Business Acumen VIII: Assessing Intangible AssetsAs a follow-on to yesterday's post dealing with intangible assets, I'd like to recommend taking a look at an article that Dave Ulrich of the University of Michigan and consultant Norm Smallwood published in the June 2004 issue of the Harvard Business Review.
"Capitalizing on Capabilities" focuses on one particular type of intangible asset, namely organizational capabilities, i.e., such assets as human talent, speed in making changes, and leadership. Ulrich and Smallwood explain how carrying out an audit of an organization's capabilities can be the first step in a process of managing these capabilities more effectively.
In basic terms, a capabilties audit involves assessing each capability on a scale of 1 to 10, and assigning priorities to the capabilities in order to guide planning. The priorities reflect where investment in bolstering capabilities is likely to generate the best return. For example, one company might determine that its best opportunities for return lie in improving performance management and leadership, while another might determine that the focus should be on improving collaboration and strategic unity.
Ulrich and Smallwood define 11 capabilities, noting that each organization will need to customize these generic items in order to match the organization's particular make-up:
- Talent Do our employees have the competencies and the commitment required to deliver our business strategy?
- Speed Can we make important things happen fast?
- Shared mind-set and coherent brand identity Do we have a culture or identity that reflects what we stand for and how we work? Is it shared by both customers and employees?
- Accountability Does high performance matter to the extent that we can ensure execution of our strategy?
- Collaboration How well do we collaborate to gain both efficiency and leverage?
- Learning Are we good at generating new ideas with impact and generalizing those ideas across boundaries (e.g., geographic and divisional boundaries)?
- Leadership Do we have a leadership brand (= what our leaders are, know, and do) that guides managers on which results to deliver and how to deliver them?
- Customer connectivity Do we form enduring relationships of trust with targeted customers?
- Strategic unity Do our employees share an intellectual, behavioral, and procedural agenda for our strategy?
- Innovation How well do we innovate in product, strategy, channel, service, and administration?
- Efficiency Do we reduce costs by closely managing processes, people, and projects?
Labels: Business acumen