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Building Sustainable Competitive Advantage: The Power of Intangible Assets

One of the key drivers of successful business today is sustainability. Your ability to create and capture value from your competitors is one thing but can you sustain it for the long term?

The power behind what makes you unique as a business and creating a solid differentiation from your competitors is not only in your external product or service offering but is in your internal “intangible assets”. These are the assets that create the real outcomes for your clients and are integral to building your external brand and reputation.

Creating value that is rare, inimitable and appropriable has great significance on how you perform in the market. So what does all this mean and how do you do it? What is that magic ingredient that makes some companies employers of choice; have high brand recognition and leaders that can inspire respect and loyalty from their employees?

A major study Led by Christian Boedker from the Australian School of Business strongly suggests the secret is in a set of performance measures that are often considered as too difficult to quantify. However, businesses that are measuring and improving on “intangible assets" are being richly rewarded. The study found that organisations that do better on intangible asset performance also achieve higher levels of productivity and improved profitability with on average AUD $40,051 more profit per full-time employee.
 
The five intangibles measured in the study across 78 organisations over several years were leadership, innovation, employee experience, customer orientation and fairness.

Leadership involves having a vision, including people in decision-making processes and being receptive to feedback — even criticism.

Innovation is about having a forward looking direction for the growth and development of your product or service offering and staying ahead of the competition.

Employee experience includes the level of commitment by your employees to the workplace, as well as their level of effort for the organisation.

Customer orientation relates to your business’ connection to its customers and how well it responds to their changing needs.

Fairness is about reward and recognition and employee satisfaction with their share.

Is it surprising that the people element and systems inside the organisation are behind the power of success? So many businesses get lost in the day to day functions and don’t spend enough time building their core sustainability. Boedker found that positive emotions were much more prevalent in the higher-performing workplaces. People had a really strong emotional connection with the workplace - they felt proud, valued and cheerful and they clearly understood the bigger picture along with their own contribution. Are you good at communicating your big picture with your team?

A good place to start to build this capability in your own business is with a strategic review. This will help you to understand the key factors that need to be improved across leadership, systems, people, structure and culture and remember it all starts with leadership and change.