NOTE: The frameworks in this class can be applied on their own, as well as
being used as part of a more complete business model.
We all know that intangible or "soft" factors have a big impact on organizational
performance – a damaged reputation can destroy a business, strong staff motivation
can drive powerful growth, proprietary knowledge can give rise to market-leading
products, and so on. But there is a challenge in making practical use of this
general understanding to steer strategy, because we have largely talked about
these issues in terms that are ambiguous and inconsistent.
This class offers definitions of tangible and intangible resources that is clear
and usable, and identifies three major categories into which intangible factors mostly divide:
- Psychological factors concerning the state of mind of key groups, especially customers
and staff, but also investors and other stakeholders
- Information-based resources, such as data, technology, knowledge
- Certain quality-related factors that must be built up and sustained over time
The class gives frameworks for working with these types of intangible, and examples
of how they feature in real-world situations.
Key issues addressed
- Classifying resources and capabilities to give a clear specification
of intangible resources
- Three classes of intangibles affecting the tangible heart of the
strategic architecture: state-of-mind factors, information-based resources, and
- The distinction that current quality drives behavior for current
customers whereas reputation influences potential customers
- States-of-mind that build up to threshold levels where they
trigger big changes in behavior
- The decay of information-related intangibles, causing a need to rebuild
- Knowledge as a higher-level concept than data or information, requiring effort
to develop and maintain, but with important effects for many firms
- How quality factors, not all of which are strictly "resources" contribute to
Class 9.0 – Intangible factors: Summary - (46 min)
A rigorous and reliable categorisation and definition of resources (tangible and
intangible) and capabilities. Understanding the three main categories of intangible
resources – state-of-mind factors, information-based items, and quality-related factors.
How intangible resources follow the same causal rules and principles as tangibles,
and how they can impact strongly on performance.
Class 9.1 – Negative factors, thresholds and tipping points - (27 min)
Certain intangibles are “negative” – we would like less, rather than more of them.
How state-of-mind (both positive and negative) can build up to a threshold level
at which they trigger action. The crossing of such thresholds creates “tipping points”
which can be either favourable (a take-off in demand) or problematic (loss of
customers or staff). Such cross-over points can be anticipated and influenced.
Class 9.2 – Information-based resources - (12 min)
Data, knowledge, technology and procedures are the main categories of information
that enable the rest of the business system to perform. Effort and cost are needed
to gather and maintain such information – and effort that must be continued because
data and knowledge become obsolete.
Class 9.3 – Quality-related intangibles - (16 min)
Some quality factors simply reflect the adequacy of other resources, but other
quality factors do accumulate and deplete. Some, such as product functionality, are
positive, while others, such as faults or software bugs, are negative. Effort and
cost must be put in to build up positive qualities or work away at negative cases.
This course is supported by a series of worksheets provided in both PDF format and as Sysdea online models.
Class 9 is supported by a number of Sysdea models:
Class 9.0, Intangible factors - summary, is supported by a model on IT-support company
Intangibles - this adds Reputation and staff Morale to a model of this business
from earlier classes
The model supporting segment 9.1 looks at annoyance with late flights, and considers
forgiveness rates and what might happen when annoyance exceeds a tolerance limit.
Segment 9.2 is supported by a model on The model on Customer-support data - this shows how a
company receiving support calls from customers relies on customer
data to support their activities.
Class 9.3 uses a Software quality (bugs) model that plays out the launch of a new software in a business
with functions to help a large group of staff to do their work.
Additional materials are available to registered teachers as
well as free access to the complete course.
Login here or
register here for more information.
Other resources and links
Charles J. Fombrun, 1996, Reputation: Realizing Value from the Corporate Image, Harvard Business School Press; Boston.
Mark Lutchen, 2004, Managing IT as a Business: A Survival Guide for CEO's, Wiley: Hoboken NJ.
Chris Collison and Geoff Parcell, 2004, Learning to Fly: Practical Knowledge Management from Leading and Learning Organizations, Wiley:
Barrie Dale, 2003, Managing Quality (4th Edn), Blackwell: Oxford, Chapter 3.
George Eckes, 2001, The Six Sigma Revolution: How General Electric and Others Turned Process into Profits, Wiley
John Maxey, David Rowlands, Michael George and Malcolm Upton, 2005, The Lean Six Sigma Pocket Toolbook: A Quick Reference Guide to 70 Tools for Improving Quality and Speed, McGraw-Hill: New York