The act of a company opening its wallet…will likely find yet-to-be exploited (lucrative, competitive, revenue generating) intangible assets. I believe it’s variously short-sighted for ‘opening company wallets’ always be characterized as risk. Put another way, in my view, the act of ‘opening one’s wallet’ should not necessarily be viewed with dread by c-suites, nor merely constituting a prelude for inevitable risk.
When company’s do open their wallets, often the reason is to buy and/or invest…the objects of the buy – invest are likely to be various forms-categories of intangible assets. After all, it is a universal economic fact that 80+% of most company’s value, sources of revenue, innovation, and sustainability lie in – emerge directly from intangible assets, primarily in the form of intellectual, relationship, and structural capital. And, as posted here numerous times, if a company engages in effective pre-post transaction (intangible asset) due diligence, most, if not all of the presumed risk can be mitigated, if not prevented from materializing.
That said, seasoned (experienced) business decision makers and strategists recognize that most innovation…business in general, and markets, do not miraculously develop, grow, and expand without decision-makers executing on a willingness to engage in some level of risk, which again, will inevitably involved intangibles.
The assumption of risk is routinely preceded by a series of bold (tactical, strategic) moves…preferably executed in a sequential fashion. Preferably, actual and/or prospective competitors have yet to recognize this, or have exhibited little, if any, willingness – receptivity to take – engage in the level of risk.
My varied experiences as an intangible asset strategist and risk specialist…I have found most business initiatives seldom must rise to the level of ‘rocket science’ to mitigate or prevent. To be sure however, there are numerous c-suites and boards who view ‘taking risk’ primarily (or, only) involving the acquisition of sufficient capital to execute. But, through my lens, ‘capital’ need not be characterized exclusively as money, instead it may consist of investments in intangible forms of capital, which likely already exists – is present, if parties are aware and look. In these instances it becomes a matter of, if a company has not already done so, identifying, unraveling, developing, exploiting, and monetizing its internal intangibles.
As Russell Pearlman aptly asks in a February 15th, Korn Ferry Briefing Paper…where would Netflix be if it hadn’t poured billions into the unorthodox step of making its own television shows and movies, or Coach, if it hadn’t expanded well beyond its conventional style of leather hand bags?
To be sure, these are two, of countless examples in which decision makers have engaged in what I often refer to as ‘risk by necessity’, i.e., a company either elects to do it, and if not, its sustainability will be adversely and perhaps irrevocably marred.
Rarely has ‘the decision to open company wallets ever been so hard’, Pearlman suggests…but, a more prudent question in my view is, is business in-the-midst of a reviving global economy in which decision makers sense (believe, are advised) it’s the perfect time to be bold, i.e., a risk taker? Or, are stakeholder activists and stockholders questioning – balking at investment outlays, posits Pearlman? Is there a single right tract?
Risk taking almost always pares difficult decisions…however, if decision makers are receptive to viewing ‘opening the proverbial company wallet’ as a potential bounty of unrecognized, unused, under-utilized, and unvalued intangible assets (i.e., intellectual, structural, and relationship capital, in particular) then possibly, how risk is perceived may necessarily, be favorably altered!
Michael D. Moberly February 22, 2018 St. Louis firstname.lastname@example.org ‘A business intangible asset blog where attention span really matters’!