Underestimating Intangible Values during Cost Cutting


 
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Underestimating Intangible Values during Cost Cutting
Peter Jetter, Coach, Germany

Intangible value is hard to measure. So often it is not measured. False conclusion: no measured value = no value.
I observe the following pattern:
- The primary method to increase profitability is reduce costs.
- Experienced experts are expensive. In my area the "products" created by them are intangible (e.g. competence).
- The value of intangibles is not measured in the same units as the costs (). So managers cannot do an easy cost/benefit calculation.
- Astonishingly this leads to the assumption, that intangibles have little monetary value.
Typically experienced (= long time) experts build an extensive network. Part of their effectiveness is caused by their networks support in a) quickly getting expert consultation, b) quickly reach a agreement + decision due to mutual trust and understanding c) quickly getting small things done as personal favors (give and take!)
It is a common habit now to replace these experts with low cost resources.
And then the management is surprised, that profit does not increase, despite reduced costs.

 
   















 

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