Wendy's Blog

It's Your Intangibles that Matter!

       posted on Wednesday 24 Jan, 2007.
 

“When you buy a business today, on average 71% of what you are paying for is intangible,” says Ramesh Thomas, principal executive officer at India’s largest branding company, Equitor Management Consulting. “Twenty-five years ago that was only 18%.”

What this means is that most of a company’s value is no longer in the capital part of the business – the machines and the computers – but lies in the way the company interacts with its customers and the relationships it has with them.

…the valuation of intangible assets, such as brands, has become a hot issue. It’s also the law. New international accounting standards require public companies to record the value of intangible assets – such as brands – on their balance sheets when they are acquired.

AFR BOSS January 2007

The article goes on to explain that valuing your brand gives you the opportunity to design your people systems by focussing on the improvement of that part of your assets that contains the greatest value: your intangibles.

Reading this article was an “Aha!” moment! There has always been a conviction in my mind that people are the driver for the profits or other measures of an organisation’s success, but this really brought it home.

It gives legs to the value of an organisation’s commitment to its Corporate Social Responsibility, its Ethics and the culture that underpins these.

And it gives credibility to a strategic direction that is based on increasing the value of relationships with all stakeholders.

Yes, Kindness really is the Key.

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