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Intangible economy and performance

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2 years ago

Employees inundate me with their observation that “I do ward rounds” almost on every working day. Ward round is their metaphor comparing me with medical doctors who go round the hospital wards regularly to check the well-being of patients. It is during this visitation that doctors pick the situation of their patients and give additional care where necessary.

However, a boss that sits behind the desk instead of checking out the “front lines” will always fail to get the essential feedbacks from those delivering the “results”. A key attribute of an accountable leader is to walk around, listen and know much more than he would have ordinarily known about the business. Getting little details right, makes all the difference between an exceptional company and an average one. It makes for an on the spot assessment and taking remedial action on the feedbacks.

In this piece, we are going to take a peep at the intangible economy and how it interacts dynamically with financial performance. I will also make brief submission on why it should be adequately represented in the balance sheet or company’s document on factors responsible for performance of the business.

The intangible economy or unseen resources and assets, most effectively and realistically enhance growth and the capacity of the human community to shape the future. They aid value-delivering diversification. The intangible economy defines corporate value and emplaces employee motivation as well as qualitative productivity.

It is the new currency of the economy that influences how decision-making can be aptly quantified. It is indispensable in how corporate performance is recorded, evaluated and nurtured. It is the value creation index. It challenges the way valuation and wealth management perspectives are computed.

It is the “economic equivalent of the night vision goggles.” It is the intangible but solid stuff. It gives us the capacity to see, measure and capitalize on heaps of hidden assets that are of tremendous economic value.

The intangible economy gives vent to the very successful concept that employees are associates and the most important asset in business. Brand equity and supposedly hidden but very useful intellectual property, human capital endowment and the ability to innovate, are all attributes of the intangible economy.

Jonathan Low and Pam Cohen Kalafut described the make-up as “unseen assets” and listed the components as “brand equity, strategy execution ability, innovative culture, ideas and relationships, reputation, employee and team motivation, communication, technology, collaborative partnership, profitable customers and value-adding board members as well as other stakeholders.”

It drives corporate value and, thereby, corporate growth. It tangibly drives growth of revenue and profits. It is an indispensable addition to financial statements. It is the “make or break” value creation index. Viewing business without it, is viewing your organisation with one eye closed. You gauge the organisation’s strengths and prospects through it and also specific values that customers are demanding from your organisation. It is the authentic ground for differentiation and competitive advantage.

For instance, how do you determine your company’s reputation for effective, and “unimpeachable” leadership? It is through exemplary brand management, effective communication, sensitivity to nuances of value-adding alliances and perception of crucial indices. It is worthy of note that intangibles that realistically drive performance are; accountable leadership, effectiveness of strategy execution, communication and transparency as well as valuable relationships.

Daniel Coleman, in his latest findings on “The Art of Managing Emotions”, discovered that in most work places today, majority of employees are “disengaged”. They are doing enough to do the job in order to keep it for economic reasons. Factors responsible according to Coleman, are: little support but too much pressure from bosses; low or no flexibility in execution processes and clarity on what is expected from them as well as lack or inadequacy of essential tools to do the job.

The smart leader, he pointed out, should drive associates’ focus to the optimal in such a way that they can handle responsibilities and challenges. He should ensure that skills are challenged to the highest level. Give clear goals and promote flexibility on how to achieve them. Get immediate feedbacks to know how the tasks are being accomplished. Promote adaptability and grow skill sets to match ability.

There must be high level of trust and faith in the employees that they can get the work done without being micro-managed. Also, leaders must encourage public recognition and praise. Value-adding accomplishments and vital contributions must be recognised and commended openly.

Deserving recognition of the intangible economy in the workplace is also helping out in the management of the “stress pandemic” and drastically limiting how it has been hurting workplaces. Tal Ben-Shahar’s Multi-Levels Recovery Model effectively fights this “silent killer”. The model prescribes energizing lives of employees with flexible working hours, occasional off-days, as well as short and long vacations. This surely makes employees healthier and happier.

People deliver value through their skills and capacity, knowledge and experience. Reputation drives outstanding quality customer experience and brand stewardship. Brand equity impacts innovation and adaptability of products and services as well as non-contentious partner relationships.

Will anybody say, according to today’s practice for instance, that the worth of a brand name has no value? Let us briefly examine the “brand-length” of a financial services company, Mutual Benefits Assurance Plc. Brand length is the extension of a particular brand into diverse markets and value delivered to numerous consumers.

Mutual Benefits successfully partnered with twelve states in Nigeria to dramatically push-up internally generated revenue. This for instance, led to among other deliverables, the construction of a six-storey state of the art office complex in Ado-Ekiti, Ekiti State and the Retail Plaza in Mushin, Lagos state.

The Mutual brand partnered with Sandtex Paints to protect houses (tenants and landlords), against prevalent fire outbreaks. Specially crafted fire policies were used for sales promotions by private sector companies instead of the usual motor cars and television sets. The branch office of one of the top-most commercial banks in Nigeria was converted to the meet-identifiable-need branch of the Mutual Benefits Microfinance Bank for Ladipo Market traders in Lagos State. The brand was also used through the lease arrangement to drive the purchase of Hyundai and Toyota cars. A franchise arrangement signposted by two tastefully furnished offices, were established in Ibadan and Lagos to “convert” high networth retired Chief Executive Officers and top military officers into insurance sales executives.

The value-delivering activity of brands in today’s market place is huge and still growing. The success is due by and large, to the silent but tangible utilisation of the intangible economy. Intangible economy is indeed creating the environment for smart organisations to succeed and be outstanding.

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