Archive for the ‘Mary Adams’ Category:
The Intangible Value of Air Transportation
Many experts estimate that only 20% of economic impact is measured in financial value – rather, most of it is measured in intangible value. The work of visionaries in the areas of Intangible Value and the value of social networks are able to articulate value far beyond that which can be counted with money. Suppose these principles could be applied not only to corporations, but also to communities sharing an asset such as an airport?
In the race to defend valuable assets from the fiscal cutting room floor, communities are increasingly trying to define themselves in terms of shared community assets from schools to parks museums and even airports.
From: Worcester Telegram & Gazette – telegram.com.
State officials released a study yesterday saying that Worcester Regional Airport is a boon to the local economy, even though the airport has struggled for years and offers charter service through just one carrier. The study released by the Department of Transportation said the airport supports 418 jobs and has an annual economic benefit to the tune of $51.4 million.
The Intangible Value Drivers include the following questions for corporations, but this also applies to any community sharing a set of assets. From Mary Adams from her recent book Intangible Capital, she asks:
- How do you get paid (the key revenue categories on your income statement)? (strategic capital)
- What are the processes and knowledge/data that drive this revenue? (structural capital)
- What are the competencies that your people need to support this business model? (human capital)
- What are the key external relationships that make this model work? (relationship capital)
Apply these intangible principles to any community:
A community gets paid by their collective productivity – this is their strategic capital. In order to be productive, communities need access to markets and resources that support their productivity. The structural capital of a community includes their social processes and knowledge assets but also, their access to knowledge assets and data (stored value) of other communities. The community counts human capital in the skills that they collectively hold; entrepreneurs, trades, and social services, and education for example. Finally, strong and weak relationship capital includes the internal social fabric but also their external connections and associations.
All of these Intangible factors are directly tied to the ability for a community to travel and be traveled to. As such, travel assets, by definition, always return 80% ROI. If you lose one of them, you lose the other three.
The Massachusetts State Study found that overall the state’s 39 airports combined support more than 124,000 jobs and generate $11.9 billion in economic output annually.
If 80% of the value is in intangibles, one can argue that Worchester Regional is worth 250 Million and all 39 Massachusetts airports are worth 55 Billion in intangible economic output. The real connection being missed is the difference between the economic value that cannot be accounted for in existing service models. $250 Million dollars is a lot of air transportation for a region that always generates 80% ROI.
What many peoples fail to realize is the possibility that a community can operate their own airline. The regionalization of air service pioneered by Social Flights is a new concept that allows communities to own and operate one or more aircraft maintaining control over the schedules and locations where the aircraft flies.