"The fundamental transition
from the manufacturing
economy (making things)
to the services economy
(making promises) has
created significant
problems for governments,
organizations, managers,
and executives around the
world."  Dr Ken Standfield.

The services sector
(intangibles goods production)
has become the dominant
employer.  Research by
Colorado State University
showed that between
1980-1990, 80% of all
new job creation occurred
in the services sector
of the economy.  From
1990-2000, 90% of all
new job creation occurred
in the services sector. 
It is expected that the
services sector will
comprise 88% of all
employment by 2005,
and 90% of all jobs
by 2020.  

International Intangible Standards, referred to as Intangible Management Operating Standards, were created as a solution to identifying, classifying, financially valuing, systematically reporting, and managing intangibles - the source of competitive advantage within organizations in the 21st century.

There is a growing understanding by policy makers, senior executives, customers, investors, and society that the source of competitive advantage, productivity, revenue, effectiveness, efficiency, satisfaction, quality of life, standard of living, and sustainability are no longer embodied in physical assets, but in intangibles.   Physical assets are now commodities and are unable to create and maintain competitive advantage.

Intangible management methods and practices overcome the substantial problems that currently exist in valuing intangibles through conventional accounting and finance methods.

“It has been 500 years since Pacioli published his seminal work on accounting and we have seen virtually no innovation in the practice of accounting – just more rules – none of them which has changed the framework of measurement.”   David Wilson, CPA, Partner Ernst and Young

"As intangible assets grow in size and scope, more and more people are questioning whether the true value - and the drivers of that value - is being reflected in a timely manner in publicly available disclosure.” Former SEC Chairman, Arthur Levitt.

"There are going to be a lot of problems in the future as accounting is not tracking investments in knowledge assets.”  Alan Greenspan, Federal Reserve Board Chairman

Accounting has its intellectual foundations in the identification, classification, recording, and aggregated presentation of financial transactions resulting from contractual performance.  In short, accounting measures changes in money.  In the manufacturing economy, measuring changes in money was appropriate as goods were tangible. 

In the 21st century, intangibles (promises, decisions, expectations, perceptions, etc) dominate the value creation process.  Intangible transactions are non-financial transactions, and therefore escape detection, classification, reporting, and valuation by conventional accounting and finance systems. 

It is a little understood fact that intangible transactions create financial performance (not the other way around).   To understand how this is the case, have a look at the coffee example.

It has also been acknowledged that the GAAP (Generally Accepted Accounting Principles) system that underpins international accounting and financial reporting is losing relevance and credibility.

"The GAAP (General Accepted Accounting Principles) system has, for all its faults, served business and the public well, like an octogenarian butler. At the same time there's increasing evidence that the faithful servant isn't just misplacing a spoon here or there but has lost track of some valuable jewels, paid no attention to the furnace and the water heater, and put the place at risk. Investors simply don't value what accountants count.” Thomas Stewart, Editor, Fortune Magazine