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Measuring and managing invisible and intangible assets is one of the most powerful sources of sustainable competitive advantage.
Increasingly, people are understanding the value of invisible assets in their organisations. It has become the holy grail of the accounting world. The value of an organisation can no longer be based on facts and events as before, but needs to take account of intangibles, invisible assets and added value. These are hard to imitate and are powerful sources of sustainable competitive advantage.
Two decades of research shows that an organisation's culture (how things get done, how people think, behave and co-operate) is the key factor in its performance. A multi-year Harvard Business School study on the links between corporate culture and performance found that high performance cultures resulted in 682% revenue growth versus just 166% for low-performing cultures.
A company's culture, it's invisible assets, is a powerful source of sustainable competitive advantage. Invisible assets are not easily reproduced by other organisations. In fact, paying attention to the culture of your organisation, those intangible traits and added value, will set you apart from your competitors. Nurturing your company's invisible assets will have a major impact on your bottom line.
Invisible assets are key to the valuation of organisations. Invisible assets include:
* Customer focus
* Level of alertness to the market and their respective fields
* Adaptability and flexibility and integrity
* Potential for action, teamwork and co-operation
* Leadership and management skills
* Sharing of knowledge and effectiveness of communication
* Capacity for alignment
* Attention to and knowledge of the brand
"It's the intangibles that are the hardest things for a competitor to imitate. You can get an aircraft, you can get ticket-counter space and baggage conveyors. But it is our esprit de corps - the culture, the spirit - that is truly our most valuable competitive asset." Herb Kelleher, Southwest Airlines.
Culture by design
The most expensive item in any organisation will often be the payroll and associated on-costs. Are you ensuring the best possible return of those tangible assets you spend on recruiting, training and retaining staff; office space, computers and other expensive items. Are you harnessing the intangible assets of every person in your organisation? Research shows that treating employees like the assets they are, boosts returns over the long term.
In many organisations not enough attention is given to the design of the culture -- it seems to "happen" by itself, to come about by accident. To harness the potential of your invisible assets it is necessary to design the culture by aligning people with the vision and objectives of the organisation.
Good leadership is about designing a culture that will make the very best of your invisible assets.
The culture of an organisation is reflected in at least two places: the attitudes of your staff and the attitudes of the customers. To understand the feeling of the staff one might ask:
Is your place of work somewhere that people feel uplifted and pleased to be in?
* Does it encourage people to use their initiative, "own" problems and think about new ways of working and producing new solutions to problems?
* Is it the top priority of every member of staff to build, maintain and protect the organisation's reputation?
* Does every member of staff understand what the Brand is and why it is so vitally important?
* What are the individual team cultures?
* Is your culture leading you towards or away from where you want to be?
* Are all staff trained with the right skills to do the right job?
* Does your staff believe in the organisation and its ability to serve its Customers well?
* Does your staff understand how important Customers are to your business? How do I find out more about my staff's approach?
In thinking of the customer's response put yourself in their shoes. Ask yourself:
* Do our Customers get transferred to five different people before finally getting someone who is willing to "own" the problem?
* Having taken thirty minutes to decide on the product s/he wants, is our Customer greeted by - I'm sorry, we're out of stock?"
* Is our website easy or difficult to navigate?
* When was the last time we found out if our Customers are advocates and not just "satisfied"?
* What value do we add for our Customers?
While these questions might seem large and unwieldy, there is a simple solution: the most important thing to know about your organisation is what your Customers and staff tell their friends. How willing are your Customers and staff to recommend the product or service you provide? From the Customers you will find out about the level of service provided. From staff you will discover how they feel in their job and this is a direct reflection on the standards of service provided. These questions will help identify the internal culture of the organisation.
Attitude determines Altitude
"All people are the same. It's only their habits that differ." Confucius
The Altitude Indicator on an aircraft shows the attitude of an aircraft in relation to the horizon, whether it is climbing or descending or banking to the left or right. It shows you if the aircraft is deviating from where you want it to be. It is the basic reference point to check that the aircraft is doing what the Pilot wants it to do.
Just as with flying, we need to make sure we've got the right attitude to move us forward to where we want to be. Attitude is another invisible asset we want to harness for the company's well-being. There will be days when we take a nose dive, when things go wrong, the market or currency changes go against us and we experience turbulence. If your staff have the right attitude and are focused on the organisation's overall objectives, they will quickly set about corrective action to get back on track. If they haven't, imagine the cost!
Excited or Scared about the Future?
Are your staff excited or scared about the future? Do they understand how different the world will be when research into nanotechnology, telecommunications, biotechnology, marine and material technologies, cosmology and many more, converge? Do they have a sense of urgency about how adaptable and flexible they will have to be to be to deal with that? What difference does it make?
If your staff are scared and have a negative attitude about the future, if they are talking about uncertainty and are unsure of what might happen, they are likely to be focused on all of the things in the organisation that can, and probably will, go wrong. They will find evidence to support their negative view. They will create blindspots to opportunities and fail to notice things that could enable the organisation to do well.
If, on the other hand, they are excited about the future and the opportunities it will bring, they will open their minds to opportunities and will generate ideas that will take the organisation forward. Harnessing attitude will make the organisation more effective and successful in any new situation.
A clear, simple, shared Vision
We are teleological in nature. We move towards the future and are driven by desires, intentions and aspirations. Our systems are endlessly in pursuit of goals. Are your goals and objectives exciting enough" What are your aspirations? Do they have energy? Do they create commitment and buy-in? Can you feel the energy of your staff creating the Vision?
People need to believe in their leaders in order to secure their buy-in to the organisation's objectives. Leaders need to connect with people before they can depend upon that commitment.
One way to connect the organisation and to design the culture is to create a simple, clear, shard Vision. Some Vision and Mission Statements are complex and unwieldy. It is difficult for people to grasp them and if they are difficult to grasp, it is hard for people to buy-in. Take time to create a simple Vision - a vision that can come to life through good leadership and storytelling. Paint a bright, colourful picture of the company's goals and objectives through the use of stories. It is proven to be an effective way to influence the human mind and is also a key leadership skill. Effective stories, told with integrity, move people to greater understanding and action. They help to speed things up and create a sense of urgency!
The Tractor Supply Company in the US is a very successful Company. Its Mission is powerful, clear and simple. "To work hard, have fun and make money by providing legendary service and great products at everyday low prices." - Joe Calloway, Becoming a Category of One.
"The ability to influence people's thoughts and feelings, to generate their buy-in, has emerged as the paramount leadership skill." Mark Walton, Generating Buy-In.
People need to believe in their Leaders and buy in to the organisation's objectives. Leaders need to connect with people before they get commitment and the most effective way to influence the human mind is to communicate in story form. Using stories with integrity is a key leadership skill. The best Leaders in the world connect with the futures their target audience want. They paint bright, colourful pictures in story form.
We need to connect with people in order to get commitment, buy-in.
Effective stories, told with integrity, move people to greater understanding and action. They help to speed things up and create a sense of urgency!
"The ultimate hallmark of world-class champion Leaders ... is the ability to weave vibrant stories that lead their organisations into the future." Noel Tichy, The Leadership Engine.
Our brains don't think in bullet points, they think in story form. We need to connect with people's emotions, as well as their logic.
"Reasons lead to conclusions and emotions lead to action." Donald Caine, Neurologist.
I was recently interviewed by Terry Brock, International Speaker on Marketing and Technology who is based in Florida, USA. Terry was a little sceptical about Storytelling and its value in business but by the end of our short conversation, he was convinced about the Power of Story as a Leadership Tool. You can listen to the interview next time you're on the Web by going to the following link:
Out of Office Experience!
Taking time out to work ON the business, rather than IN the business is vital. It is an established fact that people are more productive and creative when they take time out to refresh, re-energise and re-focus. Sometimes, we can't see the wood for the trees. Taking time out helps us to get a different perspective. A change really IS as good as a rest! So maybe it"s time for you to take a well-earned "Out of Office Experience" to:
* Refresh, re-energise and re-focus
* Take a different perspective
* Make sure you're on track
* Review and be sure that everyone on your team understands the Vision and objectives
* Ensure you're all adaptable and flexible enough to face the future
* Create a sense of urgency!
Just imagine the impact on the organisation and the bottom line if every member of staff increased their level of performance by 5%. What difference would that make to your organisation?
What's your opinion?
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