However, there are two distinct types of assets in a company: firstly the physical assets like the equipment, buildings, vehicles and machinery, and the non-physical assets like the employees, company culture, leadership style, internal and external networks and otheraspects.
The non-physical assets can enable a company either to be static or to be agile and resilient and being able to react to sudden changes in the market place. Agility can be defined as an organisation’s ability to change tactics or direction quickly – that is, to anticipate, adapt to and react decisively to events in the business environment. This requires an outward focus where the company has to interact with external networks in a totally different way than before.
A good example is one of the larger US vehicle manufacturers that survived the economic downturn did so because the management focused on improving the utilisation and efficiency of the non-physical assets.
They realised that they had to utilise the inputs of all their resources internal and external to the company for not only the best practices, but also for the next practices that would allow the company to become a leader in the automotive industry.
According to the chairman of the company, “We need to recognise that good ideas are coming from everywhere, and we need to embrace good ideas. For many years, we didn’t do much of that. Now we are really reaching out to people across the globe. We’re getting, therefore, a lot more out of it.” This non-physical asset is available to everyone, but has to be developed and requires the support of another nonphysical asset – leadership agility.
To survive and prosper in the next few years, companies will have to learn how to manage in a turbo-turbulent environment. This will require a different leadership style and culture than what companies have been used to in a stable environment. This requires management to create a culture where employees will be able to raise an opinion and be part of the solution for growth in the future. Management will have to assist the employees to resolve problems and not only focus on the problem areas that they feel comfortable with.
The automotive company now embraces such a management style, where people aren’t penalised for raising an issue. Management in fact encourages staff members to raise issues, and then co-operates in solving the problem. Again, according to the chairman, “in the old culture people were afraid to raise an issue. We need to work hard, to stay humble, and to remember that we’re never where we want to be.” Therefore leadership style plays an important role for not only survival but also growth in a troubled environment.
To improve the return on agility, companies will have to act and do things differently going forward and this starts with how companies view the return on the non-physical assets and the value that this can add to growth in a turbo-turbulent future. •