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The following guest post is from James Clawson , one of those external instructors we partner with in a program we’re doing for a global, Fortune 500 client called “Change Leadership”. Theories of leadership abound to the point of confusion. Given the shape of the model, let's call this the “diamond model of leadership.”
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. How much is changing?
Tobin’s q is the ratio between a company’s market capitalization and the replacement cost of its tangible assets, with a higher ratio indicating that a company has more intangibleassets such as patents, brands, leadership etc., LeadershipMarketing' during the growth years to 0.8
stock exchanges has declined by almost 50% from its peak in 1996, despite dramatic increase in aggregate market capitalization. firms gravitate towards digital strategies, firms have less need for elaborate finance, marketing, production, distribution, accounting, and human resource departments. stock exchanges.
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. Organizational transformation must begin with a leadership transformation.
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? The CHRO must step up to the implications of the new world of work.
There’s a demand for this type of information, and thus product and market opportunities, but in an information services marketplace where people want everything for nothing, it is not easy to monetize information products. The ultimate goal is to treat information as a tangible flow rather than an intangibleasset stuck on the balance sheet.
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. In a previous HBR article , we argued that, in contrast to physical assets that depreciate with use, intangibleassets might enhance with use.
There’s a demand for this type of information, and thus product and market opportunities, but in an information services marketplace where people want everything for nothing, it is not easy to monetize information products. In short, from many to one to many. The practice of management itself must evolve for this capability to emerge.
Through co-creation, companies can access a deep well of customer capabilities, knowledge and assets. Although the Net Promoter Score (NPS) is a market standard, customer promotion alone can’t sustain a co-creation model. Evaluate your leadership team’s openness to co-creation as well. Your customers are waiting.
Interestingly, intangibleassets are all the rage these days on Wall Street. Investors grapple daily in an effort to figure out how to value companies whose accounting assets — things like land, capital, products, and licenses — don't adequately express their true market value.
Decades ago, a company’s market value was nearly equivalent to its tangible assets—buildings, machinery, materials, financial capital, and so on. In 1975 intangibleassets were just 17% of the market value of the S&P 500. Trust comes from transparency, and transparency is the norm today.
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