New paper about the strategy on intangibles. Changing to a more intangible-intensive strategy can have benefits but it has costs so it is important to understand whether there is a threshold for the change. This is analyzed in "Status-quo vs new strategy in intangibles" (http://www.emeraldinsight.com/doi/abs/10.1108/JES-07-2015-0132). To get the conclusions there are some mathematical procedures that can appear as complicated but the conclusions are quite clear. Enjoy the reading and comments are welcome.
There was a great article in the Financial Times entitled The strategy consultants in search of a strategy.
This article comes on the heels of the very vigorous discussions going on at Relationship Economy and here at Smarter-Companies about the future of consulting which make it clear that consultants themselves see change coming.
And it’s a continuation of the discussions we have had since the publication of Intangible Capital where we talk about the implications of the rise of the digital economy. One of the big implications we wrote about was the shift from strategy to innovation as a management focus (the others include the shift from org charts to networks, the shift from command and control to orchestration and the shift from accounting to ICounting).
Strategy is at its roots a largely top-down exercise that assumes the people at the top have and know how to use all the knowledge necessary for a company to succeed. But one of the basic changes in the digital economy is that knowledge and collaboration reside throughout a company’s network. This means that emergent strategy, or innovation, is growing in importance. This view says that information and learning need to come from the bottom up and outside in rather than just the top down.
It’s in this context that I see the disruption of strategy consulting. You’re not helping much if you facilitate management teams sitting in ivory towers to develop their views of what needs to be done and then implement “change management” programs to essentially “sell” the strategy to all the underlings. Consultants in this case are caught in their own industrial, top-down mode of thinking.
The alternative is consulting that helps companies listen, engage and learn from their stakeholders. What do the company’s stakeholders need? How do they experience the company? What are the drivers of growth and profitability? This alternative is what leads consultants to the study of intangible capital. Today, 80% of the value of the average U.S. company and 100% of its competitive advantage is intangible.
Strategic consulting is being disrupted because the nature of strategic advantage is being disrupted. Today it’s about intangibles like people, process, partners and purpose. To be a “strategic” consultant, you have to help companies see, measure and optimize these intangibles. It’s not about formulating a plan and driving execution (although there will always be a place for this). It’s much more about understanding the intangibles driving the future success of your clients’ businesses and incorporating stakeholders in the conversation about how to maximize the potential of these intangibles through innovation and growth.
Intangible Capital: Looking Inside the Black Box - I often explain that the 70% of corporate value that is intangible in companies today is stuck inside a “black box.” This article I wrote for Strategy magazine tells the story of a company that looked inside the black box to let loose its potential for innovation and growth.