An Annual Report for Technology?

The McKinsey Quarterly published an interesting read, “Memo to the CEO: Why we need an annual report for technology1

The idea is for a technology rich company to issue an annual report for technology analogous to the annual report for investors and the broader market. A take from the article: The annual report would provide an overview of the company’s ability to extract business value from technology but also substantiate that analysis with hard metrics, giving perspectives on the challenges of technology, convey ideas about its role in the company, celebrate achievements, and articulate our plans and visions for the future business rationale for issuing it: namely, to tell key stakeholders about technology’s performance over the past fiscal year, describe technology’s explicit contribution to meeting core business objectives, and explain the implicit value of the technology portfolio, along with the company’s vision for the year ahead.”

We are enthusiastic about this idea, but wrote to the Quarterly Editor:

“Interesting reading, but one thing I think should be part of any technology report is an analysis of what the company does to create value from its intangibles (technology present in the company) by using its intellectual property. Way too often we see companies with lovely products, an innovative approach, and smart marketing, but where IP awareness-let alone an IP strategy-is lacking. Result: under-utilization of the company’s intangibles and technology capabilities, making it prone to IP challenges from third parties and thus vulnerable towards competition. IP is a much under-valued aspect and unfortunately there is not enough attention paid to it in your generally interesting article.”

(published in the May premium version of The McKinsey Quarterly.)

[1] By Driek Desmet , director in McKinsey’s Amsterdam office, and Tor Mesøy a principal in the Oslo McKinsey office.

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