Understanding Pre Tangibles

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Makes a case for using the term pre-tangible to emphasize cause and effect relationships between intangibles and tangibles. Advocates conversations aimed at "seeing" how value is created or destroyed.

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Understanding Pre Tangibles

  1. 1. UNDERSTANDING PRE-TANGIBLES Sharon VanderKaay Farrow Partnership Architects Inc. www.farrowpartnership.com
  2. 2. tangibles intangibles Let’s
examine
the
rela/onship

 between
tangibles
and
intangibles…

  3. 3. “only what we can count counts” “talking just wastes my time” “too abstract” “a matter of opinion” “numbers, more numbers!” “hurts my brain!” “that’s not my department” …to
understand
how
the
concept
of

 


PRE‐TANGIBLES

 


changes
the
old
conversa/on. “need more proof of cause and effect” “if you can’t measure it you can’t manage it” “too soft”
  4. 4. Traditional View tangibles intangibles revenue service property aesthetic appeal buildings brand products relationships customer retention judgment, insight research data knowledge bottom line reputation balance sheet goodwill
  5. 5. © Susan Ottevanger / susan@seewater.com tangibles intangibles Are they always two distinct states?
  6. 6. tangibles intangibles In business practice, a dynamic state of conversion is the norm.
  7. 7. For example, these dots connect states of conversion: intangibles tangibles service……….. reputation……..… revenue design……….. attraction……..…. market share attitude………. retention………… sales figures judgment……. research………… products insight……….. knowledge……… great buildings gut feeling…… goodwill…………. balance sheet
  8. 8. The term PRE-TANGIBLE captures this dynamic state …while emphasizing value-creating (or destroying) cause and effect relationships for the benefit of decision makers. Sharon VanderKaay Farrow Partnership Architects Inc. www.farrowpartnership.com
  9. 9. Pre-tangibles draw attention to the dynamics: intangibles pre-tangibles tangibles service……….. reputation……… revenue? design……….. attraction………. market share? attitude………. retention……….. sales figures? judgment……. research….……. products? insight……….. knowledge….….. great building? gut feeling…… goodwill…………. balance sheet?
  10. 10. “only what we can count counts” “talking just wastes my time” “too abstract” “a matter of opinion” “that’s not my department” The term PRE-TANGIBLES “hurts my brain!” also signals that there are consequences to neglecting “numbers, more numbers!” these relationships. “need more proof of cause and effect” “if you can’t measure it you can’t manage it” soft?
  11. 11. Why are intangibles so frequently ignored? Maybe the prefix “in” has negative associations: (in)significant (in)operable (in)sufficient (in)competent intangible
  12. 12. Whereas pre-tangible evokes things to come: pre-condition pre-determine pre-nuptial pre-suppose pre-schedule pre-shrink pre-surgical pre-tangible
  13. 13. What kinds of intangibles are NOT pre-tangible? Feelings, beliefs and values that you do not intend to act on–that don’t matter to you or anyone you care about–are intangibles that are not pre-tangible.
  14. 14. service quality aesthetic appeal attitude foresight Although most business judgment leaders have a sense they insight cannot afford to knowledge ignore the impact of reputation intangibles… goodwill relationships gut feelings
  15. 15. revenue property buildings …they have been products trained to work with customer retention numbers that measure research data past performance. bottom line balance sheet
  16. 16. Susan Ottevanger / susan@seewater.com Various attempts have been made to find a universal method for capturing and valuing intangibles …so that intangibles can be judged as objectively as tangibles.
  17. 17. But efforts to quantify intangibles in a universally verifiable way are ultimately frustrating…
  18. 18. Susan Ottevanger / susan@seewater.com …due to their organic nature.
  19. 19. Susan Ottevanger / susan@seewater.com Meanwhile, attempts to assign misleading values to intangibles have led to disastrous results.
  20. 20. CONVENTIONAL WISDOM tangibles = “things that matter”
  21. 21. CONVENTIONAL WISDOM tangibles = “things that matter” intangibles = “matter of opinion”
  22. 22. CONVENTIONAL WISDOM difficult to ignore tangibles = “things that matter” easier to ignore intangibles = “matter of opinion”
  23. 23. UNCONVENTIONAL WISDOM tangibles = “things that matter” pre-tangibles = “let’s understand how the dots connect” intangibles = “matter of opinion”
  24. 24. Aren’t these connections obvious? “Pre-tangible connections should be obvious. But look what happened in my beloved, long-suffering home town of Detroit when people focused on managing numbers while neglecting interdependencies between managers, employees, suppliers, customers, shareholders and the community.” -Sharon VanderKaay
  25. 25. FOR EXAMPLE: One of the many conversations that didn’t happen in Detroit: What if we recognized our interdependence? What if we treated our suppliers as innovators who could make a valuable contribution to our business, rather than starving them with monopolistic price squeezes? …Discuss.
  26. 26. Will we miss the real challenge by focusing on a quest for more numbers?
  27. 27. How much proof do we need in order to justify action?
  28. 28. Illustrations: Susan Ottevanger / susan@seewater.com Instead, we can monitor the quality of intangibles and the relationship between tangibles and intangibles.
  29. 29. Susan Ottevanger / susan@seewater.com Instead of attempting to compete based on better measurements, we can change the game by getting better at “seeing” how value is created.
  30. 30. Illustrations: Susan Ottevanger / susan@seewater.com To make these pre-tangible connections visible and understandable, better quality conversations are required.
  31. 31. These conversations can also expose the hidden costs of dismissing pre-tangible warning signs. Illustration: Susan Ottevanger / susan@seewater.com
  32. 32. An understanding of pre-tangibles will benefit decision makers who are responsible for: - finance - resource allocation - policy - research so that they don’t succumb to 3 ILLUSIONS:
  33. 33. intangibles implies a fixed state of being not tangible or being confined to a distinct category… Illusion #1: Intangibles will always be intangible. …but bland design, for example, is a tangible thing that creates intangible feelings that cause a tangible loss of revenue leading to diminished intangible reputation–and on and on.
  34. 34. We need to develop the skills to describe the qualities we aspire to, using authentic terms, rather than empty generic words. Illusion #2: Neat numbers are a substitute for messy conversations. These skills are honed by participating through provocative conversations, rather than over-reliance on numbers for guidance.
  35. 35. By the time negative intangibles show up on the bottom line they are expensive and difficult to fix. Meanwhile, a disruptive event could be on the horizon that makes the numbers meaningless. Illusion #3: Intangibles reliably improve by looking at snapshots from recent history. It’s the wrong time to act when the building is built or the decision is made or the vehicle is sitting in the inventory lot.
  36. 36. tangibles intangibles Once we regarding how recognize the value is created or true organic destroyed. flow between tangibles and This kind of intangibles, we conversation can have more builds a shared Susan Ottevanger / susan@seewater.com illuminating sense of being conversations engaged with things that matter.
  37. 37. © Susan Ottevanger / susan@seewater.com BOTTOM LINE: Pre-tangibles provide us with a means to get our arms around the dynamics between intangibles and tangibles. Let’s change the conversation. Sharon VanderKaay Farrow Partnership Architects Inc. Toronto, Canada www.farrowpartnership.com

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