A key aspect of decision intelligence is that it recognizes that many business decisions are based on intangible factors, such as opportunity costs, employee morale, intellectual capital, brand recognition, and other types of value that traditional quantitative or financial models fail to capture. There is no doubt that leaders looking for sources of growth should pay greater attention to their intangible assets. When social distancing prompted remote working and rapid digitization during the COVID-19 pandemic, investment in intangible assets soared.
As we live in uncertain times, intangibles are becoming increasingly important. Our world is no longer dominated by physical assets. Intangible assets are often viewed as a risk, overvalued, and difficult to manage by corporate leaders who started their careers when physical goods dominated business. Intangible assets are the new frontier, but executives and strategists aren't changing their ways. Rather than investing capital in more valuable intangibles that are supported by networks and platforms, most leaders focus on plants, property, and equipment. In today's digital-driven market, physical assets and the same yearly budget are not going to keep you or your company competitive and relevant.
The world is changing and intangible assets, such as ideas, IP, software, and brands, are becoming more important and more valuable than physical things such as equipment, machinery, and plants. Making important decisions about these intangibles is crucial for key decision-makers. Overlooking them can have devasting economic effects on a business. By using insolvency as an example, Nortel illustrates the importance of valuing intangible assets. A bankruptcy filing was made by Nortel in 2009. The physical assets of the company were sold for US$3.2 billion. On the balance sheet, its patents were valued at US$31 million, but they sold for a staggering US $4.5 billion in the end. 1 It is a classic case of legacy accounting standards that are making it difficult to capture intangibles in financial statements and they usually aren't recorded on balance sheets until after a transaction has occurred.
An organization's key decision-makers must understand what drives and protects their organization's underlying growth. It is crucial that the economic value of intangible assets are correctly communicated to decision-makers so that they can be leveraged, and associated risks can be minimized. Intangibles represent more than half of the value of the average organization, so it is imperative that their economic value be accurately conveyed to decision-makers. Decision intelligence helps organizations see how informal interactions help build trust and pave the way for innovation and new ideas. It also makes visible informal exchanges that are key to building trust, enabling innovation, and producing new ideas. Value chains don't show this kind of information, but decision intelligence does. Organizations cannot afford to rely on outdated decision support tools such as value chains, which can adversely affect your organization. Decision intelligence aims to address new levels of business complexity by providing insight into what's really happening today, where more value can be realized, and what needs to be done to deliver maximum value across the business.
Decision intelligence is reliant on the effective management of intangible assets. This can be achieved through a focus on organizational agility and decision support. Companies that rely on, explore, and manage their intangibles more strategically will outperform their competitors in the future. Companies that want to improve decision-making and better manage all of the intangibles in their business, from risk and opportunity to employee morale and brand value, should start by cultivating a culture that values decision intelligence and then using data, algorithms, and machine learning to continuously improve decisions across the different areas of business.