Are Intangibles Increasing in Value?

by Jay Deragon on 01/13/2009

better-than-free-packaging_id369168_size3801Business leaders have been taught to focus attention on those things they can measure. Income, expenses, worker productivity, process variation etc and many leaders fail to consider some of the most important issues that truly drive a business.

W. Edwards Deming used to say “The most important things in business are those things you can’t measure, you can see but such things can make or break your business. I once had to opportunity to spend some time with Dr. Deming and I asked “What are such things which you cannot measure? His response was “How do you measure the value of relationships, conversations and the intangible benefit such things produce? It is the intangible things that create success but management wants to focus on results at the cost of the intangible things. Doing so destroys relationships, manipulates conversations and encourages the production of false results because that is what management wants, results even when they are false “

As I study the emergence of a “networked world” and all the related dynamics I can’t help but witness the rising value of the intangibles. What we learn from conversations, relationships and the intangible value we all gain from being connected with people is the perplexing paradox that many business leaders simply don’t get. Since much of the related activities of a networked world are driven by communications and influenced by information the “result” is what we the people do with the information to benefit ourselves our businesses and our relations.

What Useful Results Do We Produce?

Kevin Kelly writes: This new economy has three distinguishing characteristics:……It is global. It favors intangible things–ideas, information, and relationships. And it is intensely interlinked. These three attributes produce a new type of marketplace and society, one that is rooted in ubiquitous electronic networks.

New Rules for the New Economy lays out ten essential dynamics of this emerging financial order. These rules are fundamental principles that are hardwired into this new territory, and that apply to all businesses and industries, not just high-tech ones. Think of the principles outlined in this book as rules of thumb.

The principles governing the world of the soft–the world of intangibles, of media, of software, and of services–will soon command the world of the hard–the world of reality, of atoms, of objects, of steel and oil, and the hard work done by the sweat of brows. Iron and lumber will obey the laws of software, automobiles will follow the rules of networks, smokestacks will comply with the decrees of knowledge. If you want to envision where the future of your industry will be, imagine it as a business built entirely around the soft, even if at this point you see it based in the hard.

Of course, all the mouse clicks in the world can’t move atoms in real space without tapping real energy, so there are limits to how far the soft will infiltrate the hard. But the evidence everywhere indicates that the hard world is irreversibly softening. Therefore one can gain a huge advantage simply by riding this conversion. To stay ahead, you chiefly need to understand how the soft world works–how networks prosper and grow, how interfaces control attention, how plentitude drives value–and then apply those principles to the hard world of now.

As we begin 2009 businesses appear to be rushing to engage their markets using social technology. Advertising dollars are moving from print to digital. Attention is rapidly moving to the intangibles and engagement is free but the cost of trying to force results can be very high.

Business leaders, marketers and advertisers, must learn how to enhance the intangibles rather than trying to produce results to meet tangible goals. The goal is a conversation which begets a relationship which can produce results. However, the results cannot be the overriding goal. Get it?

What say you?

{ 1 comment }

Kimberly LeRiche January 17, 2009 at 12:20 am

It is hard, if not difficult to measure the intangibles of connection and making relationships:

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