The Leadership Capital Index
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The Leadership Capital Index

Realizing the Market Value of Leadership

Dave Ulrich
Berrett-Koehler, 2015
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

Almost every investor and business leader acknowledges the need for better methods for assessing the value of companies. The sum of an organization’s hard assets and its “intangibles” is too blunt an instrument. Investors seek insights about the quality of a firm’s workforce and, especially, its leadership, so they can make a more sophisticated, informed investing decision. Until now, the professional landscape offered few reliable, structured processes for measuring the quality of leaders. Once again, Dave Ulrich – arguably the foremost human capital thinker – provides the groundwork, in this case offering a tool set and a process that can change the game of valuing and rating companies. Long-term investors with significant assets to invest will gain the most from Ulrich’s process, but getAbstract believes it will also prove valuable to CEOs, board members, and anyone seeking a structured, evidence-based, rigorous method of evaluating organizational leadership.

Summary

Valuing Organizations

Over the past several decades, investors have evolved from valuing companies based solely on their ownership of “tangibles” – physical assets such as buildings, inventory, machines, fleets, and the like – to a better and more accurate measurement that includes their “intangibles” such as patents, talent, reputation, intellectual property, and more. Today, the value of most firms rests largely in their intangibles. In the developed world in particular, dynamic and fast-evolving economies reward companies that have good ideas and the ability to innovate rapidly and to adapt to unexpected market and technological change. By contrast, formerly iconic companies, even those with vast and valuable physical assets, often experience valuation decreases unless they demonstrate the ability to leverage talent and adapt to changing conditions.

Today, even adding intangibles and tangible assets doesn’t provide the complete package of data that investors need to value a company accurately. After investors assess and add up the broad measures of tangible and intangible assets, what remains is a blunt instrument for investment decisions that can risk millions ...

About the Author

A leading authority in HR and a thought leader on the Thinkers50 list, Dave Ulrich teaches business administration at the University of Michigan.

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