Collaboration as an Intangible Asset

Harvard Business Review

The point is not to nod in the direction of the "little people," but instead to recognize that the intangible assets an organization has are the product of the hundreds, perhaps the thousands, of "assists" — to extend the basketball metaphor — that usually go unnoticed but without which problems would not get solved, insights would not be generated, and uncertainties would not be vanquished. Interestingly, intangible assets are all the rage these days on Wall Street.

Why Leaders Are Still So Hesitant to Invest in New Business Models

Harvard Business

Consider the dramatic shift in the types of assets that create market value. According to Ocean Tomo, a consulting firm focused on intellectual capital, physical assets (plant, property, and equipment) made up more than 80% of the market value of the S&P 500 in 1975. Today, the majority of market value is made up of intangible assets (networks, platforms, intellectual property, customer relationships, big data) more than physical assets.

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Managing With a Conscience

Leading Blog

Frank Sonnenberg makes the case in Managing with a Conscience , that the only sustainable way to succeed is the right way—not cutting corners—emphasizing the intangibles like trust, creativity, focus, speed, flexibility, relationships, loyalty, and employee commitment. Sonnenberg believes that leaders who have a jaded view of intangible assets will never make the commitment required to reap their full potential.

What Younger Workers Can Learn from Older Workers, and Vice Versa

Harvard Business

What we asked people was, at this point in their lives, are they actively building, maintaining, or depleting their tangible and intangible assets? Actively building both tangible and intangible assets is crucial to creating a long and productive working life. Learning how to build and maintain tangible assets is crucial to leading a long and productive life. Coaching and mentoring across age groups makes sense.

A Four-wheel-drive Diamond in the Rough Leadership Model

Great Leadership By Dan

We may or may not be good at strategic thinking, and we may or may not have developed a story which we can convey to others in the hopes of leading them in a particular direction. If we have, however, done our homework and have developed a story about where we think we should be going, then one can say that the northeast axis has “formed.” These results can be, in my experience, best conceived as a progression of outcomes moving from intangible assets to tangible outcomes.

Why We Shouldn’t Worry About the Declining Number of Public Companies

Harvard Business

In a parallel development, the number of companies listed on U.S. The number of listed firms can decline because of three developments: 1) bankruptcy, failure, or closure of listed firms, 2) delisting of firms going private or acquired, and 3) decrease in number of initial public offerings (IPOs). All three factors have become more common over time, which we argue stems from firms’ increasing reliance on intangible and knowledge inputs in their business models.

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What’s Driving Superstar Companies, Industries, and Cities

Harvard Business

They spend 2-3 times more on intangible capital such as R&D, have higher shares of foreign revenue, and rely more on acquisitions and inorganic growth than median firms. These “superstar” sectors include financial services such as banking, insurance, and asset management, professional services, internet and software, real estate, and pharmaceuticals and medical products. Apexphotos/Getty Images.

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How to Navigate a Digital Transformation

Harvard Business

Different industries and different business models have always maintained different percentages of these asset types. Manufacturers invest most of their capital into physical assets, while high-tech firms invest in R&D to create new intellectual capital. But all assets are not created equal, especially as the technological landscape changes. Even when these firms rely on physical assets, like cars for Uber, they own the technology, not the physical asset.

What Workers and Companies Should Know About the Republican Tax Bills

Harvard Business

corporations to accumulate assets in those affiliates (now estimated at $2.6 The legislation would replace the tax on profits that are repatriated with a low-rate tax on annual profits attributable to the intangible assets of their foreign affiliates, impose a one-time transition tax on the stock of accrued foreign profits of U.S. While both bills try to limit access to the special pass-through rates, tax planners may develop strategies to avoid those limits.

Why Financial Statements Don’t Work for Digital Companies

Harvard Business

Our current financial accounting model cannot capture the principle value creator for digital companies: increasing return to scale on intangible investments. For an industrial company dealing with physical assets and goods, the balance sheet presents a reasonable picture of productive assets and the income statement provides a reasonable approximation of expenses required to create shareholder value. steven moore for hbr.

The Answer to Short-Termism Isn’t Asking Investors to Be Patient

Harvard Business

Too many companies prioritize quarterly earnings over long-term innovation, human capital investment, and brand development, and many people believe short-term shareholders are to blame. An informed shareholder, who looks beyond earnings numbers and analyzes the company’s intangible assets, would notice that the firm has mortgaged its future. Large shareholders – blockholders – do have incentives to gather intangible information. Tim Evans for HBR.

Investors Today Prefer Companies with Fewer Physical Assets

Harvard Business

At home, we’re Marie Kondo–ing our way to minimalism, buying experiences rather than things, and using services — Netflix, Spotify, Uber — rather than owning assets such as movies, music, and cars. The companies that provide those services and enable us to share what we have (insights, relationships, assets) with others not only are valued more highly by investors but also are relatively asset-light themselves.

Startups Could Fundamentally Change the Way Big Investors Operate

Harvard Business

Small startup firms are already developing proprietary technologies — such as machine vision, deep learning, and other innovations —– that could help large investors evaluate opportunities and risks with far greater accuracy and efficiency than was previously possible. This disconnect is a major problem for the continuing development of efficient capital markets. Innovation has the potential to transform the investment industry.

How NASA Uses Telemedicine to Care for Astronauts in Space

Harvard Business

Since the Expedition One launch to the International Space Station (ISS) in 2001 — the first long-duration stay on the orbital construction site — NASA’s Human Health and Performance team has been developing expertise in the planning and provision of medical support to crews staying in our world’s most remote environment. They determine what material and intangible means of disease and trauma prevention, diagnosis, and treatment are needed for each mission.

What the Companies That Predict the Future Do Differently

Harvard Business

The most forward-thinking companies are developing new business models to create value from these kinds of information exchanges. (2) 2) Develop open multiple multi-sided relationships: Altruism or openness alone will not give rise to ready access to the diversity of data required to understand the predictive future. Financially, organizations require new models to account for information assets beyond treating them as intangibles.

What VW Didn’t Understand About Trust

Harvard Business Review

Though the story is still developing, there are a few big, interconnected lessons to be drawn from what we know so far. Decades ago, a company’s market value was nearly equivalent to its tangible assets—buildings, machinery, materials, financial capital, and so on. In 1975 intangible assets were just 17% of the market value of the S&P 500. But today those proportions are flipped: intangible assets now make up 84% of the market value of the S&P 500.

How Software Is Helping Big Companies Dominate

Harvard Business

Even outside of the tech sector, the employment of more software developers is associated with a greater increase in industry concentration, and this relationship appears to be causal. Over 70% of the firms’ software budgets goes to code developed in-house or under custom contracts. These are often referred to as “intangible assets,” but it’s worth getting more specific than that. Andrew Brookes/Getty Images.

A Novel Idea for Putting Sidelined Cash to Work

Harvard Business Review

To drive shareholder value and be a catalyst for economic recovery, our nation's largest companies must deploy their assets in a productive manner, either internally for innovation and organic growth, or externally for corporate venture capital investments, research partnerships, joint ventures and alliances, or acquisitions. Standard methodologies and ranking systems would need to be developed to lower the risk of loans backed by intangible assets, but this is a manageable challenge.

What the Companies That Predict the Future Do Differently

Harvard Business Review

The most forward-thinking companies are developing new business models to create value from these kinds of information exchanges. (2) 2) Develop open multiple multi-sided relationships: Altruism or openness alone will not give rise to ready access to the diversity of data required to understand the predictive future. Financially, organizations require new models to account for information assets beyond treating them as intangibles.

What It Will Take to Fix HR

Harvard Business Review

Put the most strategic pieces into the hands of up-and-comers passing through the leadership-development revolving door? Lynanne Kunkle, VP-Global Talent Development and HR-Asia for Whirlpool, is a case in point. HR strategy is an expertise that takes years to fully develop.”. In the early 1980’s, sixty percent of corporate value creation emanated from the optimization of tangible assets.

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What Apple, Lending Club, and AirBnB Know About Collaborating with Customers

Harvard Business Review

homes and cars) and intangible (e.g. expertise and relationships) assets, firms can gain these advantages of the Network Orchestration business model. Through our research on network-centric businesses and our experience advising hundreds of companies we have developed a framework for understanding customer affinity. Through co-creation, companies can access a deep well of customer capabilities, knowledge and assets.

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We Need to Raise Taxes for Shareholders and Cut Them for Companies

Harvard Business

Clinton has proposed raising both taxes by removing some corporate tax breaks, raising capital gains tax rates on assets held from one to six years, imposing a surtax on high-income taxpayers, and taxing some capital gains on assets held until death. There’s no good way to determine where those increasingly important intangibles are located.

The U.S. Needs Tax Reform, Not Tax Cuts

Harvard Business

Getting tax reform done requires strong political leadership, significant input from government staffers with technical expertise, and development of a public consensus of the need for change. tax law to keep up with changes in the business environment in the past three decades, including the growth in international trade and capital flows, the increased importance of intangible assets to businesses, and lower corporate tax rates in all our major trading partners.

Even in a Digital World, Globalization Is Not Inevitable

Harvard Business

Especially given the fragmentation of the ”splinternet,” dramatized by the development of a distinct internet ecology in China, this is currently a matter of much concern. The broader point, which is particularly useful for countering the idea of technology above all else , is that policy choices can trump technological developments. In the aftermath of the UK’s Brexit vote and Donald Trump’s election in the U.S.,