Are Our Accounting Systems Innovation Killers?
from author Robert Brands:
"Halling says, “Our present accounting systems never show [that] internally funded inventions produce any value.”[1]To illustrate this point, he uses the example of a new cellular telephone that has come about due to millions of dollars worth of investments in numerous inventions. Even with the case of a new cellular telephone where most of the phone’s profits are based on its inventions and not to manufacturing, our present accounting systems “only allocate a return for the manufacturing of the phone and nothing for the inventions that made the phone possible.”[2] This seems perverse as the massive difference in price between the latest and greatest cellular phone and a cellular phone with old and outdated technology is due to the inventions in the new phone, not to manufacturing."
Interesting article with some interesting solutions. Check out his blog :)
"Halling says, “Our present accounting systems never show [that] internally funded inventions produce any value.”[1]To illustrate this point, he uses the example of a new cellular telephone that has come about due to millions of dollars worth of investments in numerous inventions. Even with the case of a new cellular telephone where most of the phone’s profits are based on its inventions and not to manufacturing, our present accounting systems “only allocate a return for the manufacturing of the phone and nothing for the inventions that made the phone possible.”[2] This seems perverse as the massive difference in price between the latest and greatest cellular phone and a cellular phone with old and outdated technology is due to the inventions in the new phone, not to manufacturing."
Interesting article with some interesting solutions. Check out his blog :)
