When Intangible Becomes Tangible

In the business culture, an organization’s top priority is and has always been its bottom line. The profit margin is most important. After all, an organization must have some level of success to remain in existence. With that in mind, every asset is regularly evaluated and measured in terms of its effect on the organization’s balance sheet. These assets are often categorized as tangibles and intangibles. In a business, tangibles include physical property that can be felt or touched such as furniture, business equipment, vehicles, household goods, collectibles, and jewelry. Intangibles, on the other hand, are not physical items, but intellectual property such as patents, copyrights, trademarks, etc.

In addition to being felt or seen, tangibles can be assigned a dollar amount. They can be quantified fairly easily. Intangibles are more of a guessing game when it comes to measuring their value to an organization.

Due to the nature of a business’ focus on its profit by means of quantifying its tangibles and intangibles, marketing for organizations must also adhere to these standards. This means public relations professionals have their work cut out for them. How could they ever assign a dollar amount the business will gain directly relative the services they provide?

A PR individual or team works to influence outside opinion and behavior directed toward an organization or product. Public Relations may encompass several forms of media and communication to build, maintain and manage the reputation of clients. Essentially, PR professionals attempt to convey to the public, all the positive aspects of an organization. The amount of success experienced due to these endeavors is difficult to measure. Nearly impossible. They will most likely never be credited to an increased profit margin.

Some aspects can be calculated. An organization can determine how many times it is mentioned in the media, its website traffic, “likes” on Facebook, requests for speaking engagements, calls, emails, etc. The digital buzz of an organization can be measured and tracked.

“In PR, The ROI [Return on investment] is more about communications objectives and less about financial objectives.” (MJW, 2013) Therefore, PR strategies often fall under intangible benefits. Brand recognition, reputation and market leadership are examples of an organizations PR intangibles. Without investing in research, those are concepts cannot easily be measured. PR attempts to tell consumers how to feel about an organization, relate positivity to its brand and bring it to the forefront of that particular industry. However, rarely can PR really know how good a job its actually doing. There are so many variables involved, complete accuracy could never be achieved.

Although PR professionals may be challenged proving why an organization needs them, it may be easier to let them know why they can’t survive without them. While PR may not directly increase their wallets, choosing not to invest in these services could actually have a negative effect on an organization’s bottom line. Public Relations does so many things that keep an organization from losing steam. They work hard to preserve values and keep the organization always in sight of the consumer. Beyond just promotion, an organization without a crisis management plan is a sitting duck. It may not survive if a crisis arose, without the help of a seasoned communicator.

Whatever makes the point, organizations must accept that PR contributes greatly to an organizations intangibles. But how intangible are they?

In a case study in New England, a business experienced a collapsed infrastructure due to ignored “intangibles.” The long-time CEO of the Market Basket family-owned Supermarket chain was forced out by majority stakeholders. What played out following his dismissal was a “stakeholder revolt that is showing the direct connection between intangible capital and financial results” (Adams, 2014). One thing led to another creating a catastrophic domino effect for this organization.

Adams analyzed the results in the form of intangible capital lost by Market Basket. The first was Human Capital. The company had excellent rapport with its employees. They feared this reputation would end with his dismissal. They walked off the job and even held protests at the stores claiming they would no longer work for the company if he was fired.

Relationship Capital  was the next to suffer. Market Basket was known for its loyal customers. They offered low prices and a wide selection that couldn’t be found elsewhere. Due to the bad publicity and empty shelves due to employee riots, customers were staying at bay and even transitioning other stores.

By this time Market Basket was in a mess. Strategic Capital also crumbled. “The culture, the vision and the business model were apparent to all the stakeholders, except maybe the majority shareholders. Their position was a clear message to the market that values and practices were going to change” (Adams, 2014).

These values and principles once thought of and recognized as intangibles, quickly jumped over to a whole new column. After changes in the board room, without these being considered, they in turn did eventually have an effect on the bottom line.

Adams states that the failure to steward these assets destroys profits and value and smarter companies pay attention to their intangibles.

I was thrilled to come across this article written by Adams. It portrays unfortunate circumstances for the organization, but a good analysis of the events that took place and how what seemed like a simple decision resulted in a major destruction for Market Basket. I struggle to accept that these principles are categorized as intangibles. I think this case study further drives home the point the line between tangible and intangible can be a very thin one. Public Relations and the strategic communication that comes with it is vital to the continued success of an organization.







Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s