September 01, 2003
I was doing the end keynote at the annual conference of the risk profession. By the time, I stood up my talk was barely necessary. All I had to do was point to the dichotomy of stories told during the day:
-the companies that had survived because their leaders addressed a human crisis with all the organisation was worth
-the companies that went under by asking where's the business case that suggests we need to respond to this crisis with all humanity
The business case addicts were making a fundamental mistake. They were assuming that everything can be separated out as a number (a trade off here, a balanced scorecard there, reducing goodwill in bits wherever snapshots looked numerically convincing). They may argue they wanted to make their decsion look rational with a number put on do this part one way and that another. Human crises are one of many challenges to the entire organsiational system where the business case question is ridiculous because the value is whole -ie all or nothing to the organisation's future.
One of my favourite stories of the day was of Boots- the UK's most trusted retailer among women. It was a great case because it responded to a sudden crisis even though it was not of its making. A sensationalist journalist phoned up to say his tv report had evidence that the flame retardant mattreses Boots was selling caused cot deaths. Although Boots leadership was assured by every scientist in the land but one that this was nonsense, it did not ask: what is the business case for not responding seriously. It withdrew all mattresses from sale. It explained personally to all parent groups - including one led by a journalist who has suffered a cot death - why it was taking this sudden action even though no verifiable scientific evidence existed. And Boots volunteered to help in every open way and in every re-examination of the story, which was later found to have no sense to it.
But risk is only one of the leadership challenges which is so systemically connected to everything a trustworthy company is humanly valued for that to ask for separate numbers is to miss the point of how value dynamics flow through people relationships. Every Intangible Capital needs connectivity modelling not the separability measurements that tangible accountants and many traditional management consultants assume will sound precise to many CEOs' ears. CEOs must go beyond such false precision however formally dressed the spreadsheet looks.
Help us compile a disctionary of Intangibles Capitals at this European Union bookmark (left hand column). Let's limit the business case question to applications where it mathematically is justifiable to ask. permalink
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