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The Old Way |
The New Way |
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Assets are concrete things like buildings and equipment. |
Abstract things like expertise, commitment, integrity and learning capacity are decisive assets. |
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Objective |
To focus a company’s attention on things it can see, count, buy and sell. |
To focus a company’s attention on the competencies and qualities it needs to succeed. |
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Method |
Management through financial accountancy. Important things are monitored on the balance sheet. |
Management through strategic capability development. Important processes are continually improved through teamwork. |
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Perspective |
The costs of assets are amortized over many years, softening their impact on the bottom line. |
Employees are not costs, they are assets. Investing in them pays dividends. |
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Reasoning |
"Look – there it is. How much does it cost?" |
"How can we do this better?" |
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Nature of Inputs |
This company measures its inputs simply in terms of dollars and cents. |
This company recognizes that its most important inputs are its people, processes, values and vision. |
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Nature of Outputs |
Again, outputs are measured in terms of dollars and cents. |
Outputs are measured in terms of customer satisfaction. |
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Internal Systems |
All business units are regulated by cost accounting systems. |
All business processes are managed by committed teams of expert employees. |
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Employee Outcome |
Employees are deemed to be secondary costs that should be minimized. |
Employees are recognized to be the soil that must nourish the company’s dreams into reality. |
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Customer Outcome |
For this company, customers are externalities, and are rarely afforded first consideration when important decisions are made. This company’s assets are component parts of their production systems. |
For this company, the point of every decision made is customer satisfaction. This is why the major assets of this company (their workforce) are deployed in teams with the goal of serving customer needs and exceeding customer expectations. |
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Competitive Outcome |
Companies whose investment strategy is focussed on concrete items are always vulnerable to competitors who use the same strategy to invest in newer or better assets. |
Companies whose investment strategy is focussed on developing and supporting human assets, can compete effectively with anyone in the world. |
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Result |
Living in a world of numbers, this company forgets its customers and ignores its Core Competencies. |
Focussed on customers, this company develops the Core Competencies and competitive qualities it needs to succeed. |
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