MANAGING A SUCCESSFUL INTANGIBLE
Organizations that distribute goods and services in a context characterized by lively competition are exposed to two types of pressure: efficiency and effectiveness. Efficiency is stimulated by the rivalry between competitors who are committed to minimizing the quantitative use of the organization’s resources (economic, human, time, technological, etc.) but with the same result in productivity. Effectiveness originates from customers who are well-aware that they can choose from several competitors and thereby stimulate companies to continually increase their qualitative performance in terms of their ability to relate to the market and the standard supply of goods and, primarily, services.
Organizations that are simultaneously exposed to the challenges posed by effectiveness and efficiency are subject to the uncertainties of evolution and adaptation to a dynamic market. For this reason, an open culture and an organizational dimension (vis-à-vis the external market) is developed and focuses on customers and competitors.
The corporate script of these types of organization leaves little room for distraction by internal conflicts. The only conflicts permitted must be, for the most part, anchored to professional contents and roles. The urgency of tasks rewards transparency and objectivity and forces personal conflicts into the background. In this organizational situation, personal conflicts and tension are diseconomies that affect company margins and, at times, put the organization out of the market. These organizations are, therefore, culturally sensitive to the maintenance of positive social climates aimed at channelling professional and relational energies towards corporate objectives, if they are not to be excluded from the competitive scenario.
It can be stated that organizations that come under pressure from highly competitive markets are forced to continually rationalize and reduce to essentials all the tangible aspects of their set up and methods of action.
The first aspects on which companies usually focus their attention in terms of rationalization are tangible and measurable: product or sales volumes, revenues, margins, sizing: economic and human resources, physical space, technology and time.
From the same perspective, historically, and understandably, all organizations involved in distributing goods have focused their attention on the tangible and measurable aspects that characterize their market. Whether this involves selling products in the engineering, electronic, chemical, construction sectors or whether the objects of trade target such markets as clothing, automotive, furnishings or consumer packaged goods. Attention to “material objects” is a priority for vendors. And it is mainly against objective aspects that companies measure their competitive potential.
The attention allotted to these tangible and measurable aspects is an inescapable precondition for guaranteeing the maximum efficiency of organizational systems, but it is not sufficient to explain why some companies are more successful than others, even though the same attention is paid to efficient rationalization.
The reserve of reactive power in some successful organizations can be traced to their attention to the more qualitative, less tangle aspects of effectiveness that are more closely linked to subjects than to objects. To fully express their potential, the tangible body of efficiency must be enriched by the intangible spirit of effectiveness.
Styles of management, the climate within an organization, enthusiasm, the ability to listen, and the personalization of relations with customers are the distinctive intangibles of success.
The motivational social climate that characterizes a company mainly comes from the kind of relationship between entrepreneurs and hierarchical heads. The vices and virtues of styles of leadership are the most important factors that influence the climate within the organization as a whole.
Dogmatic, authoritarian styles of management are the leeches of motivation and lead to inflexible work processes and the depletion of drive from the organizational set up.
Authoritative styles of management and negotiation are the catalysts of motivation and generate proactive and unprompted collaboration.
An organization imbued with motivation has a wealth of subjective energy that is channelled into achieving success. A good climate within an organization can only have positive consequences, also in relation to the market. Company climate is also an implicit selling point in the customer’s perception.
Another essential intangible in business is the relational attitude of those who handle sales and are, therefore, in constant contact with customers.
The ability to listen, transparency, reliability and availability are the most important services and an intrinsic part of the product. Characteristics that are recognizable only in those who have an aptitude for selling. One sells relational ability not just goods and services.
When the market is easy and flourishing the diseconomies created by very poor styles of management and an ineffective sales force are hidden by the profit margins attainable in a successful economy. In moments of market crisis it is the vital intangible that frequently makes the difference, the continuing existence or disappearance of organizations.
Consultant, organization researcher and professor of organization and organizational behaviour at SDA, Scuola di Direzione Aziendale, Università Bocconi, Milan