Why the Bottom Line ISN'T!: How to Build Value Through People and Organization (Hardcover)

by Dave Ulrich (Author), Norm Smallwood (Author) "The bottom line means business..." (more)
Key Phrases: building intangible value, new employee deal, leadership brand, General Electric, Herman Miller, General Motors (more...)

Editorial Reviews

Product Description
Advance Praise for Why the Bottom Line Isn’t!

"Dave and Norm tackle a tough objective–putting together a comprehensive approach to the ‘soft side’ of business, to build long-term market value–and succeed with a captivating mix of ideas, analysis, and real-world examples. They offer real insight into what works, what doesn’t work, and why."
–Rick Wagoner, CEO, General Motors

"This wonderful book makes clear what great leaders have known for years–that a company’s capabilities are heavily influenced by factors that are sometimes seen as intangible. But Ulrich and Smallwood’s greatest contribution is demonstrating that intangible doesn’t mean undefined. They provide a clear map of how leaders can build their own organization’s impact and capabilities. This is not just a book for HR professionals, but for all leaders in any industry who are trying to improve overall performance."
–Paul McKinnon, Senior Vice President of Human Resources, Dell

"Why the Bottom Line Isn’t is the essential book for leaders of the future, who accept that building intangibles is a leadership imperative that permeates the entire organization and is equally applicable in the public, private, and social sectors. The concepts and tools in this book are a timely gift to leaders who are ready to see the whole picture."
–Frances Hesselbein, Chairman, The Leader to Leader Institute

"The burst of the tech bubble swept intangibles with it. This book renews confidence in the intangibles phenomenon, and charts a new direction for research and application."
–Baruch Lev, Philip Bardes Professor of Accounting and Finance at the Stern School of Business, New York University, and Director of the Vincent C. Ross Institute for Accounting Research

"It’s refreshing to see that business success does not in fact begin and end at the bottom line. This book helps us better understand the multiplicity of factors that drive business vitality and value growth, but make no mistake–it’s as practical as it is insightful. In very clear terms, Ulrich and Smallwood provide business advice that can easily be applied to effect change."
–Don Hall, CEO, Hallmark

From the Inside Flap
Why the Bottom Line Isn’t! began when the authors asked a simple question: How can two companies in the same industry with similar earnings have vastly different market values? In answering that question, authors Dave Ulrich and Norm Smallwood demystify theories of intangible value and show that the bottom line is about much more than just earnings–it’s about building long-term value through assets not accounted for on a company’s financial statements, such as leadership, brand, corporate culture, and ability to attract talent. The authors use real-world examples from various industries to show how intangibles drive market value; even more, they provide the tools to make it happen in your company.

Based on research drawn from a number of disciplines, including human resources, finance, IT, and leadership, this book offers ideas and actions that leaders at any level, in any function, can use to protect and increase their organization’s overall value. Each chapter presents an intangible asset as a concept, then provides examples and tools that help leaders deliver and communicate the value of each to shareholders, investors, regulators, customers, and employees.

Today’s successful leaders must understand the new role that intangibles play in company valuations and see their own roles from a larger perspective if they are to join the new breed of leaders–those who can consistently build value within the company. Why the Bottom Line Isn’t! will show you how to take that next step and start improving your organization now.

But business leaders aren’t the only people who can benefit from the tools and techniques included in this book. These ideas can be easily translated to all types of organizations–from churches, to schools, to government agencies. No matter what kind of organization you operate, remarkable things happen when you build value through intangible assets. Employees will be more committed, customers and investors more satisfied, confident, and numerous. For those who want to impact the long-term value of their organizations, Why the Bottom Line Isn’t! is a clear and solid guide.

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Product Details

• Hardcover: 304 pages
• Publisher: Wiley; 1st edition (April 11, 2003)
• Language: English
• ISBN-10: 047144510X
• ISBN-13: 978-0471445104
• Product Dimensions: 9.5 x 6.2 x 1.1 inches
• Shipping Weight: 1.2 pounds
• Average Customer Review: 4.3 out of 5 stars See all reviews (9 customer reviews)
• Amazon.com Sales Rank: #628,125 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

16 of 18 people found the following review helpful:

5.0 out of 5 stars Architecture for Intangibles, August 25, 2003

By	Turgay BUGDACIGIL (Istanbul, Turkey) - See all my reviews (TOP 1000 REVIEWER)

"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.

6 of 6 people found the following review helpful:

5.0 out of 5 stars Gourmet Fare in a Fast-food Leadership World, May 6, 2003

By	M. Hiebert "author--The Encyclopedia of Leade... (Calgary, Canada) - See all my reviews (REAL NAME)

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.

6 of 6 people found the following review helpful:

5.0 out of 5 stars Great insights for business leaders, April 13, 2003

By	GREGORY W MADSEN (Santa Cruz, CA USA) - See all my reviews

Great insights and practical tools and ideas to improve organizations. I especially like the thinking behind how to make the intangible tangible. The book discusses several Organizational Capabilities such as speed, accountability, collaboration, learning, shared mindset, and the power of Leadership Brand. The chapter on Shared Mindset is very powerful and provides prescriptive ways to create a common focus and direction that will directly impact a customers experience as well as the employees that make it happen. I think it is a must read for all leaders who want to build lasting value within their organizations.