The document explores the concept of 'pre-tangibles' which highlights the dynamic relationship between tangible and intangible assets in business, emphasizing that value-creating connections should not be overlooked. It argues that a focus solely on measurable outcomes can neglect the critical interplay of factors such as relationships and reputation that influence success. Ultimately, enhancing conversations around pre-tangibles can help decision-makers better navigate these complexities and foster an understanding of how value is created or lost.

1. UNDERSTANDING
PRE-TANGIBLES
Sharon VanderKaay
Farrow Partnership Architects Inc.
www.farrowpartnership.com

2. tangibles intangibles
Let’s examine the rela/onship
between tangibles and intangibles…

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. 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. © Susan Ottevanger / susan@seewater.com
tangibles intangibles
Are they always two
distinct states?

6. tangibles
intangibles
In business practice, a dynamic state of
conversion is the norm.

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. 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. 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. “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. Why are intangibles so frequently ignored?
Maybe the prefix “in” has negative associations:
(in)significant
(in)operable
(in)sufficient
(in)competent
intangible

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. 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. 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. 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. 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. But efforts to
quantify
intangibles
in a
universally
verifiable way
are ultimately
frustrating…

18. Susan Ottevanger / susan@seewater.com
…due to their organic
nature.

19. Susan Ottevanger / susan@seewater.com
Meanwhile, attempts to assign
misleading values to intangibles have led to
disastrous results.

20. CONVENTIONAL
WISDOM
tangibles = “things that matter”

21. CONVENTIONAL
WISDOM
tangibles = “things that matter”
intangibles = “matter of opinion”

22. CONVENTIONAL
WISDOM
difficult to ignore
tangibles = “things that matter”
easier to ignore
intangibles = “matter of opinion”

23. UNCONVENTIONAL
WISDOM
tangibles = “things that matter”
pre-tangibles = “let’s understand how the dots connect”
intangibles = “matter of opinion”

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. 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. Will we miss the real challenge by focusing on
a quest for more numbers?

27. How much proof do we need in order to justify action?

28. Illustrations: Susan Ottevanger / susan@seewater.com
Instead, we can monitor the quality of
intangibles and
the relationship between
tangibles and intangibles.

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. Illustrations: Susan Ottevanger / susan@seewater.com
To make these
pre-tangible
connections visible
and understandable,
better quality
conversations
are required.

31. These conversations
can also expose the
hidden costs of
dismissing pre-tangible
warning signs.
Illustration: Susan Ottevanger / susan@seewater.com

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. 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. 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. 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. 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. © 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