Quotes  from the book:

relating to why intangibles
require new rules

According to the book Intangible Management: Tools for Solving the Accounting and Management Crisis (Academic Press, 2002, p10), management has been conducted for many years on the basis of ownership. 

“Our current economic system is based on the concept of ownership, referred to as legal property rights.  Courts all people to protect these rights and claim damages for their abuse.  Legal property rights are created when a financial transaction (as evidenced by an exchange of money) occurs.  The areas of accounting, finance, and economics have all been built from the basis that financial transactions capture total value.  As you progress through this book, you will see that financial transactions actually carry a very small proportion of total value in a knowledge-based economy.”

 The book, also at p10, states: 

“In the knowledge age, value is created from knowledge, emotions, time, and relationships.  For the first time in history, organizations cannot own their resource base as they did in all preceding economic ages.  Knowledge cannot be owned; only the representation of knowledge can be owned (i.e., intellectual property).  Relationships cannot be owned, slavery was abolished hundreds of years ago.  People have enough trouble controlling emotions, let alone owning them.  No one can own time.”

As accounting was built on the foundation of recording financial transactions, it is obvious that accounting cannot, and could never, financially value intangibles.  Intangibles cannot be owned and are therefore not subject to legal property rights, or financial transactions, in the same way as tangibles are.  At page 37, the book goes on to state: 

“The knowledge-based economy (KBE) is a fundamentally different economic environment than anything the world has ever experienced.  The KBE reverses the fundamental assumptions on which practically all conventional management systems are based.  In the KBE, almost none of the conventional assumptions that previously created value are relevant … As organizations become more knowledge based; the means of production (knowledge and relationships) resides in employees and not in physical systems.  In these cases, employee knowledge is not owned by the organization, neither is the means of production.  In short, the KBE, the notion of ownership is an obsolete management concept that is a residual from the manufacturing age.  Yet, conventional (current) management systems are built on the concepts of ownership and control.”

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.