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Most organizations say their most important assets are their people, but few behave as if this were true. Change initiatives typically devote most budgets to structural issues such as technology and processes, not staff issues. Organizations don''t adapt to change; their people do.
As technology continues to change and challenge even the most successful incumbent organizations in every industry, the cost of inertia is growing. Consider the dramatic shift in the types of assets that create market value. Despite the shift to intangibleassets, executives and their strategists are sticking to the status quo.
Hitler's human extermination empire was quite new in its scope, organization, and technology. The Balanced Scorecard's primary form of novelty is that it takes into account the intangibleassets that are so crucial for information-age companies. Immense evil has been done with human ingenuity applied to despicable ends.
In sum, digital strategies and rapid technological obsolescence increases the mortality rates among existing public firms, but does not correspondingly increase the demand for IPOs. Such acquisitions become more lucrative with rising first-mover advantages, pace of technological development, and network externality.
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. There’s no question why legacy organizations are tackling digital transformation now.
They determine what material and intangible means of disease and trauma prevention, diagnosis, and treatment are needed for each mission. Medicines, instruments, consumables, and exercise devices belong to material assets; intangibleassets involve medical expertise on board and on the ground, processes, procedures, and protocols.
Just lengthening that second stage of full-time work may secure the financial assets needed for a 100-year life, but such relentless work will inevitably deplete precious intangibleassets such as productive skills, vitality, happiness, and friendship. The same is true for education.
Baseline financial skills are still essential, but international experience, industry knowledge, investor relations acumen, technology expertise, and strategic prowess are now just as much part of the package. In the early 1980’s, sixty percent of corporate value creation emanated from the optimization of tangible assets.
The shutdown will be completed by early 2014, bringing to a close a dramatic story of rise and fall at the hands of disruptive technological innovation, or what we have called “ big bang disruption.” homes have broadband , and network operators continue to invest in ever-faster cable, satellite, and fiber-based technologies.
We typically imagine that the young can help the old understand technology and the old can impart general wisdom. What we asked people was, at this point in their lives, are they actively building, maintaining, or depleting their tangible and intangibleassets? Coaching and mentoring across age groups makes sense.
The ultimate goal is to treat information as a tangible flow rather than an intangibleasset stuck on the balance sheet. Information & technology Leadership' Financial arrangements have to evolve to handle pricing and payments for value based on possible futures. The future is already here, it’s just unevenly distributed.”
In a previous HBR article , we argued that, in contrast to physical assets that depreciate with use, intangibleassets might enhance with use. So the fundamental idea behind the success of digital companies (the increasing returns to scale) goes against a basic tenet of financial accounting (assets depreciate with use).
Small startup firms are already developing proprietary technologies — such as machine vision, deep learning, and other innovations —– that could help large investors evaluate opportunities and risks with far greater accuracy and efficiency than was previously possible. But right now that’s not happening.
And equipment must be maintained in a world that is becoming virtual and augmented by technology (VR and AR). In some cases, these assets are preventing companies from adapting, and weighing them down. that companies own compared to other assets. For example, Health Technology had an average multiple of 5.1,
Revenue moats are usually linked to intangibleassets (including brands and patents), high switching costs, and network economies. Cost moats are linked to the ownership of cheaper or faster processes, favorable locations, unique assets, or firm size.
Today, however, by exploiting new digital technologies, firms like Apple, Lending Club, and AirBnB have made customer co-creation of value central to their business models and in doing so now rank among the world’s most innovative and valuable firms.
Second, for small and rapid-growth technology companies, the problem is compounded by the fact that, while rich in intangibleassets, they typically lack the kind of collateral (equipment, inventory, real estate, etc.) banks require to secure commercial loans.
And academic research has found that rising industry concentration correlates with the patent-intensity of an industry, suggesting “that the industries becoming more concentrated are those with faster technological progress.” ” Carr distinguished between proprietary technologies and “infrastructural” ones.
Most of them focus on digitalization specifically and on communications technology, though some attention continues to be paid to transportation infrastructure (e.g., For more than 150 years now, new technologies have been touted as making the world one. Parag Khanna’s Connectography ).
New workers embarking on their careers are finding that their education is incomplete in many areas essential to our technology-driven lives today. While all of these are contributing factors, the major factor, in our view, is the deflationary effect of technology, which our measurement systems fail to account for.
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