Intangible Asset’s Contributory Value

February 21st, 2017. Published under Intangible asset mapping., Intangible asset valuation., Intangible assets contributory value.. No Comments.

Michael D. Moberly February 21, 2017 A business intangible asset blog where attention span really matters!

During several engagements, I observed clients becoming frustrated with some (conventional) methodologies for valuing their IA’s. With the intent to mitigate such distractions, I set about developing a respectfully informative basis upon which IA’s could be distinguished and values (i.e., role, worth, materiality) assigned which I refer to the ‘contributory value’ methodology. This methodology allows IA’s contributory value (role, worth, materiality, etc.) to be distinguished relative to a business, a specific project, research, and/or a transaction.

The ‘contributory value’ methodology itself, is not quantitative, in the conventional sense. That is, there is no (one-size-fits-all) mathematical equation or formula used here to calculate and ultimately assign dollar value (ranges) to IA’s. Instead, this methodology demonstrates – reveals graphically, how, where, when, and which IA’s affect (business) value, competitiveness, and revenue, and therefore, deliver – possess ‘contributory value’.

The distinctive simplicity of the contributory value methodology is very relevant to circumstances other than transactions in which IA’s are being bought, sold, transferred, licensed, etc. For example, conducting a contributory value assessment for a business-company, provides leaders and management teams with practical and strategic insights about how, where, when, and which IA’s are being applied (effectively, efficiently) and if – how they affect value, competitiveness, and revenue as well as lucrative strategies for amending the current situation.

The ‘contributory value’ methodology, applied in this context, also reveals (and unravels) far more about a business’s (IA) operational and financial state than conventional, standalone, snap-shots-in-time methods that do not wholly address IA’s relationship – connection, and contribution to other assets. Desirably, the ‘contributory value’ methodology brings clarity to IA valuation by emphasizing the interactive-collaborative relationship and connectivity to (other) IA’s.

My primary rationale for developing the ‘contributory value’ methodology is that it serve as a respectful segue to clients, unfamiliar with IA’s, to better understand and differentiate the how’s, the when’s, the where’s, and the way’s, which the IA’s they and their business produces, possesses, and uses (individually, collectively, collaboratively) affect and/or translate to value.

Too, the ‘contributory value’ approach, through its graphically descriptive content renders IA ‘contributions’ more recognizable, measurable, monitorable, and predictive, insofar as…

• their compatibility with a company’s mission, strategic planning, and operating culture, etc.

• the rapidity and repetitiveness which specific risks manifest to adversely affect any-all IA’s in play.

• evidence of IA compromise, materiality change, and/or value-competitive advantage erosion or dilution.

• executing new product development, launches, and market entry.

• their incorporation into business continuity/contingency (organizational resilience) planning.

• recognizing IA’s life, value, and functionality cycles.

• a means to kick start enterprise-wide IA intelligent culture.

Another equally valid reason for companies to apply the ‘contributory value’ methodology (product) is that, for the foreseeable future, only 20+/-% of the stock price of S&P firms, is explainable solely by the content of conventional balance sheets – financial statements, ala ‘book value’. (Adapted by Michael D. Moberly from the excellent work of Dr. Nir Kossovsky, CEO, Steel City Re)

Deploying Risk Mitigators For Intangible Assets

February 20th, 2017. Published under Due Diligence and Risk Assessments, Enterprise risk management., Sustainability of intangible assets.. No Comments.

Michael D. Moberly February 20, 2017 ‘A business intangible asset blog where attention span really matters’!

Deploying IA-specific ‘risk mitigators’, at the right time, to the right set of assets, and in the right manner can deliver obvious benefits, i.e., counter, prevent, and/or mitigate risk. Those are the obvious and desired outcomes. But, also, when company leadership and (risk) management teams recognize IA-specific risk mitigators are applicable-relevant to most any circumstance where valuable – revenue generating – competitive advantage producing IA’s are being developed and/or already in play, their contributory value rises accordingly.

For most business circumstances, the presence of and the potential for significant (IA specific) risk to materialize and variously jeopardize an IA-dominant undertaking or transaction is real and persistent. The initial management team action, in my judgment, preferably undertaken in advance, should be to do what is necessary to try to mitigate or prevent those risks from materializing – elevating to the point they can adversely (irreversibly) affect an outcome.

Effectively mitigating-preventing risks directed to undertakings dominated by IA’s or myriad of other business transaction circumstances, for that matter, lie in recognizing that putting risk mitigators in place, at the right time, focused on the right set of assets, i.e., those in play, and in the right manner, can deliver obvious and necessary benefits. The benefits are two-pronged, i.e., (1,) to thwart, counter, and mitigate risk, and (2.) measurably contribute to more valuable and competitive (desired) outcomes.

Those business leaders and management teams who assume risks to a IA’s can be adequately dealt with via the purchase of conventional business insurance (riders), without deploying risk mitigators, I suggest, have misread – misunderstood the current risk environment. That is, the ‘keystroke speed’ and asset-specific targeting capabilities of ultra-sophisticated and predatorial global economic and competitive advantage adversaries with advanced data mining technologies, have indeed become the norm, certainly not an anecdotal (one off) exception.

The effective and timely deployment of IA-specific risk mitigators (at the right time, right place, and right way) are businesses’ prelude to – segue for ensuring the IA’s in play remain as fully intact as possible in terms of their capability to continue to generate value, produce sources of revenue, and underlie competitive advantages.

The primary objectives to deploying IA-specific risk mitigators are to affect the assets’, and their holders’ receptivity – vulnerability to compromise and/or undermining throughout the contributory value – materiality cycle of the assets. This is best achieved when there are coordinated processes – actions in place to recognize, monitor, sustain, and acknowledge…

• asset’s exposure to costly and momentum stifling (risk) acts-events.
• IA’s contributory role and value will favorably distinguish companies
within their sector.
• necessary levels of control, use, ownership, value, equity, and resilience
for the IA’s.
• deployment of IA-specific risk mitigators are not mere operational
electives that can be dropped, dismissed, or delayed indefinitely.

As consistently conveyed since the ‘Business IP and Intangible Asset Blog’ published its initial post in May, 2006, whenever, however, and wherever valuable, revenue generating, and competitive advantage IA’s are in play, company-business leadership and management teams are obliged to consider there will be various types, levels, and motives for (IA-specific) risks to materialize.

The acts of, assessing and monitoring IA-specific risks and identifying effective techniques – strategies to prevent, mitigate, or neutralize, does not require leaders to reach beyond-outside their professional domains of expertise in order to take the necessary action.

Perhaps the most important-relevant component to IA-specific risk mitigation is to…

avoid making purely arbitrary-subjective assumptions about
circumstances when, where, how, and why particular IA’s are
in play and their vulnerability to risk, e.g., fragility,
stability, defensibility, and liquidity if-when compromised.

A common denominator to most all IA-specific risk (and, management) is the persistent presence of (global) economic and competitive advantage (legacy free) adversaries, ultra-sophisticated data mining technologies and methodologies, anyone-of-which by their actions and capabilities, impose consistent risk.

Intangible Asset Pre-Post Due Diligence

February 17th, 2017. Published under Business Transactions, Due Diligence and Risk Assessments. No Comments.

Michael D. Moberly February 17, 2017 ‘A business intangible asset blog where attention span really matters!

Re: Mergers – Acquisitions – VC – Market Entry Planning – Litigation Support – University-Corporate Research Alliances -Organizational Resilience

Regardless of however, whenever, wherever, or why IA’s are in play (relative to the various types of transaction noted above) IA specific, and pre-post due diligence is absolutely-essential to each type-category of business undertaking and/or circumstance.

Conceptually, the purpose (intent, objective) for designing pre – post IA-specific due diligence is multi-fold…

1. It is an irreversible and globally universal economic fact (business reality) that 80+% of most company’s value, sources of revenue, and ‘building blocks’ to competitive advantage, reputation, and sustainability lie in – emerge directly from IA’s.

2. When companies, particularly ‘IA intensive and dependent’ ones engage in any type of transaction, it is highly like their IA’s will be in play.

3. A key objective of conducting both pre, and post IA due diligence is to ensure the value, revenue generation capabilities, competitive advantages, and reputation, etc., produced by the IA’s in play, are, and will remain fully intact and the risks will be known and satisfactorily mitigated on both (pre, and post) sides of the transaction.

So, in circumstances in which…

• there has been no due diligence conducted specific to the key IA’s in
play, or

• the due diligence conducted was absent specificity, i.e., was
generic, ‘one-size-fits-all’ and resembled a conventional ‘check-the-box’
(due diligence) template more relevant to physical-tangible assets than
IA’s, or

• due diligence was conducted by personnel operationally unfamiliar with…

o IA’s and their contributory role(s) to retaining transaction value,
revenue generation, competitive advantage, and reputation, etc.,

o risks specific to IA’s that will, when they materialize, adversely
affect (undermine) IA’s contributory value, competitiveness,
transaction sustainability, and likely escalate reputation risk.

In circumstances when one, all, or a variation of the above occurs, the risk portrait for both the transaction and the IA’s in play will very likely shift from the probable to the inevitable, and that’s a ‘bad thing’ for investors and transaction sustainability.

Circumstances such as this, make it all-the-more essential for companies to have expertise at the ready to conduct effective and IA specific pre-post transaction due diligence. And, also, recognize how to leverage – exploit pertinent revelations (emerging from the due diligence) to…

• provide timely – objective insight to principals, i.e., regarding the
status, stability, fragility, defensibility, and sustainability of key
IA’s in play.

• serve as legitimate entrée for re-negotiating transaction terms, i.e.,
o increase probability transaction party will be positioned to hand-off
more valuable, uncontested, and competitive IA’s.
o reduce probability of incurring time consuming, costly, and momentum
stifling disputes that undermine IA contributory value and competitive
advantages.

• elevate principle’s confidence in invest-don’t invest, buy-don’t buy
decisions.

• ensure legitimacy-authenticity of the origins, ownership, contributory
value, and competitive advantages of the IA’s in play.

• determine why, how, who, and when the IA’s in play were targeted, risks
attached and materialized, and asset value-competitive advantage
hemorrhaging commenced, and by how much.

Thresholds – Tolerances For IA Risk Management…

February 16th, 2017. Published under 'Safeguarding Intangible Assets', Intangible asset risk tolerances and thresholds.. No Comments.

Michael D. Moberly February 15, 2017 ‘A business intangible asset blog where attention span really matters’!

The manner-in-which companies – businesses, and their leadership, approach, prepare for, and ultimately respond to the potential for and/or the materialization of risk(s) to their IA’s, as one may expect, varies considerably. Practically speaking, I find the most significant variable is learning whether business leaders I have engaged even conceive of risk (exposure) in threshold or tolerance contexts. With little doubt, there is far more attention paid to the cost of premiums and total dollar limits to the occurrence of a specific adverse event. So, it becomes more of a matter of business-company leadership equating or assuming their threshold and/or tolerance for risk is reflected in the insurance plan and/or insurer in which they have struck a deal. However, truth-be-told, in a large percentage of conversations between insurers and insureds, the words ‘intangible assets’ seldom, if ever, are a distinct-separate aspect to such discussions.

Of course, there is a percentage of forward looking – thinking business leaders and management teams who recognize the absolute importance of anticipating and trying to mitigate IA-specific risk, which is what we are about here. After all, it is economic fact that 80+% of most company’s value, sources of revenue, competitive advantage, and reputation lie in – emerge directly from IA’s. Experience suggests however, that IA specific risk, if-when it is distinguished from other (general) types-categories of risk, many of which remain fixated on tangible-physical assets, is likely to be-a-reflection of and addressed relative to (subjectively) pre-determined (risk) thresholds and/or tolerances of insurers and underwriters. This conventional approach of course, is generally weighted toward the type and content of a company’s physical-tangible products and services vs. the contributions of intangibles.

It is after all, the manner-in-which the company’s IA’s are integrated and applied to those products and/or services that individually or collectively elevate their value, competitiveness, and revenue generation capacity. Ironically, it is those same intangible features and characteristics, i.e., inputs, which simultaneously find attractivity-appeal to global cadres of ultra-sophisticated economic and competitive advantage adversaries.
This leads to another facet of IA risk management which is emerging with consistent frequency and is a consequence of a management team’s felt obligation and/or necessity to ‘get to the market space first’ with their innovation, product, or service. In other words, the go fast, go hard, go global phenomenon is itself a driver of risk to IA’s. In these circumstances, risk is likely to materialize at a very rapid pace commensurate with the accelerated investment, innovation, and product development-launch cycles, etc., which are necessary to the race to be first. Therefore, IA risk is indeed relevant to the globally predatorial and ‘legacy free’ entities, operating at each stage of product-service development functions, which includes drawing economic-competitive advantage information from targeted-companies’ value, supply, and distribution chains, which…

• adversely affects the fragility, stability, and defensibility of
(targeted) IA’s.

• renders IA’s more distinguishable and thus, their content, more vulnerable
to (specific, targeted) compromise, infringement, competitive advantage
undermining, and value dilution.

• creates more fertile ground for reputation risk(s) to materialize.

Still, another (third) facet of IA-specific risk management lies within company leadership who (mistakenly) assume IA’s constitute infinite resources which are readily and fully renewable, retrievable, recapturable should they be subject to compromise, infringement, or undermining, etc. Those holding such perspectives usually find fewer distinctions between IA’s and tangible assets, even, sometimes, espousing the former are mere extensions of the latter which presumably can be repaired, restored, and returned to productive – operational status in relatively brief periods of time following an adverse act or event. In this reality, IA’s exist primarily-variously in the form of intellectual, structural, and/or relationship capital and often are more fragile and diverse. Thus IA’s tend to be more challenging, costly, and time consuming to replicate, i.e., develop and exploit in a manner that is equally collaborative, competitive, and profitable as before.

For these reasons, I am suggesting, it would be prudent to characterize any one, or combination of the risk management issues cited above, not in contexts of if, rather, in context of when they will materialize and the specificity, depth, and/or breadth which the risk will manifest. Corollaries to these particular-characterizations of IA risk management is another aspect which I call ‘risk illiteracy’. I define ‘IA risk illiteracy’ as an absence of operational awareness-familiarity for the need of having, at the ready, rapid and effective mitigation – intervention measures specific to a company’s valuable and competitive advantage IA’s.
IA risks that do materialize will, in most instances, alter the parameters of a businesses’ tolerance, threshold, and literacy of risk, irrespective of a companies’ – businesses size, sector, maturity, and/or financial health.

To be sure, risks to IA’s, representing most all types and categories, are persistent and can materialize even in circumstances in which experienced and talented management teams are in the lead. Of course, a percentage of business leaders, whether they acknowledge it, or not, signal their thresholds and/or tolerances for risk to the IA’s under their (company’s) control, use, and ownership. Of late, this is especially relevant to IA risks that can materialize at ‘keystroke speed’ to adversely impact (product-service) value, revenue, competitive advantages, sustainability, and equity, ala reputation risks.

Ultimately, a company’s thresholds-tolerances for IA risk, which each presumably signals or establishes, should never be of the one-size-fits-all variety. That’s because, in large part, the materiality of IA’s can fluctuate, ala their fragility, defensibility, sustainability, and contributory values. Instead, company leadership and management teams are obliged to consider (assess – factor) IA risk management variables such as…

• speed of (risk) materialization and its expansion – embeddedness
throughout an enterprise.

• criticality of risks to all or specific parts/units of a company and its
products and services.

• a company’s current capabilities and speed which it can mitigate –
neutralize risk(s).

• a company’s overall resiliency, ala recuperative capabilities as a target
of a materialized risk vis-à-vis customers, clients, consumers, and
suppliers, etc.

As such, business leadership and management teams are obliged to approach and engage IA risk mitigation and management as integral to structuring (engaging, undertaking, negotiating, and executing) any new business initiative, transaction, product-service rollout, R&D, etc.

Intangible Assets Integral to Transaction Negotiation Strategy

February 14th, 2017. Published under Business Transactions, Intangible asset strategy, Transaction negotiations and intangible assets.. No Comments.

Michael D. Moberly February 14, 2017 A business blog where attention span really matters!

Management teams’ who commence negotiating a business transaction based on a strategy which has been framed predominantly, if not solely, on the content of a (conventional) balance sheet and/or financial statement, which as noted here, are variously dismissive of – omit acknowledging contributory role, value, and competitive advantages produced by IA’s (intangible assets) will lead (unnecessarily) to impasses and/or ‘walk-aways’. Both rise in probability when either party enters a negotiation absent benefits of being operationally familiar with the IA’s that will inevitably be in play!

True, IA’s are seldom, if ever reported (accounted for) in conventional financial statements, balance sheets, or valuations. Such omissions (under or non-reporting of IA’s) are tolerated because accountants, auditors, valuators, tax, and legal sectors are obliged to interpret – report IA’s in accordance with the various standards-statutes set forth by relevant state-federal regulatory-oversight bodies, academic disciplines, and professional association certification. Operationally, these obligations, given their origins in statutes and standards, translate as predispositions to conceive- apply IA’s in quite narrow contexts, and perhaps worse, are likely to be characterized as mere conglomerations of undifferentiated goodwill. Please note, for the record, ‘goodwill’ is but one (single) type or category of IA.

Of course, those perspectives about IA’s stand apart from the broader – more expansive context for addressing – executing on IA’s espoused here which solidly originate in the economic fact – business reality that 80+% of most company’s value and sources of revenue, etc., lie in – emerge directly from IA’s. This economic fact should not go in-noticed or under-estimated, particularly when negotiating most any transactions’ value, competitive advantages, sector standing, and future performance.

Achieving operational familiarity with IA’s in advance, warrants attention here and now because anyone with responsibility for negotiating a business transaction, but commence it, absent familiarity with IA’s will surely find themselves, and whomever they represent, negotiating with an incomplete portrait of the other parties assets, how those assets will be (are) in play, and can influence (negotiation, transaction) outcomes, i.e., success, sustainability, and profitability, or failure. This oversight (neglect, dismissiveness) can also serve (unnecessarily) as entrees upon which (negotiation) confusion, distortions, unsubstantiated generalities, impasses, and walk-aways will undoubtedly occur.

So, in my judgment, business leadership and management teams that have achieved IA operational familiarity in advance of a transaction overture, i.e., they recognize the presence, contributory role, value, and competitive advantages produced by IA’s, will clearly have a strategic (lucrative, competitive) advantage. This is particularly apropos as growing percentages of industry, trade, and commerce, globally, originate from IA intensive and dependent businesses.

With respectful confidence, the clarity, differentiation, performance measuring, and valuing of IA’s advocated here and recognized as (transaction) negotiation requisites, will sure to lead to more lucrative, competitive, and sustainable (project, transaction) outcomes, whenever, however, or wherever IA’s, are in play.

On the other hand, when-if transaction negotiations, preliminary or otherwise, are undertaken absent leadership-management team acknowledgement for IA development, contributory value, competitive advantage, materiality, and risk, etc., will likely experience outcomes that produce substantially less value, revenue, competitiveness, and sustainability that projected and desired, which frequently translates as some level of failure and unnecessary squandering of resources with little or no return.

Prudent objectives for business leadership and transaction negotiation management teams are to…

• acquire sufficient operational familiarity with key (operational) IA’s of
their firm, but equally important, the firm(s) in which interest is being
exhibited.

• of course, learning how to do this objectively and distinguish
the relevant from the irrelevant are essential in terms of efficiency,
effectiveness, and framing strategy-tactics and values.

Respectfully, it’s worth noting again, if IA’s are omitted, dismissed, or otherwise deemed irrelevant to a (business transaction) negotiation in which IA’s and tangible-physical assets will be bought, sold, traded, etc., but subordinates the IA’s in play to convention and/or past practice, it’s likely outcomes will be measurably less lucrative, competitive, and sustainable, but carry higher risks, as they otherwise could.

On the other hand, correctly identifying IA’s in play, whether it is for strategic-tactical planning, decision making, and/or negotiations are not responsibilities relevant only to Fortune-ranked firms. Instead, IA’s play clear and important roles in small and medium-sized companies, businesses, and start-ups!

Intangible Asset Side of Business Habituation Can Be An Impediment

February 13th, 2017. Published under Fiduciary Responsibility, Intangible asset training for management teams., Managing intangible assets, Uncategorized. No Comments.

Michael D. Moberly February 13, 2017 A business blog about intangible assets where attention span really matters!

Business acumen acquired from – retained through personal experience permits most of us to ‘encode’ repetitive activities and processes (we engage in) as habits, which, in turn, allows us to free up ‘brain space’ to learn new things. This encoding process is referred to as habituation.

Habituation however, may not always translate – manifest as (business) improvements, new practices, or creating much needed efficiencies. Instead, in its extreme, ‘habituation’ that manifests as unquestioned adherence – attachment to perpetuating past practice and/or convention, without considering some may be variously obsolete, nearing irrelevance, or wholly uncompetitive, can, quite literally, push economic realities, ala IA’s, off ‘the proverbial table’ and strategic planning radar screens to be obstructions to business competitiveness, sustainability, and viable paths to creating value and (new, additional) sources of revenue.

When one recognizes how to differentiate habitual (sometimes trivial) details from those which are genuinely relevant, competitive, and value-revenue creating, ala IA-related, vs. merely continuing to approach-execute certain practices and/or processes because ‘we have always done it this way’ (with no intent-desire to change) is habituation, perhaps in its most extreme form.

There are many good and relevant reasons why we (our brains, personalities) are receptive to habituation. One is, if habituation were absent, proponents would argue we would likely be destined to consistently taking notice of and acting on relatively inconsequential minutia – details of work. Doing so would likely impede, if not limit our work effectiveness and efficiency. That’s because, presumably it would leave little time or inclination to notice or learn new things, i.e., change that could favorably affect the way we approach, engage, execute (our) work-job.

A relevant, all-be-it comedic example of this is (comedian) Jerry Seinfeld’s career which his followers recognize has largely been built on making light of the supercilious minutia of life behaviors and processes which most of us accept and comply with as mere unquestioned realities, i.e., this is the way someone decided it should be done, and it may never rise to a level that prompts us to question why!

Yes, it’s a generalization, but, many successful business persons, are often ‘wired’ to not just notice changes in habits, life expectations, and tolerance, and re-cast them in question contexts, i.e., ‘what could be’? For example, ask, what product-service could be developed, reconfigured, modified, etc., to ‘scratch an itch’ affecting significant and diverse percentages of populations, how much will it cost to produce and market, how quickly can it be brought to market, and what are the risks of doing so, and, if so, what, when, where, and how will they materialize?

These, so-called ‘wired’ individuals, often go multiple steps insofar as anticipating, seeking, embracing, and internalizing change, and how to translate same to develop, monetize, and commercialize discoveries, technologies, and products, embedded with IA’s, often, long before it materializes in a Jerry Seinfeld comedy sketch. Wired individuals are inclined to recognize-distinguish ‘benefits and beneficiaries’ in futuristic contexts vs. recognizing its existence and affects after the fact.

In one sense, this-is-why I frequently characterize my work, as strangely as this may appear to some, as consistently viewing business-company operability through an intangible asset lens. More specifically, during engagements, I respectfully examine actions and perspectives conveyed by business leadership and company management teams in the context of how, why, where, when, and circumstances in which (their) IA’s are used – leveraged (or, not) and how either impacts or contributes to a specific outcome favorably or unfavorably.

It’s not particularly challenging, I find, for business pundits to equate (critique) a company’s missteps or miscues subjectively as missed opportunities. On the other hand, it’s substantially more challenging to correctly define and collaboratively resolve challenges – risks related to business value, sources of revenue, competitive advantages, and reputation that originate – are embedded in non-physical (intangible) assets, which, irrespective of their contributory value, are seldom, if ever, mentioned.

So, when I am engaged with-by clients and companies about their IA’s, i.e., to facilitate-enable lucrative and competitive treatments-applications, I recognize, respectfully so, there have likely been multiple and various circumstances arise previously that singularly or collectively elevated awareness and importance of particular-IA’s. When this occurs, it allows those experiencing – achieving IA operational familiarity, substantially and operationally, better positioned to recognize-examine their IA circumstances to determine if such preludes were and remain present, i.e., determine-assess if, when, where, and how IA’s are being acknowledged and utilized effectively, lucratively, and competitively.

Why am I addressing this? It’s because forward looking-thinking business leaders and management teams are becoming more adept at recognizing – distinguishing processes, initiatives, risk, transactions, and challenges, etc., through IA lens, all-be-it often filtered through conventional sense of (tangible asset) physicality. In the pre-knowledge worker era, obviously previous-to recognizing IA’s contributory role and value to businesses and companies, it was largely assumed that innovation, transaction success, mitigating risks, and/or resolving challenges could be accomplished by simpler (physical) techniques, e.g., deciding which knobs needed adjusting, which screws needed tightening, or which moving parts needed lubrication, etc. In other words, physical methodologies were routinely attached to both the execution and resolution side.

Today, however, it’s a globally universal economic fact that 80+% of most company’s value (sources of revenue, competitive advantage, etc.) lie in – evolve directly from IA’s. A logical extension of this economic fact is that the value and/or pricing of a transaction is reflected in the IA’s in play. This has relevance on several levels, perhaps the most significant is the necessity for business leadership – management teams to recognize the intangible (invisible – non-physical) elements in value, competitiveness, and sustainability, etc., and address them accordingly. (The above was substantially modified by Michael D. Moberly from Tony Fadel’s, March 2015, TEDTalk titled ‘The first secret of design, is noticing’.)

Intangible Assets, What Companies, Management Teams Are Obliged To Know Now!

February 11th, 2017. Published under Board oversight, Business Transactions, Fiduciary Responsibility, Intangible asset strategy. No Comments.

Michael D. Moberly February 11, 2017 A business blog where attention span really matters!

Integral to business operability, and certainly as a prelude to undertaking – engaging in any new initiative or transaction wherein IA’s are ‘in play’, i.e., bought, sold, acquired, or traded, etc., leadership and management teams are obliged to know, with sufficient specificity, how to distinguish, measure, and monitor…
• what IA’s are, their rightful owner-originator, and which IA’s are in play.
• IA’s contributory role to value, revenue, competitive advantages, and asset commercialization opportunities.
• IA value and performance throughout their respective life, value, materiality, and functionality cycles.
• and, identify and mitigate IA risks in both pre, and post (transaction) contexts, particularly risks which, if materialized, would undermine – erode asset value, a project’s momentum, and most, if not all, competitive advantages.

Today, with ‘keystroke capability’, businesses can rapidly engage in global competition and enter new markets, each variously enabled by at will access to ‘always on’ worldwide (intermodal) supply and distribution channels ala air freight carriers, containerized ocean-rail shipping, and e-commerce.

These comparatively new, but, very integral enablers – components to global trade are consistently tweaking their ‘logistics’ through inputs of intellectual, relationship, and structural capital, ala IA’s, to create more efficiency, speed, capacity, and on-time delivery. Such capabilities permit mature, new, and emerging businesses alike, regardless of size, sector, location, product, or volume, to distribute their products and services whenever and wherever markets exist, or are emerging, and do so rapidly and absent the burdensome expense and time to independently configure conventional supply-distribution channels.

The at will availability-access to these now ‘infrastructured’ intermodal services represent factors that further influence business leadership to look – think more forwardly, e.g., consider where, when, how, and which type-category of IA (ala, collaborations of intellectual, structural, and relationship capital, etc.) should be introduced to produce the most effective, competitive, and profitable outcomes.

A parallel aspect to these ‘infrastructered’ intermodal assets, is recognizing the necessity to consistently invest in developing, acquiring, and integrating nuanced-specific IA’s to accommodate continuous improvement, create efficiencies, sustain-build competitive advantages, increase-stabilize company-IA value, and utilized-exploited to develop new-additional sources of revenue.

An especially important capability, of course, is being able to determine their (IA’s) impact on – relationship to company-shareholder value. This value, in my judgement, and that of others, should no longer be limited by either the content or how conventional balance sheets and financial statements are framed. Instead, company (business) value should convey whether-or-not, i.e., a measure of how well, a company develops, safeguards, uses, and exploits IA’s under its control, e.g., as coordinated spring boards, building blocks, and/or paths to elevating (asset) value, revenue, competitive advantages, and wealth creation potential.

It is indeed an understatement, to assume business operability today is enmeshed in anything less than a ‘sea change’ as its operational interface with IA’s rise routinely. The IA phenomenon is, what I refer to, euphemistically, as an ‘inevitable unknown’. By that, I mean, there were numerous indicators appearing within and throughout companies and businesses, often, in advance of the publication of respected studies which surfaced IA’s actual (contributory) role and value, had more attention been paid.

So, another upshot to this total economic shift to IA’s is business leadership directing – allocating proportionately fewer resources to company’s physical-tangible assets and more resources to IA’s in play, i.e., their development, monetization, and exploitation of (their) competitive-creative capital.

For all the forward-looking insights that surfaced through the Brookings Institution’s ‘Intangibles Project’ and complimentary research conducted in the EU, there is no indication these projects were undertaken solely or even primarily, to influence revisions to conventional (IA) reporting, accounting, taxing, or the standards, statues, and regulations the relevant professions are obliged to uphold. But, to be sure, notions to that affect have occurred.

Intangible Asset Global Shift

February 10th, 2017. Published under Fiduciary Responsibility, Intangible asset training for management teams., Intangibles as strategic assets. No Comments.

Michael D. Moberly February, 10, 2017 A business blog where attention span really matters!

Indeed, country economies have rapidly entered and connected to an era irreversibly intertwined, at all levels and functions, in which IA’s (intangible assets) are the overwhelmingly dominant ‘players and actors’ as sources of revenue, value, competitive advantage, and sustainability, all of which I believe, we are in the early stages.

This translates as most companies and businesses, irrespective of sector, are, whether recognized or not, have shifted economically away from reliance on – applications of tangible-physical assets to being irreversibly attached to – dominated by intangible – non-physical assets. In other words, the IA era which influenced growing percentages of business – company leadership and management teams to engage their IA’s (functionally, operationally, competitively, and monetarily), some for the first time, is now indeed, for many, a permanent component to c-suite agenda’s.

That is not to suggest dependence – reliance on (conventional) tangible – physical assets has been completely eliminated to the point of absence. Instead, it means business leadership are variously (fiduciarily) obliged to recognize that business competitiveness, value, and revenue generation, etc., require IA inputs to achieve desired outcomes.

Starting in the mid-to-late 1990’s, I had the good fortune, and perhaps good sense, while faculty engaged in security-asset protection studies at Southern Illinois University, to read-study early products (chapters) of a multi-year project undertaken by The Brookings Institution titled ‘Understanding Intangible Sources of Value’. The principle investigators-authors of the project, several of whom I engaged at the time in discussion for clarity and insight, were a strong troupe of forward looking-thinking professionals. Most, to my recollection, were not exclusively schooled in economics per se, but never-the-less, experienced and respected practitioners who clearly understood the impending prominence – dependence on IA’s. For me, that Brookings’ project remains a very insightful treatise, certainly equal to the fine work on IA’s developed-produced at prominent institutions in the UK and Sweden.

To be sure, IA’s, still prompts some debate in certain quarters, debate that is less about the existence and presence of IA’s, and their contributory role and value they consistently play in business operability, innovation, and transactions, etc., and more about how to report IA’s relative to convention and profession specific standards, practices, and statutes.

Arguably, the IA ‘sea change’ for business, grew out of various consternations that conventional financial statements and balance sheets largely dominated by ‘tangible assets’ and to the exclusion or, at the very least, minimization of IA’s. Among the key arguments of IA proponents, aspects of which remain today, is that continued adherence to conventional asset reporting and accounting, (that essentially excludes IA’s) is insufficient, insofar as painting a complete and accurate portrait of a company’s financial wealth, health, potential, and competitive standing. This argument is all-the-more-relevant now, given the economic fact that substantial percentages (80+%) of most company’s value, revenue, and competitive advantage derived directly from IA’s.

Companies and Management Teams Can Run, But They Can’t Hide From Intangible Assets!

January 2nd, 2017. Published under Fiduciary Responsibility, Intangible asset strategy, Intangible asset training for management teams.. No Comments.

Michael D. Moberly   January 2, 2017   ‘A business blog where attention span really matters’!

Let’s be clear, IA’s (intangible assets) are thoroughly and irreversibly embedded in business operability as enablers and sources of value, revenue, and competitive advantage which manifest as variations-collaborations of intellectual, relationship, and/or structural capital.

One perspective I hear voiced about IA’s with some frequency in routine encounters with company-business leadership and management teams is their over-dramatization of a perception that the introduction of IA’s to company operability requires substantial company-wide adjustments as preludes to execution.  Too, their perceptions are often conveyed with a sense of enormity, i.e., execution will entail significant outlays of time, resources, and managerial, operational, and even cultural change before returns may be realized.  Such perceptions, unfortunate as they are, will likely persist as long as business leadership and management teams approach ‘change’ to convention, past practice, or company culture, ala executing on their IA’s, through the traditional lens of (a.) how long will it take, (b.) how much will it cost, or worse, (c.) assuming their company neither produces nor possesses any IA’s that produce value, enable new sources of revenue or competitive advantage.

Aside from fiduciary responsibilities conveyed in Stone v. Ritter, which directed attention to the stewardship, oversight, and management of company’s IA’s, business leaders and management teams may act as dismissively as they wish with respect to whether they engage their IA’s or not!

My experiences suggest that when company leadership exhibits hesitancy and/or reluctance to engage their IA’s, outcomes can vary.  Yes, one is, their company may eventually ‘muddle through’.  But, when they are inevitably influenced-prompted by logic and competitiveness to engage their IA’s, such actions often manifest in crisis and/or urgency contexts.

Proceeding with IA execution, absent sufficient operational familiarity with IA’s will likely surface numerous disenchanting missteps, miscues, frustration, and minimal patience which influences an initial focus on near-term outcomes.  Such circumstances, in turn, minimize confidence in going forward, i.e., IA conversion to sources of revenue, value, and competitive advantage, in strategic contexts. Quality and thorough IA operational familiarity remains the most important step off point for execution.

It is true, some company leadership and management teams believe they can still run from their IA’s.  But, many more are finding it increasingly challenging to continue to hide from (ignore, dismiss) their IA’s!  After all, it is a globally universal economic fact that 80+% of most companies value, sources of revenue, and ‘building blocks’ for future wealth creation, competitiveness, sustainability, and profitability today, lie in – derive directly from IA’s.  No hiding or running from this, unless, that is, failure is an option!

Growing numbers of us are employed in sector-specific organizations in which growing percentages of company’s which are IA intensive and dependent.  More specifically, the contributory value many of us make to our  employer – company (as employees, individuals, professionals) manifest as forms-variants of intellectual, relationship, competitive, collaborative, creative, and/or structural capital, ala IA’s.  Of course, I am not suggesting people-employees are mere collections of exploitable IA’s, indeed, we are much more than that.  In comparison, it is reasonable to consider that many of the (personal, professional) returns one receives from their education, employment, skill sets, family, leisure, etc., are genuinely intangible.  Individually – collectively each serve as potential pathways to (personal) satisfaction, fulfillment, sense of dignity, and self-worth, etc., not terribly unlike a businesses very valuable reputation, brand, image, and goodwill, etc.

In business management and organizational behavior contexts, acquiring-possessing attributes such as these and having them manifest through our work (product) should come as no surprise!  Shouldn’t the same be applied to company-business operation?

Through my lens as an IA strategist, risk specialist, and trainer, for every transaction, operation, or initiative a business or company undertakes and/or engages, there are (fiduciary) responsibilities to maximize, extract, and safeguard as much value and competitive advantage as possible from the IA’s in play!  This is important because it is an undisputed, irreversible, and globally universal economic fact that, for an overwhelming percentage of companies today, 80+% of their value, sources of revenue, and pathways for sustainable growth, wealth creation, competitiveness, and reputation, lie in – draw directly from collaborations of, usually existing-internal IA’s.

In other words, growing percentages of businesses-companies, irrespective of sector, size, revenue, or maturation, are now IA intensive and dependent. This means IA’s are integral to company operability and sustainability. For example, intellectual, structural, and relationship capital as types-categories of IA’s, can manifest as operation and/or transaction specific knowhow and efficiencies, which should generally be considered proprietary. As such, IA’s are now far more than mere tools to manage other (usually tangible-physical) assets.  Instead, IA’s can be standalone or collaborative commodities with varying cycles of contributory value, functionality, materiality, and risk attached.  (Adapted by Michael D. Moberly from the work by Anne Wells Branscomb.)

Methodology For Assessing IA’s Contributory Value To Companies!

December 30th, 2016. Published under Intangible Asset Value. No Comments.

Michael D. Moberly   December 31, 2016    ‘A business blog where attention span really matters’!

The methodology I developed to assess the contributory role and value of IA’s (intangible assets) is designed to influence – guide clients toward recognizing how-ways in which IA’s underwrite their company’s-businesses value, serve as starting points for generating revenue, competitiveness, and future wealth creation.  This methodology commences by identifying-examining, among other things…

  • centers or clusters of standalone, under-utilized, under-valued, or under-performing IA’s.
  • how or whether key IA’s are (collaboratively) effectively interwoven to favorably influence a particular project, initiative, or transaction.
  • how the IA’s collectively – collaboratively contribute to a company’s overall IA intensity and dependency.
  • the compatibility of its IA’s with the company’s mission (statement), strategic planning, and its cultural – structural capital.
  • the prevalence and speed which particular risks, threats, vulnerabilities, and liabilities manifest to adversely affect any-all IA’s in play.
  • evidence of IA losses, compromises, materiality changes, and presence of current and/or horizontal risks.
  • projected returns from its IA’s and contributions to the company’s competitive position within its market-sector.
  • IA’s contributions to producing synergies, efficiencies for the company.
  • how-ways which IA’s contribute to executing (new) market entry planning.
  • evidence of IA’s contribution to enterprise wide (IA intelligent) company culture.
  • how-ways which IA’s are incorporated into business continuity/contingency (organizational resilience) planning.
  • life, value, functionality, and risk cycles of IA’s in play.

Regardless of the venue which clients-companies prefer for the delivery of IA advisory services, I consistently draw their attention to this ‘contributory value’ process.  In large part, that’s because I believe this methodology reveals far more than conventional snap-shot-in-time portraits of IA assessment.  IA’s contributory value is the asset’s assessed relationship, connection, collaboration with other IA’s within a company.  After all, today, and for the foreseeable future, only 20+/-% of the stock price of S&P companies is explainable via conventional balance sheet – financial statement (book value).

The contributory value methodology framed above is executed with the view…

  • that IA’s can exist as standalone or integrated clusters-bundles of intellectual, structural, relationship capital, and
  • how those IA’s contribute to (current, future) projects, products, services, ventures, R&D, efficiencies, materiality, competitive advantages, and/or revenue streams, including foundations (or, building blocks) for company’s future wealth creation and sustainability.

The rationale for encouraging IA assessments – valuations be conducted using this ‘contributory value’ approach is to…

  • provide business leadership with the frequently overlooked aspects about the integral role IA’s play in a company or transaction.
  • develop descriptive paths (roadmaps) for company IA values, and materiality to be readily recognized, monitored, measured, safeguarded, and ultimately preserved, i.e., banked.
  • provide business leadership with much needed and practical insight to optimize IA’s in timely (bottom line) relevance.