Chapter 2: Leadership: The Greatest Intangible Asset Of Them All
In the new economy, value isn’t where it used to be. Intangible assets are hidden gold, and leaders who concentrate on them will outperform their competitors. What, really, are they – and how do you measure, monitor and manage these intangibles? Why do these ‘soft’ assets require different, and better, communication skills?
How do you measure the value of employee emotions? Does it even matter how employees feel? Is the culture in your department or your organization collaborative and supportive? Are all the key relationships in and outside the company in good order? Do your customers value your support and services, and do they keep coming back to you? Can you count on the support of your local community if you want to expand your factory? Do people widely recognize and favour the name of your business and regard you as a force for good?
Strange questions, you might say, but increasingly crucial to leaders because of the powerful influence – both positive and negative – that the answers have on leadership effectiveness.
The answers to these questions reveal a lot about the state of your intangible assets. Those assets that cannot be seen and weighed and accounted for in conventional ways, like factories, plant, machinery, stock, equipment or real estate. Intangible assets are the basis of competitive edge and long-term growth and wealth creation – and are the ‘worryingly’ emotional side of leadership. I say worrying, because at any moment people’s perceptions of these assets could change, and a vast amount of value could be destroyed as those perceptions get worse.
In the new economy of a radically transparent world, I have seen it said that more than 65 per cent of global market value is determined by intangible assets. I have seen reports that the total value of all listed companies all over the world is estimated at more than $50 TRILLION (million million). This means intrangible assets are worth more than $30 trillion – and that is not including all the private companies in the world. Immense financial value! The problem is that leaders do not spend a proportionate amount of time managing these soft assets. Even if you are a leader in the public sector or a charity, these intangible assets are key determinants of whether you will succeed.
Organizations that outperform their rivals usually do so less on the basis of competitive advantages such as market share, product differentiation and price, and more and more they achieve it through leaders who value and nurture intangible assets.