Soft Skills have to do with things that are hard to measure, things like managing relationships, emotional stability, happiness, contentment, morality and influence. Hard Skills are those that are easier to measure: profits, engineering, manufacturing, athletic performance, etc.
Kaplan and Norton at Harvard Business School wrote about strategic mapping. At the base of their four level model were “intangible assets.” Things that are hard to measure like human capital pools (the sum of what all the employees can do), social capital asset pools (the net sum of value created by the way people interact—can be positive or negative) and organizational capital pools (the value added or detracted by the way we are organized). These are intangible capital pools because unlike financial capital they are hard to measure and therefore don’t appear on your balance sheet and income statements.
The goal of executive management is to transform intangible asset pools into tangible results like sales and profits that DO appear on your balance sheets and income statements. These are “soft skills.” How does one measure HC+SC+OC?
Or take a more micro example: a doctor’s bedside manner. Or a salesperson’s style. Or a company’s culture. Let’s assume that all three are equal in skill set. The doctor can diagnose and treat appropriately. The sales person knows their product and how to sell. The company can produce a quality product or service.
Now add soft skills. If one can get the same product or service but in one place they get a poke in the eye and a kick in the shin and in the other place they get a Japanese haircut, which would they choose?
What’s a Japanese haircut? At 19, I went to live in Japan for a while. After a month I needed a haircut. Where to go? In Idaho a haircut consisted of an elderly man with a translucent nylon smock using rusty sheep shears going zip zip zip while watching a black and white television showing football reruns. Quick blower once over. Ten minutes in and out, ten bucks. The rusty shears would pull some hairs out leaving a little blood perhaps but pain at least. Next! And I’m itching all day long for the cut hairs down my neck.
I picked a random barber shop. Five young women in blue and white uniforms lined up and said, “Irrasshaimase!” “Please come into our humble shop.” The first young lady took me to the shampoo station and shampooed my hair not once but three times. The second young lady took me to the cutting station and instead of zip zip zip swipes, she made a perfect taper with comb and scissors (sharp no rust). It felt like she was cutting every hair individually. The third young lady took me to the shaving station and then with hot towels and hot lather and a straight razor shaved my cheeks, chin, neck and THEN to my surprise my forehead, nose, and ear lobes. And THEN she cut the hair out of my ears and nose! No blood. No pain. Then the fourth young lady took me to the, what I learned later was the differentiating factor, head and neck massage station. Ten minutes of incredibly soothing head and neck massage. The fifth young lady took me to the grooming station. Instead of a blower, she used a small vacuum! Genius! That felt like another massage. Groomed me and put something that smelled really good on there. Then, they all lined up and said, “One US dollar please, and come again soon!” My answer was, “Can we do it again right now?”
Was it a haircut or an experience? See Pine and Gilmore’s book, The Experience Economy. The profit margins are in the soft skills—the ability to understand customers well enough to give them a superior experience on top of presumed quality in product or service.
The experience economy is based on a set of VABEs that are very hard to imitate and copy. The VABE that if we give the customer a superior experience in addition to assumed core competency and quality, we can charge higher margins.
Soft skills are hard to imitate, hard to copy and therefore provide a superior, strategic, sustainable competitive advantage. (SSSCA)
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