MANAGING in the

NEW WORLD

The majority of today’s business leaders began their careers at a time when physical assets dominated the net worth of organizations. To cite the 1975 S&P Index, eighty percent of the top five hundred companies’ assets were physical ones like plant, property and equipment. This is in complete contrast to today where four-fifths are intangible properties primarily composed of networks, platforms, Big Data, intellectual property and customer relationships. A lot of the business leaders do not trust intangible assets and thus fall short of a major skills- capital allocation. Every year they keep investing in the same asset category. Also, a lot of investors get scared off as Generally Accepted Accounting Principles dictate that physical assets are given primacy in the world of investment. Thus short terms gains are catered to by investment in them. Broadly speaking there exist four kinds of resource allocators among leaders. There are the Reactors who wish to stick by older norms and do not respond to business innovations in the market. There are Transformers who gradually begin the movement to shift away capital assets from physical to intangible ones. The third category includes the Alignors, who fully understand the modern norms and wish to take away their organizations to that stage, yet are often unable to as they do not prefer to ruffle feathers, instead stick by industry norms. The Disruptors on the other hand are the ones who shift the capital allocation according to market evolution and are proactive in their stance.

Source:https://hbr.org/2016/12/why-leaders-are-still-so-hesitant-to-invest-in-new-business-models

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