People Are Assets, Not Expenses

The problem with so many businesses today is that they’re using an Industrial Model in an Information Age.

Let me explain.  The Industrial Model was based on the machine.  In fact, the machine was the main asset of the 20th century, and it enabled productivity to increase fifty times.   So it’s no wonder that so many businesses want to keep on using that model … because at one time it worked so well.  Seductively well.

Unfortunately, as the great historian Arnold Toynbee said, “You can pretty well summarize all of history in four words:  nothing fails like success.”

Even though we’re in a new age, the Information Age, some businesses are still trying to use the old machine model … and they wonder why struggle.

The Information Model is based on the knowledge of the worker.  It’s an altogether different model.    The new asset is intellectual and social capital — the qualities of people and the quality of the relationships they have with each other.

In reality, many companies “say” their people are their most important assets, but do they really mean it?  After all, when you look at a company’s profit-and-loss statement, you still find machines in the investment column and people are counted as expenses.