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Economic Crisis Blamed On Failure To Recognise Change September 30, 2008

Posted by liverpoolchamber in Business, Technology.
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Here’s an interesting (short) essay from America looking at the current economic crisis.

It postulates that failing to recognise the change from industrial to information and service economies has resulted in a failure to account for modern businesses’ greatest assets – talent, staff, innovation, communication and more….

In the industrial economy, value is added by taking raw materials and turning them into finished goods, which are then brokered to their destination in some supply chain, and consumed or used to produce further value.

The entire philosophy of our accounting and systems for valuation are based on this system which was developed for assessing risks in the renaissance for trading and raiding (European war financing) ventures.

Accounting methods really haven’t been updated to keep up with the changes as service and information economy overlays have changed the game.

We have no way to account for our greatest assets in the modern economy — talent, staff loyalty, team productivity in innovation, effective communication of information through media and business channels, and so on.  These are all without accounting value in our current systems.

Read the full article by Sheva Nerad over on the Gather website.

Article found via Boing Boing.

Has she got a point? What do you think? Let us know in the comments.