16 of 18 people found the following review helpful:
5.0 out of 5 stars
Architecture for Intangibles, August 25, 2003
This review is from: Why the Bottom Line Isn't!: How to Build Value Through People and Organization (Hardcover)
"This book explores a new bottom line that creates real market value. In this new bottom line, the soft stuff is as important as the hard stuff because it builds customer, investor, and employee confidence about the future. Because leaders want to build confidence about the future, they need to discover a new bottom line, one focused on creating value through people and organization. When they do so, they will find that remarkable things happen. Employees are more committed, customers more satisfied, and investors are more confident...Accomplishing this purpose requires an integration of ideas from a number of different disciplines. It involves an understanding of the new role that intangibles play in company valuations and new shifts in thinking about organizational theory. It invites leaders in human resources, accounting, finance, andd information technology to consider new dimensions to their roles...The traditional viewpoint is that when a firm earns more money, its value goes up. The more it earns, the more investors value it. In recent years, however, that logic has begun to twist. Firms in the same industry and with similar earnings may have vastly different market values. This is based on the intangible value-components of a company (pp. 1-2)."
In this context, Dave Ulrich and Norm Smallwood outline a way to build an organization's intangibles by formulating an Architecture for Intangibles. "This architecture defines four layers of intangibles in which leaders use the ideas with great impact (p.13)."
Level 1. 'Delivers consistent and predictable earnings.' Ulrich and Smallwood say that "it is the most critical of all levels to achieve. Without it, there can be no success in building intangible value at any other level. You must begin there, then evaluate where you are most likely to experience success (pp. 15-16)." And they propose following six guidelines for delivering consistent and predictable earnings: (1). Set realistic expectations, (2). Build credibility by degrees, (3). Communicate frequently and publicly, (4). Access data frequently -know the numbers- look for early indicators, (5). Make bold decisions when necessary to adjust, (6). Legally level earnings, it possible (For details see Chapter 2).
Level 2. 'Articulates a future growth vision.' They say that "this level deals with having a strategy for future growth. Once leader meet current numbers, they are expected to have a clear strategy for growing the business in the future, in terms of both revenue and cost (p.16)." And they use the idea of a growth tripod to communicate three primary alternatives for growth: (1). Growth through customers- On the customer leg of the tripod, revenue growth comes from targeting customers, figuring out new channels to connect with them, building a brand that creates value, and ultimately gaining customer share of each targeted customer (Coca-Cola, Home Depot), (2). Growth through innovation- Revenue growth that comes through innovation shows up in product or service extension or creation (HP), (3). Growth through geographic expansion- Geography brings revenue growth from expanding business either within countries or in new countries (Wal-Mart, McDonald's). (For details see Chapter 3).
Level 3. 'Ensures future competencies aligned to strategy.' They say that "this level deals with core competencies of the organization. Core competencies in this case refer to the technical or functional requirements for a business to succeed...Core competence also ties to the strategic focus of a firm. Within an industry, a firm may take a strategic focus as a way to differentiate itself from its competitors. In the process, leaders can pick one of five primary strategic foci: (1). Product innovation- Invest in R&D, win new patents, and create new source of ideas (Core Competencies Required-CCR), (2). Operating efficiency- Manage productivity, improve processes, and make project choices (CCR), (3). Customer intimacy- Segment target customers, service or connect with target customer, and build enduring brand (CCR), (4). Distribution- Manage logistics, and create channels to customers (CCR), (5). Technology- Develop unique technology, apply hardware and software for success, and design product or service (CCR). (For details see Chapter 4).
Level 4. 'Creates capabilities.' This level deals with organization capabilities. They say that "organization capabilities are the things a company knows how to do well; the ability of an organization to use resources, get things done, and behave in ways that lead to accomplishment. They form the identity or personality of the fiirm, govern the way work gets done, and help executives create an organization that succeeds (pp.78-79)." Then, they propose seven capabilitiies that leaders use to build intangible value: (1). Talent- It represents the ability of an organization to attract, motivate, and retain the employees it need for peak performance, (2). Shared mindset/culture- When a firm has a shared mindset or culture, customers identify the firm as a brand and employees know what is expected of them, (3). Speed- Being right is not enough when being fiirst critical. Speed not only allows for first mover advantage into new markets and products, it excites and engages employees, (4). Learning- It becomes critical to an organization when it attempts to generate and generalize ideas with impact, (5). Accoutability- When organizations have individuals who are accountable for their behavior and outcomes, they have ability to execute and deliver what they propose, (6). Collaboration- It occurs when the whole is greater than the sum of the parts, (7). Quality of leadership- Effective leaders demonstrate competencies and deliver results. (For details see Chapters 5, 6, 7, 8, 9, 10, and 11).
Finally, they say that "leaders must define and create intangible value as well as track it, and this book helps them do so. For employees, leadership intangibles result in greater commitment, productivity, competence, job security, and personal wealth. For customers, leadership intangiibles produce products and services that meet current and future needs. For investors, leadership intangibles ensure sustained market value. Employee value often leads to customer value that leads to shareholder value (pp.250-251)."
I strongly recommend this book for all leaders who want to build confidence about the future.
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8 of 9 people found the following review helpful:
5.0 out of 5 stars
Intangibles in Organizational Effectiveness, March 11, 2004
This review is from: Why the Bottom Line Isn't!: How to Build Value Through People and Organization (Hardcover)
This book argues that competitively successful organizations seek to constantly build long-term value by strategically managing some of their intangibles. As we know, intangibles are not accounted for in an organization's financial statements. By exploring the world of intangibles, the authors explore a new idea or a new bottom-line, which has the building of long-term market value as its central theme. The authors have identified 7 key intangibles that have to be nurtured. They include the following: shared mindset, talent, speed, learning, accountability, collaboration, and quality of leadership. They have built their formulations on the basis of their own real experiences or a survey of the practices followed by globally successful organizations. The book is based on an Architecture which is the central model on which its contents revolve (p.13).
Some of the prominent features of the book are as follows: Firstly, the book explores a new bottom line suggesting that the intangibles are as or even more important as the hard strategies, systems and processes; for it is the focus on the intangibles that helps build customer, investor, and employee confidence about the future.
Secondly, the book should be seen as outlining an agenda to focus on for HR managers; this is to charge them to increase the shareholders' value through helping develop each of the intangibles. The present crisis of HR department globally emanates from the allegation against it that it indulges in wasteful expenditure in non-measurable activities. Thus the book suggests that HR managers have to become coaches, architects, designers and facilitators of organizational capabilities.
Thirdly, the observations and formulations of the authors are based on inter-disciplinary perspectives within management segments, and are not just reflections of organization theory or effectiveness or just better HR management. They have drawn from researches from disciplines such as human resources management, financial management, IT, and leadership.
Fourthly, the book succeeds well as a solid guide that makes a complex subject simple to the reader by putting before her the essence of various functional perspectives related to management of intangibles. The discussion helps in gauging what works and what does not, and why.
Fifthly, the book contains some remarkably interesting and effective tips of leadership building at the top as well as leadership-building as a way of organizational life. The authors point out that when leaders identify and implement the seven intangibles identified in the Architecture, they "create intangible value" (p. 251).
The book is an essential reading for any executive who wants to better handle the complexities of managerial life in the era of chaotic competition. It surely helps the reader see a larger picture. Though the book has been written in extremely user-friendly way, I feel if it had a simpler title it would have carried a much higher attention value of potential lay readers. Still, there is no doubt that it will be especially liked by those managers and leaders who want to build confidence about shaping their future in the chaotic business world.
Debi S. Saini
MDI, Gurgaon, India
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5 of 5 people found the following review helpful:
5.0 out of 5 stars
Gourmet Fare in a Fast-food Leadership World, May 6, 2003
This review is from: Why the Bottom Line Isn't!: How to Build Value Through People and Organization (Hardcover)
In this world leadership hyper-hype comes a book of solid, actionable, no-nonsense, research and action-based material. The basic message of book is that intangibles are becoming a bigger portion of the formal and informal valuation of organizations. The book is a how-to primer on making "intangibles tangible."
Full of down-to-earth advice, a number of assessments & worksheets, lots of how-tos (and some not-tos), most chapters in this book end with "Here are some steps you can take to..." or "Here are some questions..." As a bonus, Why the Bottom Line Isn't integrates much of the current thinking in leadership and organizational effectiveness into a whole.
Those of us who have been around the field have come to expect this kind of book from David Ulrich and his many author friends-in this case, Norm Smallwood. The price of the book is easily recouped from an entertaining section on organizational "viruses" and a suggested antivirus program.
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