Sometimes when I talk about intangible capital I feel that people think I am speaking in a foreign language. We use terms that are different from what has been taught in our colleges, our businesses and in the marketplace.
Intangible capital does have its own language. We speak about human capital, strategic capital, structural capital and relationship capital while most of the market has no reference to what exactly these terms mean. As Nilofer Merchant says “Language encodes our thinking. To write a new future, we need to use a new language.”
Making Complexity Simple
People understand that that success in business is impacted by the quality of the people they hire, the support systems in place to facilitate processes and information to serve the customer, the sales and marketing efforts that attract the customer and keep them after the sale and the strategic purpose of the organization that aligns all of these resources with a common aim. All of these are the intangibles that produce the tangible results—yet it’s extremely rare for businesses to actually track these intangibles in a coherent way.
The intangible language is not the language used today by businesses yet if you listen to what businesspeople are talking about—it’s the intangibles. So we have a communication gap. We are talking about the same things but we are not talking the same language.
Why try to talk the same language? Why should businesspeople adopt IC thinking? Because intangibles are the root of strategic advantage. There is virtually no tangible asset you can buy that will give you a competitive edge today—it’s about how you use assets, how capable your people are, how strong your partners are.
Our guidepost for creating this language needs to be simplicity. Clayton Christensen said “Disruptive innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility and affordability where complication and high cost are the status quo”.
To create a new language we need to bridge the gap between the old language and the new. It will take time and adaptation for us to come up with a common language that everyone can understand.
This is the first of a series of posts that we will continue over the next month or so to try to advance our language. We look forward to everyone’s input so we can ultimately get to a place where it is simple, convenient and understandable. Our goal is to not dumb things down or make things complicated rather it is about speaking in a language that everyone can understand.