profits - Member Blogs - icknowledgecenter32024-03-28T19:57:51Zhttps://smarter-companies.com/profiles/blogs/feed/tag/profitsWhere's the Proof?https://smarter-companies.com/profiles/blogs/wheres-the-proof2014-05-05T15:20:22.000Z2014-05-05T15:20:22.000ZMary Adamshttps://smarter-companies.com/members/MaryAdams<div><p>Maybe it’s just a coincidence but I received two messages today. One from a contact here in the Boston area. And another from Europe. I thought I would share the questions and my answers as a way to start a conversation about intangibles, intangibles measurement and “hard” business results. I would love to hear your thoughts....</p>
<p><br /> <strong>Question 1</strong>: Is there any evidence that evaluators consider seriously the findings of an intangibles assessment in acquisitions or buying of shares? Can a company expect to benefit from having an intangibles assessment when talking to investors?</p>
<p>My answer: The evidence comes from what moves markets. Changes in financials move markets. But so do changes in management, company partnerships, failures of process, performance problems, lack of innovation. If a company wants to be judged just on the basis of its financials, then it should let the financials speak for themselves. <br /> If there is an interest in telling a richer story, then a team has two choices: talk about the company or provide data about how and why the financials turn out the way they do. Our ICounts products, for example, provide hard third-party data about the performance of the kinds of changes described above. It's about controlling the conversation.</p>
<p></p>
<p><strong>Question 2</strong>: What are the best stats (and supporting source reference) to support the following:</p>
<ul>
<li>% impact that ‘employee engagement’ has on profitability</li>
<li>% impact that ‘employee diversity’ has on profitability</li>
<li>% impact that ‘employee absenteeism’ has on profitability</li>
<li>% impact that 'customer satisfaction' has on profitability (or any impact on anything)</li>
<li>% impact that ‘sustainable investment’ has on investment return</li>
<li>% impact that 'best practice' as demo’d by public companies v private companies has on profit performance</li>
<li>% impact that managing environmental and natural resource intensity has on profitability</li>
<li>% impact that doing sustainability reports (CSR) has on profitability</li>
</ul>
<p>Answer: We don't know the answers. But we also don't know that answer to questions like:</p>
<ul>
<li>% impact that "having a good CPA" has on profitability</li>
<li>% impact of "accurate financials" has on profitability</li>
<li>% impact of "well-run company" has on profitability</li>
</ul>
<p>Companies are actually complex systems. Questions like this are hard to answer whether you are talking about any aspect of their operations. This is why I advocate an approach that starts with creating a <a href="http://www.smarter-companies.com/page/icounts-visualizations" target="_blank">map of the system</a> the company has built to deliver on its value proposition and purpose. For me, the more important questions are:</p>
<ul>
<li>How does the company generate/drive revenues and profits?</li>
<li>How strong are each of these drivers today?</li>
<li>What's important to the stakeholders (customers, partners, employees) who control whether the company succeeds or not?</li>
</ul>
<p>Ultimately, the answers to these questions will explain the impact of intangibles on the overall system driving profitability.</p>
<p></p>
<p><strong>What do you think?</strong> Did I do the subject justice? What's missing? What’s your answer? </p></div>