Intangible Assets as a Source of Competitive Advantage
Intangible Assets as a Source of Competitive Advantage
Look No Further
Managing Intangibles seems to be a smart idea. But to bet on it, one has to create a whole new organization. The concept of intangibles is not new, but across the globe, companies are slowly coming to grips with it. tury back physical, tangible assets created wealth; today, it’s intangible assets that are creating wealth. It’s a concept that packs a lot of punch but has no form as such. It questions capitalism for its emphasis on buying assets like plant and machinery, and hiring executives and workers to run those to make money in the process. Managing Intangibles seems to be a smart idea. But to bet on it, one has to create a whole new organization. Management control systems are built around the framework of strategy, structure and systems. Typically, the top management is considered as the resource allocator and is the grand strategist, while the junior management is considered as implementors and middle management as administrators of the strategy. Using intangible assets means that you move from this structure to the purpose, process and people structure. Here the role of the top management is only to create an overarching purpose and allow people the freedom to deliver. Companies which are hot on intangible assets look out for a completely different set of signals in business than those which are not. Researches have shown that customer loyalty and employee commitment are two of the most important intangible assets. As such a company that believes in intangible assets wouldn’t so much look for market share figures as it would for customer satisfaction figures. As the concept of intangible assets gathers
EFFECTIVE EXECUTIVE
S T RA T E G Y
F
orget plant, machinery, capital. Think of people, processes, brands, relationships…. World over, business is moving into a new era, where competitive advantage comes from intangible assets. Welcome to the age of a new asset, the Intangible
Look No Further
Managing Intangibles seems to be a smart idea. But to bet on it, one has to create a whole new organization. The concept of intangibles is not new, but across the globe, companies are slowly coming to grips with it. tury back physical, tangible assets created wealth; today, it’s intangible assets that are creating wealth. It’s a concept that packs a lot of punch but has no form as such. It questions capitalism for its emphasis on buying assets like plant and machinery, and hiring executives and workers to run those to make money in the process. Managing Intangibles seems to be a smart idea. But to bet on it, one has to create a whole new organization. Management control systems are built around the framework of strategy, structure and systems. Typically, the top management is considered as the resource allocator and is the grand strategist, while the junior management is considered as implementors and middle management as administrators of the strategy. Using intangible assets means that you move from this structure to the purpose, process and people structure. Here the role of the top management is only to create an overarching purpose and allow people the freedom to deliver. Companies which are hot on intangible assets look out for a completely different set of signals in business than those which are not. Researches have shown that customer loyalty and employee commitment are two of the most important intangible assets. As such a company that believes in intangible assets wouldn’t so much look for market share figures as it would for customer satisfaction figures. As the concept of intangible assets gathers
EFFECTIVE EXECUTIVE
S T RA T E G Y
F
orget plant, machinery, capital. Think of people, processes, brands, relationships…. World over, business is moving into a new era, where competitive advantage comes from intangible assets. Welcome to the age of a new asset, the Intangible