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Managing intangible assets: if the work you're doing is building needed capabilities, competencies and market value, good. If not, stop--and do something that adds value.

Here's the premise: Sustainable shareholder value comes from assets that aren't accounted for on an organization's balance sheet.

Why the Bottom Line Isn't! by Dave Ulrich and Norm Smallwood has significant implications for communication practitioners who want their work to focus on what really matters to their organizations--and who need to get the junk off their plates so they can do that. Here's the premise: Sustainable shareholder value increasingly comes from assets that aren't accounted for on an organization's balance sheet. These assets are called intangibles. Ulrich and Smallwood discuss seven of these--shared mind-set, talent, speed, learning, accountability, collaboration and leadership quality--and offer a hierarchy of intangibles, worksheets and tools to help communicators better manage them. Improved market value, the authors insist, comes from managing these intangible assets well.

Here is their hierarchy of intangibles:

1. Deliver consistent and predictable earnings. A business simply can't build intangible value without them.

2. Articulate a vision for growth. The book offers solid guidelines and makes it very clear that simple and targeted beats cluttered and confusing.

3. Ensure that future competencies are aligned with the strategy. Core competencies are the technical or functional requirements for a business to succeed. They include product innovation, operating efficiency, customer intimacy, distribution and technology.

4. Create capabilities. Capabilities represent the skills, abilities and expertise of the organization--how its people think and what they can do. These might include talent, culture, speed, learning, collaboration or leadership quality. This notion is particularly useful for performance-based internal communication practitioners who need to target their work toward those things that matter.

For instance, let's assume speed and learning are equally important to your organizations success. If you're strong in the speed department but weak in learning, why would you work to further improve speed when you have the option of improving learning?

Simply put, if the work you're doing right now is focused on managing intangibles in a way that builds needed capabilities, competencies and market value, that's good work. If you're not doing that, stop what you're doing and do something that does add value.

Why the Bottom Line Isn't! is not just a communication-, finance- or human resources-oriented book. That's good, because increased market value doesn't belong to a particular function. My only complaint about this book is the title. Aside from being awkward, it doesn't describe the point Ulrich and Smallwood are making--and making well. The bottom line is the bottom line, whatever it is. If a company gets more value out of its people, the bottom line goes up. So, if intangibles help make the bottom line go up, the bottom line still is the bottom line. It's just not where it was before it was corrected for intangibles.

about the reviewer Jim Shaffer is leader of the Jim Shaffer Group, a communication consultancy based in Annapolis, Maryland.

about the book Why the Bottom Line Isn't! How to Build Value Through People and Organization by Dave Ulrich and Norm Smallwood John Wiley & Sons Inc. 2003, 304 pages
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Title Annotation:bookmark
Author:Shaffer, Jim
Publication:Communication World
Geographic Code:1USA
Date:Mar 1, 2006
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