Shed Light on Your Dark Matter

The part of the universe visible from Earth has a diameter of about 92 billion light years. That means a beam of light, which travels at a rate of 671 million miles per hour, would take 92 billion years to travel from one end to the other. But even this mind-boggling measurement conveys just a fraction of its actual size, experts suspect.

Since at least the 1930s, physicists noted that galaxies spin and twirl in ways that the rules of gravity simply couldn’t explain. Their hypothesis? Massive, unseen forces are at work in the heavens. Insert some fancy calculations and you have the theory of dark matter.

Dark matter was given that name because there is no visible indication of its presence. It neither emits light nor absorbs it. Despite that, it’s all over the place. In fact, it accounts for an astounding 95 percent of the universe when combined with dark energy, a close relative.
So basically, the part of the universe we know exists — meaning we can touch, hear or see it — is just a tiny fraction of what’s actually out there. Instead, the universe is primarily made up of a vast, powerful and difficult-to-measure force that you can’t touch but nevertheless touches you.

Sounds a bit like the forces at work in today’s organizations. What is tangible, observable and measurable is only a fraction of what is inside. The rest is a critical mass of intangible assets — the dark matter of the business world.

Unlike property and physical products that can be clearly measured, assessed, amortized and depreciated, intangibles are immaterial yet important, difficult to quantify yet incredibly valuable. Like dark matter, they are all around even us even though we can’t always see them.

Intangible assets include things like brands, trademarks and designs, and they account for a disproportionate amount of value. If you took an iPhone apart and added up the cost of its component parts, it wouldn’t come anywhere close to warranting its $649 price tag. Yet legions of us drop that kind of cash without blinking, willing to pay a premium for elegant design and the value we place in the Apple brand.

Intangible assets are also things like intellectual capital, know-how and knowledge. Google’s market cap of more than $300 billion isn’t an assessment of its servers and machines, no matter how sophisticated they may be. Rather, the company’s $1,100 per share stock price is a reflection of the inherent value of its search algorithm and investors’ confidence in the continued innovation of its engineers.

In short, the primary value of your organization is locked up inside your human capital. Yet, most often the only financial embodiment of people is a line item on the ledger that sums up what they cost in salary and benefits.

That’s starting to change. An analysis by the Organization for Economic Co-operation and Development, a think tank of economic leaders from developed countries, estimates that intangibles account for almost one-fifth of economic growth since the 1980s. In the U.S. alone, investment in intangible assets is estimated to add up to $1 trillion annually. In July, the U.S. Bureau of Economic Analysis revised the way it calculates national GDP to incorporate intangibles like research and development, and designs, patents and copyrights.

All of this is a long-winded way of saying that, like the physicists who continue to tackle the mysteries of the universe, we’re starting to shed light on the dark matter that holds our organizations together. We’re collecting and analyzing more data than ever before on what motivates and drives performance. We’re developing new models and theories to explain what works and why.

For proof, look no further than the case studies we are putting front and center in this magazine. Organizations like Novelis, profiled in last month’s issue, or Cisco, profiled this month on page 36, aren’t just staring up at the skies. They’re studying what’s out there, developing theories and putting them into practice.

Their goal — and ours too — is to uncover ways to better manage that most valuable of business assets, talent. It’s still dark, but organizations are starting to shed new light on what really drives business.

Have a story to share about what you’re doing to inspire and marshal talent? Drop me a line at mikep@talentmgt.com.