense side of learning technologies that tend to drive the dreaded RFP and articulate an attainable vision for the gains that the implementation of online learning and social media technologies will bring. This is a topic I plan to return to in the future. In the meantime, I welcome comments from readers who feel they are effectively realizing and measuring the intangible value associated with online learning and social media—or, for that matter, who take issue with the whole concept of intangible value.

JTC

P.S–The Times, of course, is building one of its own sources of intangible value by requiring you to hand over personal data in order to get access to the articles referenced above

Related Items and Updates from the Blogosphere:

Do you consider intangible benefits of social media? (Beth Kanter)