Because of the reluctance of banks to lend for investment in intangible assets, the development of intangible assets is mostly self-financed. In other words, the invisible assets are matched, on the financing side of the balance sheet, by equally invisible finance, most of which in the form of invisible equity . For the most part, their competence is directed outwards, to the task of generating revenue, by solving customers problems. It is this outward-directed energy that creates the relationships, networks, and image that comprise the organization s external structure. Similarly, it is the smaller amount of human competence that is directed inwards that creates, maintains, develops or erodes the organization s internal structure.
Individual competence is people s ability to act in various situations.
It includes skill, education, experience, values and social skills. Competence cannot be owned by anyone or anything but the person who possesses them, because when all is said and done employees are voluntary members of the organization. A case can, however, be made for including competence in the balance sheet, because it is impossible to conceive of an organization without people. People tend to be loyal, if they are treated fairly and feel a sense of shared responsibility. That is why companies are generally willing to pay some kind of compensation to those who retire, or have to be laid off.