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.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

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.

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.

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. Financial markets Digital Article

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. stock exchanges has declined by almost 50% from its peak in 1996, despite dramatic increase in aggregate market capitalization. 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). westend61/Getty Images.

IPO 36

Why Financial Statements Don’t Work for Digital Companies

Harvard Business

In the 2016 book The End of Accounting , NYU Stern Professor Baruch Lev claimed that over the last 100 years or so, financial reports have become less useful in capital market decisions. Our current financial accounting model cannot capture the principle value creator for digital companies: increasing return to scale on intangible investments. The economic purpose of these intangible investments is no different than that of an industrial company’s factories and buildings.

GDP Is a Wildly Flawed Measure for the Digital Age

Harvard Business

Gross Domestic Product (GDP), our core measure of prosperity, was developed during the industrial age. It struggles to account for today’s intangible assets—services, insights, and networks. As the market, including customers, employees, and investors, shifts the mix of what is done and what is consumed, this most important and commonly used economic indicator, along with Generally Accepted Accounting Principles (GAAP), tells a concerning story. HBR STAFF.

GDP 33

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. In today’s market, tech platforms enable IP and relationships to scale rapidly, and at near-zero cost.

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.

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. What exactly is all that intangible value?

How Software Is Helping Big Companies Dominate

Harvard Business

“How long does it take for her to interact with a market that isn’t nearly monopolized?” have grown more concentrated in the past 20 years, meaning that the biggest firms in the industry are capturing a greater share of the market than they used to. 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.

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.

A Novel Idea for Putting Sidelined Cash to Work

Harvard Business Review

With interest rates at historic lows, market volatility, political uncertainty, the European crisis, severe commodity price fluctuations, and other unpredictable market conditions, corporate brands and executives have been understandably inclined to sit on the sidelines. The returns provided by many market fund rates or treasury bills cannot yield sustainable strategic value to a company and its stakeholders.

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

Break up a strategic function in response to underperformance in the wake of severe market disruptions? Put the most strategic pieces into the hands of up-and-comers passing through the leadership-development revolving door? What would the capital markets look like today if a similar tack had been taken when the CFO role was ripe for transformation? Lynanne Kunkle, VP-Global Talent Development and HR-Asia for Whirlpool, is a case in point.

CFO 12

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.

CRM 12

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.

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.,