Creating the organisation through performance measurements

Joop Kielema

pp. 67-82

in: Kecheng Liu, Rodney J. Clarke, Peter Andersen (eds), Information, organisation and technology, Berlin, Springer, 2001

Abstract

When we measure things we know them, but we only know the things we measure. Sometimes we know that the things we are not, or cannot, measure are also important. These things are called intangibles. They are values that are important but are not (yet) tangible — so we do not measure them. Sveiby (1997, p. 3) uses the example of Microsoft. In 1995, the stock market value of Microsoft was ten times higher than their so-called book value or equity. This means that that the shareholders have enormous trust in the company. Microsoft shareholders are not making this judgment based solely on financial results, but on trust in the strategy of the firm or confidence in the person who is the figurehead of the company (Bill Gates) for example. Its shareholders are likely to view Microsoft as a creative and innovative firm with a good marketing policy, and they are likely to believe that management of Microsoft is capable of continuing this policy thereby guaranteeing their continued good financial results.