Opportunistic attitudes lead directly to further fundamental change in management in leading organizations. Managers are recognizing how the character of companies is changing.
The traditional concept of a company was largely based on hard assets and primarily hierarchical. This concept influenced the structuring of business in the United States and globally for several decades.
The new concept is that the business value of an organization resides in the way it combines the power of hard assets—finances, equipment, bricks and mortar— with the power of “soft” assets—productive, market, sales, human development factors. This combination includes such assets as these:-
• Brand names and reputation for quality and customer satisfaction
• Technology, know-how, and patent rights
• Customer relationships and distribution arrangements
• Partnerships with suppliers and other business alliances
• International and global connections
• Capacity to attract and retain capable people and provide training and development
• International connections
• Sense of public responsibility
• Integration of technology, management, and human resources
• Responsibility of corporate governance Companies have recognized this combination
value in principle, and pacesetting companies are now applying that principle. It has become a fundamental focus in the way in which investment in companies has been changing, principally in understanding and managing business value.
Leaders now focus on value-added intangibles and soft assets as much as hard assets—and far more in some markets.This changes the meaning, skills, tools, and emphasis of management.
One of the primary characteristics of this new management model is how leaders understand and emphasize innovation. This is characterized by the institutionalization of constant management innovation, especially of intangibles, and integration of it into the infrastructure. The most significant characteristic of a successful business innovation is that it also positions a company for the next innovation—it is not just an end in itself.
Here are three ways to maximize on your soft assets:
Develop your business value: Recognize your combination of hard and soft assets. Build it, diffuse it, and network it.
Focus on value-added intangibles and soft assets:
Understand that they are as important as hard assets, if not more. Change how you manage.
Institutionalize innovation: Integrate it into your infrastructure. Think of a successful innovation not just as an accomplishment but as positioning the company for more innovation
“Annual investment in intangible ‘soft’ assets—research and development, advertising, software purchases, and so on—rose from 4 percent of the gross domestic product in 1978 to almost 10 percent in 2000, an enormous increase over two decades.”