Welcome to the New Age of Intangibles

By: Frank Sonnenberg

We live in a time of unprecedented change. The world continues its transition from the Industrial Age to the Information Age, a new age characterized by intangibles that have far-reaching implications for everything we do. And clearly, our ability to successfully weather this transition will determine our competitive position in the world market, which will, in turn, affect generations to come.
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Many people will tell you that such things as empowering your workforce, creating an environment that encourages risk and discourages fear, eliminating waste and improving business processes, communicating in an open and honest manner, building trust among employees, nurturing long-term relationships with suppliers and clients, working hard to develop an impeccable reputation, and unifying your organization around a mission and shared values are likely to be among the key determinants of success in this new age. Others will tell you that these are "soft" issues.

What do people mean when they say these issues are soft? Are they saying that they are not effective management practices and that they do not enhance results? Or are they saying that because these things are difficult to quantify and measure, they make management uncomfortable and uneasy?

Thinking Across the Ages

The differences in the thought processes between the Industrial Age that brought us products such as cars, heavy farm equipment, refrigerators, washing machines, and computers—equipment that could be seen and touched— and the Information Age of intangibles is evident in the terminology in the following table.

Industrial Age                                       Information Age

Capital intensive                                  Knowledge intensive

Capital expenditures                          Education/training

Natural resources                                Educated workforce

Inventory                                                Data (information)

Production enhancements               Process enhancements

Hierarchical management                Employee empowerment

Issuing orders                                        Communicating

Equipment failure                                 Employee turnover

Equipment uptime                                Morale building

Sales                                                            Customer satisfaction

Defending turf                                         Innovation

Company push marketing                 Consumer pull marketing

Clearly, the critical success factors of the Information Age are intangibles. And just as you cannot measure liquids in pounds or nuclear fusion in quarts, you cannot use yesterday's measurements of physical inventory to gauge the results of trust, creativity or a passionate workforce. How do you measure the value of employee empowerment or measure the manager who builds camaraderie, trust, and lasting relationships with his or her team? ¹

Trust, the Miracle Ingredient

According to Barbara Kimmel, the Executive Director of  Trust Across America, a framework for Trustworthy Business Behavior like the one her program has created, gives companies a holistic "trust" checkup, examining key metrics including financial stability, governance risk, transparency, workplace recognition and community involvement. This type of data is a great management tool, and  provides year-over-year comparisons for a given company as well as an analysis across industry sectors. In essence, companies can now access critical information and obtain the feedback necessary for competing effectively in the Information Age.

If businesses are to thrive in the global marketplace, they must be able to outshine the competition in critical areas such as trust. In fact, trust must be more than something that is talked about; it must be at the core of everything that is done. Trust is not an abstract, theoretical, idealistic goal forever beyond our reach. Trustworthy business behavior MUST become a priority. That begins with measuring the critical success factors of the Information Age. Soft issues, like trustworthy business behavior, are all very like the tree that falls in a forest. In the Information Age, if we don't believe that there was a sound, maybe it's time to get our hearing checked.

Adapted from Managing with a Conscience: How to Improve Performance Through Integrity, Trust, and Commitment (2nd ed.) by Frank K. Sonnenberg. Used with permission.

Frank Sonnenberg is a marketing strategist who has written four books and published over 300 articles. Portions of this article are adapted from his new book, Managing with a Conscience: How to Improve Performance Through Integrity, Trust, and Commitment (2nd ed.). Industry Week named the first edition of Managing with a Conscience one of the Top Ten Business Books of the Year. www.franksonnenbergonline.com