Strategic Management Dynamics

Chapter 9 - Intangible resources

It is widely accepted that intangible or soft factors have a substantial impact on organizational performance—a damaged reputation can destroy a business, strong staff motivation can drive powerful growth, proprietary knowledge can give rise to market-leading products, and so on. But there is a challenge in making practical use of this general understanding to steer strategy, because of terminology that is overly wide-ranging, ambiguous and inconsistent. This chapter offers definitions of tangible and intangible resources that is clear and usable, and identifies three major categories into which intangible factors mostly divide:

1. Psychological factors concerning the state of mind of key groups, especially customers and staff, but also investors and other stakeholders
2. Information-based resources, such as data, technology, knowledge
3. Certain quality factors that must be built up and sustained over time

The chapter then gives frameworks for working with these types of intangible, and examples of how they feature in real-world situations.

KEY ISSUES

• Classifying resources and capabilities to give a clear specification of intangible resources
• Three main classes of intangibles affecting the tangible heart of the strategic architecture: psychological factors, information-based resources, and quality-related items
• The distinction between current quality driving behavior for current customers vs. reputation influencing potential customers
• Perceptions that build up to threshold levels where they trigger big changes in behavior
• Problems with intangibles that bring the system back into balance, though not for good reasons
• The decay of information-related intangibles, causing a need to rebuild, and the key role of information systems strategy
• Knowledge as a higher-level concept than data or information, requiring effort to develop and maintain, but with important effects for many firms
• How quality factors, not all of which are strictly "resources" contribute to strategic performance