86 Leading with NLP
because of the way the expertise, intellectual capital and
imagination of its people have been harnessed. Buildings
are easily measured. Human imagination is not, but is worth
far more.
In 1988 Philip Morris bought Kraft for close to 13 billion
dollars. The hard assets, that is the buildings, offices, ware-
houses and real estate, were valued at about one and a half
billion dollars. The soft assets, the values, marketing ability,
brand equity and creativity were worth nearly seven times the
hard assets. The same pattern applies to any company
takeover. The ratio of a company’s stock market value to the
replacement value of its physical assets is known as the Tobin
ratio, after the Yale economics Laureate James Tobin. Some
typical ratios were calculated by Fortunemagazine in 1991 and
they ranged from eight to one for some software companies to
two to one for hardware companies with more physical stock.
Shared values and purpose lead to competitive advantage.
If an organization is not guided by shared values, layers of
management are needed to control the organization. Which
of the well-known multinational organizations of the world
do you think has the fewest layers of management? You
might guess it would have to be one based around values and
you would be right. It’s the Roman Catholic Church. The
Pope is at the top and after him come only cardinals and
bishops. Three layers. A community of faith by definition,
the Church has little need of a large management hierarchy.
Now which well-known multinational organization do you
think had the most layers of management? It would need to
be an organization where command and control were im-
portant, and where there was little trust. The answer: the
Russian Communist party. Springing from suspicion and
mistrust, it perpetuated suspicion and mistrust. It was a for-
midable hierarchy for stifling liberty and free ideas for over
50 years.
Politics and religion are two of the most emotive subjects
(perhaps because they are so closely allied with the other
two, money and death), so it is perhaps fitting that they hold
the records in these fraught areas.