The value creation index : quantifying intangible value

There is increasing recognition of the importance of intangible assets. There is also a pressing need for a set of widely accepted metrics by which corporate leaders and the investment community can account for the non‐financial factors that affect value creation in the modern enterprise. Intangibles have always been a driver of corporate performance, and institutional investors take intangibles into account in their analysis and earnings estimates. Managers, by the same token, are increasingly adopting non‐traditional methodologies of measurement. The authors report on the work of Cap Gemini Ernst & Young researchers who have developed a rigorous, comprehensive model, the value creation index. The index combines the impact of key value drivers (e.g. innovation, quality, customer relations, management capabilities, alliances, technology, brand value, employee relations, and environmental and community issues) to form a single measure of non‐financial performance.