Ben Bernanke talks Intangible Capital
Last month we attended The Conference Board’s two-day program on Job Growth and Intangibles: New Building Blocks for Jobs and Economic Growth: Intangible Assets as Sources of Increased Productivity and Enterprise Value. The conference had two themes: policy (the government people) and strategy (the business people).
Fed Chief Ben Bernanke gave the opening address, speaking about intangibles, innovation and job growth. Bernanke did not bang his shoe on the podium or make any hand gestures
while speaking about this, probably to avoid sending signals to the intangible stock market about his intentions.
He did use the phrase “intangible capital” four times in its proper context, and overall gave a forward looking presentation. You can read highlights of the speech here.
Many attendees were interviewed during the rest of the conference with the one-to two-minutes posted on YouTube. Here’s my interview.
People attended from all over the world, which is appropriate because Europe and Asia are far ahead of the US in recognizing the value of intangible capital. The Brazilian development bank even has an intangible component in its credit ratings for long-term borrowers. Again, though, the divide was between the government/academic community who want measures for investment and results on research and development and innovation and how to correlate this with job growth and economic growth.
Those of us involved in business recognize the value of government investment and academic research over the years and the job growth that has resulted. (Think of the innovation out of the Defense Department and MIT alone.) But we are more interested in how this applies to individual companies.
In various forums, we were able to point out that the balance sheet is basically worthless in trying to understand a service company, knowledge-based company or technology company. You must understand your own firm’s intangible capital to 1) manage it better to increase value and 2) tell the company’s story better to borrow funds, attract investors or get the right price from an acquirer.
Many people at the conference started to understand how investing in and measuring intangible capital can make a difference in individual companies, just as we business-types got some insight about the approaches by the policy types.
