Transformation is often misconstrued as undertaking certain specifics only such as moving to
adopt new technology or reorganization of structure or adjustments post mergers or acquisition.
This would be a myopic view of the entire effort of transformation. Transformation is an
opportunity to simultaneously build Intangibles of the organization. Focus on intangibles alone
guarantees sustainable business outcomes.
Intangibles are those that cannot be measured in rupee or dollar terms. Yet they can provide a big
boost to business. It is now well recognized that intangibles such as human capital, brand marketing
and leadership contribute significantly to the market value of a corporation. Delivering financial
performance is one thing and creating a healthy organization is another. Soft strategy initiatives are
the foundation stone of hard side strategy …..
Investors are beginning to ask questions about such intangibles. Often, the market value of scrip moves
up with the appointment of a recognized leader at the top. Analysts today increasingly comment on
intangibles while assessing the value of a company.
Booker Institute of USA estimates that about 50% of the market capitalization of any company is
attributable to intangibles. Further research has shown that market value is becoming less and less
correlated with earnings. Two firms in the same industry with the same earnings may have
dramatically different market value. Well known researchers, Creelman and Ulrich, observe that it is
intangible that drive market value other than earning. The core issue in developing the architecture of
intangibles, apart from clear strategy, is building capabilities – those things that make a company
stand out in the minds of customers. It could be a shared mindset, speed, learning, accountability and
leadership.
It was my clear sense that to prepare my Bank for long-term competitiveness and developing the
bank as a powerful brand, we could not have worked with existing operational mindset which always
focused on achieving short-term targets. We needed to be far-sighted and take some foundational
steps. These include a renewed emphasis on building human capital, leadership pipeline,
introduction of technology, improving performance culture, taking customer-centric initiatives,
rebranding and re-engineering internal processes, to mention a few.
We did not allow ourselves to play to the temptation of short-term business results. Interestingly,
our unwavering emphasis on building the architecture of intangibles brought dramatic business results,
accelerated movement of share price and movement of ranking among peers. I am much more
convinced that CEO’s main role is to continuously improve building intangibles to bring about long
term sustainability of their organization ( Dare to lead, Sage 2011)
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