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288 pages, Hardcover
First published November 7, 2017
Firms that can create and manipulate intangibles can reap outsize benefits. In a world where intangible investment is very important, we would expect to see the 'best' firms - that is, those firms that a) own valuable scalable intangibles, and b) are good at extracting the spillovers from other businesses - being highly productive and profitable, and their competitors losing out.
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The scalability and synergies of intangible investments also play a role in making leading firms more willing to invest. Leaders are more likely to be larger and grow faster and, therefore, to be able to take advantage of the scalability of intangibles. [...] They are more likely to possess other valuable intangibles that are synergistic with new investments they make.
We should consider the possibility that the true nature of intangible investment has changed. Maybe it conceals rent-seeking activities that superficially look like they increase productivity but actually do nothing of the sort.
The divides revealed by the UK's Brexit referendum and the election of Donald Trump also point to a different form of inequality, one that economists typically focus on little, if at all. This is inequality of esteem The reasons for the rise of populist political movements around the world, from the supporters of Donald Trump in the United States, to Britain's UK Independence Party, to the Five Star Movement in Italy are many and varied. But one thing many of their supporters repeatedly invoke is their anger at being patronised and disrespected by what they perceive as an out-of-touch, technocratic, even degenerate Establishment. Some of the supporters of these movements are are undoubtedly also poor in income or wealth terms - but not all. The inequality that fuels their anger seems to be as much about regard as money.
Different types of organisation will emerge, matched to the parts of the intangible economy they specialise in. Are you creating intangible assets (writing software, doing design, producing research)? If so, you probably want a flat organisation with more autonomy, fewer targets, and more access to the boss. That will cost you time on influence activities, but will build an organisation that allows information to flow, helps serendipitous interactions, and keeps the key talent. Are you using intangible assets (say, the routines in the Starbucks franchise book)? Then you probably want more control and authority to use the asset to its advantage and stop influence activities.