Banking The Equity In Intangible Assets

December 29th, 2016. Published under Intangible asset training for management teams., Reputation risk.. No Comments.

Michael D. Moberly December 29, 2016 ‘A business blog where attention span really matters’!

Business leaders and management teams are obliged, now, perhaps more than ever, to acknowledge the prudence of ‘banking’ (monitoring, preserving) the equity held within their company’s IA’s. That equity, ultimately manifests, aside from value and potential sources of revenue, etc., as reputation, image, goodwill, and relationship capital. Seldom, if ever, does IA ‘equity’ materialize very rapidly. Instead, it evolves over periods of time as consumers-customers-clients attach favorable and long term relationships with/to a particular product, service, or, in some instances, a specific employee, ala IA.

There are some companies and their management teams, of course, who, for a variety of reasons and rationales, have yet to distinguish or associate these attributes (assets), intangible as they are, as contributing to, or even being sources of value and revenue. Other business leaders, based on my experiences, remain dismissive of IA’s, particularly in the context of reputation and generating customer-client-consumer ‘equity’ that is capable of being saved or banked. Again, my engagement experiences coupled with volumes of client centered research bear out the perspective that business leadership who remain dismissive of their company’s IA’s and their ‘equity’ potential, will likely experience unnecessary challenges to profitably operate and compete in IA intensive and dependent environments, now common to the ‘go fast, go hard, go global’ space.

Another consequence to business leadership’s dismissive approach to the necessity for – practice of ‘banking’ IA equity, is that they will be hard pressed to develop a comprehensive portrait of their company’s real financial – competitive advantage health. In other words, the ‘portrait’ they will likely receive from conventional accounting will be incomplete at best, if it does not fully address-include IA’s. In addition, on the transaction side, if IA development, safeguards, value, competitiveness, and equity are not routine discussion and/or action items on c-suite agendas, this too will contribute to understating IA’s contributory role and value to business transactions, particularly (again) for IA intensive and dependent firms, which a growing percentage clearly are.

Collectively, these circumstances frequently elevate company-business propensity to the materialization of risk which can adversely affect companies in many different ways, one being reputation, e.g.,

• dilute value of the key IA’s, ala reputation, image, and goodwill which are routinely in play, and
• undermine anticipated-projected synergies and competitive advantages, by
• making key (in play) IA ‘s substantially more fragile and vulnerable to risk.

Each circumstance represents an example of where-when the respectful guidance and services of an experienced IA strategist and risk specialist can favorably intervene to reduce the probability, vulnerability, and criticality of adverse events-risks materializing.

Such risk circumstances highlight the over-arching premise that management teams, boards, and even stakeholders have (fiduciary level) obligations (ala Stone v. Ritter) to routinely and objectively ask; is this company effectively positioned to develop and sustain current skill sets and experience to…

• identify, unravel, assess, develop, bundle, utilize, and extract as much value and competitive advantage as
possible from its IA’s under its control.
• safeguard and monitor IA value and identify and mitigate risks which, if-when materialized, will
adversely affect assets’ contributory role – value, and sources of revenue.

It’s reasonable for business leadership to consider then, if these purposefully acquired skill sets are not be regularly practiced, little else may matter, because IA value, competitive advantages, sources of revenue, and IA’s underlying equity that’s in play, can very rapidly erode, be undermined, compromised, or worse, the asset’s value, and by extension, its equity, go to zero!

Leave a Comment