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This old way seems like a pretty solid statement of fact. All you need do to verify this, is to take a look at your company’s financial statements. Not only will you find a list of all the assets of a company, but you can also see the value of any asset listed – past or present. This is the neat and tidy world described by numerical accountancy. |
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Companies following numerical accountancy pay attention to what the balance sheet says. They invest in, and operate through concrete items such as buildings and equipment. Typically, such companies use the same kinds of buildings as their competitors, and operate with similar equipment and similar processes as them. They pay the average salary for the local labour market, and therefore tend to attract similar types of employees. (Human Resource Management for Strategic Advantage) |
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If one company makes a move — say it acquires a new piece of equipment or a corner lot — then another like-minded firm is sure to follow suit. Why? Because this is the asset management game. If a company can make a better investment than the competition, they can get ahead of them. |
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Asset management is rather like a game of chess in which you can buy or sell various positions and pieces. The object of the game is to acquire and arrange your assets in order to maximize opportunities and minimize threats. To make this game a little easier to play, companies can amortize the cost of their buildings and equipment over many years, softening their impact on the bottom line. When these concrete items become obsolete or unusable, it is plainly obvious, and so investing in replacements is always easy to justify. |
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The needs are clear. The solutions are straightforward. The costs and the plans can all be spelled out in fine detail. And yet, companies guided by numerical accountancy routinely forget what really matters. |
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Mislead by the balance sheet, leaders of such companies see a collection of corporate functions, instead of a unity of people, purpose and process. They see buildings and equipment, instead of people. As a result, they forget the one factor that should form the basis of every sound business decision. They forget their customers. |
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