Archive for 'Managing intangible assets'
Michael D. Moberly August 19, 2015 ‘A blog where attention span really matters’.
Readers, there is absolutely no dispute to the globally universal economic fact that today 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, competitiveness, and sustainability lie in – directly evolve from intangible assets! So isn’t it quickly approaching the state of being a no-brainer to acquire an operational familiarity with an organization’s intangible assets, because, by doing so, better business decisions are all but sure to follow!
It’s just entirely insufficient now for management teams to (a.) merely know what intangible assets are or which one’s their company – employees have developed, (b.) utilize, or perhaps worse, (c.) succumb to conventional accountancy path of lumping all internally developed intangibles together (indistinguishably) as goodwill.
It’s now essential, if not a fiduciary responsibility to:
- sustain control, use, and ownership of IA’s.
- know precisely how the IA’s contribute to a company’s value and create sources of revenue.
- understand how to utilize, leverage, and position the assets to extract as much value and competitive advantage as possible.
- exercise effective stewardship, oversight, and management of the IA’s and consistently monitor their materiality and contributory value.
By achieving this level of operational and financial familiarity with IA’s, numerous enterprise wide multipliers can follow, for example
1. Add predictability to business transactions when intangible assets and IP are in play by being able to assess the stability, fragility, defensibility, and sustainability of the assets through an IA focused due diligence.
2. Elevate probabilities that projected returns will be achieved, competitive advantages will be sustained or enhanced, asset synergies and efficiencies will develop, and transaction exit strategies affirmed
3. Achieve effective convergence of IA accounting, reporting, and valuation by recognizing their linkages to:
- knowledge management initiatives.
- IP development and safeguards.
- the balanced scorecard.
4. Reduce probability of costly, time consuming, and momentum stifling legal challenges and disputes regarding IA’s by foreseeing circumstances that can ensnare and/or entangle IA’s that will impede a transaction, or erode or undermine its projected synergies, value, competitive advantages, or overall performance.
5. Build an IA focused organizational culture that contributes to
- recognizing, producing, and sustaining control, use, ownership, and value of IA’s.
- elevating organizational awareness to accelerate the pursuit of adverse IA issues, i.e., ownership, value, infringement, misappropriation, theft, etc.
6. Develop a comprehensive OR (organizational resilience – continuity-contingency) plan that encompasses an organization’s key ‘contributory value’ IA’s that will facilitate quicker and more complete recovery following a significant business disruption.
Michael D. Moberly July 20, 2015 A blog where attention span really matter!
To no one’s surprise, the endless stream of opinions regarding the agreement reached last week to restrict (mitigate) Iran’s nuclear arms potential fit very well, at least initially, on a straight continuum with three markers, i.e., yea, in principle, and nay.
I suspect for many global citizens, their opinion of the agreement are not exclusively about whether they believe it is good or bad, rather, it’s about how large and how probable they sense the threat (posed by a nuclearized Iran) actually is. That ‘sense’ is a very personalized IA (intangible asset). Respectfully, the presence, absence, and strength of such personalized intangibles may likely be influenced by a citizen’s proximity to Tehran.
The inevitable suspected violations and the way the agreement has been structured will surely influence more to publicly assess the agreement, i.e., good or bad, probably on a daily – weekly basis versus strategic points of agreement’s 10-15 year life cycle.
The agreement is necessarily complex with many moving parts that must be in sync attitudinally, behaviorally, and definitionally. Professor Stephen Carter, Yale University School of Law suggests, (a.) the number and complexity of those moving parts can be likened to a Rubic’s Cube, or (b.) akin to a Rube Goldberg machine, i.e., a contraption that is deliberately over-engineered or overdone to perform a very simple task in a very complicated fashion.
Too, with that level of complexity, my hope is that when there are challenges, they will not be so large or politicized to undermine or cause the entire agreement to collapse. This is something every business decision maker who has engaged in a merger, acquisition, new product-service launch, buy-sell agreement, or strategic alliance understands well, i.e., how opponents to a deal will interpret suspicions – infractions as being individually or collectively significant to warrant it’s termination.
Professor Carter also suggests when one party to an agreement assumes the other party will attempt to cheat in some manner and at some point, this prompts other questions, but not solely whether the deal was good or bad, rather, were the interim (intangible) gains, i.e., psychological, attitudinal, emotional, etc., derived from an imperfect agreement sufficient insofar as mitigating or delaying what may have been otherwise inevitable. Of course, I am not talking about nuclear Armageddon.
In other words, Carter asks, were those potential (intangible) gains from having an agreement in place for a period of time, greater than the costs of not ever negotiating or producing an agreement in the first place?
Should most aspects of the agreement be adhered to by the parties, Professor Carter suggests that when one looks back on any agreement, be it business, trade, or nuclear, from the time of its signing to its potential termination, the global citizens represented by the negotiating parties were likely happier and felt safer than if the agreement had not been executed. Again, some powerful intangible assets at play here!
Michael D. Moberly May 7, 2015 ‘A blog where attention span really matters’!
We’re well into the 21st century and the contributory role IA’s (intangible assets) consistently play as value, revenue, and competitive advantage generators, is recognized at the 5,000 foot elevation among business communities globally, but, there is little corresponding evidence that business leaders are actually engaging their IA’s.
At the 5000 foot level, it’s a well known economic fact – business reality that steadily rising percentages, i.e., 80+%, of a most companies’ value and sources of revenue emerge directly from IA’s.
THE question is, what factors are being assumed by business leaders that influence substantial numbers to dismiss, disregard, and otherwise over ride this economic fact – business reality even though engaging their IA’s could benefit their company in numerous ways.
Frankly, I sense no particular urgency, among the leadership of the U.S., and perhaps global business communities to willingly engage their companies IA’s in strategies to maximize and extract as much value and revenue as possible.
Cutting to the chase! I, like other national – international voices advocating greater recognition and utilization of intangible assets, meet with astute, intelligent, and extraordinarily talented and successful business leaders who are apt to use sophisticated techniques to schedule employee work schedules to minimize overtime pay, but, mention the words intangibles or intangible assets and eyes glaze over!
Equally puzzling is, why aren’t these business decision makers acting on this factual, irrefutable information, whether it comes from blog posts like this or other ‘higher’ sources? Why are these sources of – contributors to organization-wide value and revenue which are literally‘ within hands reach’ being overlooked, neglected, or, in some instances, dismissed outright?
In part, the lack of business leader enthusiasm for intangible assets can be attributed to…
- accountant’s governed by law and practice standards, have no particular motivation or obligation to delve too deeply in clients’ IA’s other than what is attributable to goodwill.
- faux strategic planning which is more akin to near term – quarterly-based projections that preclude discussions regarding IA utilization or monetization…
- ill-informed inclination to assume – characterize IA’s as being synonymous with IP (intellectual property), which serves as rationale for business leadership to attach little relevance because IP matters are contextually structured to be legal only.
- self-deprecating assumptions by some business leaders, irrespective of their success, that their company neither produces nor possesses any valuable – competitive advantage intangible assets, worthy of the time and expense to identify and assess.
- intangible assets absence of physicality, i.e., having no tangible or conventional physical presence.
- presumed consultants’ who inappropriately, and perhaps unwittingly, characterize the identification, unraveling, assessment, and extraction of value, revenue, and competitive advantages from intangible assets as being too complicated, time consuming and producing little ROI.
Understanding and taking affirmative steps to maximize and extract as much value and competitive advantages as possible from the IA’s a company develops, is not rocket science, it’s just good business!
Michael D. Moberly January 13, 2015 ‘A blog where attention span really matters”!
I had the pleasure to communicate/converse with Dr. Tatiana Garanina of St. Petersburg University recently to discuss her research titled ‘Value Creation in Russian Companies: The Role of Intangible Assets’. What follows is a collaborative summary of that discussion.
Dr. Garnina’s research revealed that…
- as much as one third of all investment solutions occurring in Russia are related to a company’s (existing) intangible assets.
- business decisions-transactions allow management teams to make more accurate income and profitability projections including shareholder value.
- management teams of leading (Russian) companies are more apt to acknowledge and understand that the key sources of their company’s value creation are irreversibly rooted in intangible assets.
- Dr. Garnina distinguishes intangibles in Russian companies on the basis of their composition and structure which hrough her and co-researchers’ analysis of 43 (sampled) companies, intangibles were distinguished intangibles in five aggregated fields, i.e.,
- mechanical engineering
- extractive industry
- power engineering
- communication services, and
- metallurgy.Drs. Garanina and her co-researcher Dr. Volkov also found that leading (Russian) companies are endeavoring manufacturing cost reductions, hence value creation, which translates as reductions in the value of their tangible/physical assets. Doing so advances another trend, which producing more intangible assets, i.e., intellectual, structural, and relationship capital, proprietary know-how and creativity.Some rovocative perspectives, offered by Drs. Garanina and Volkov offered are
- Dr. Garanina astutely points out a key challenge for (Russian) management teams today creating conditions that will lead increasing the value of (their) intangible assets and therefore the value of their entire company, something which has global relevance far beyond the Russian border.
- Admittedly, value creation through intangible assets represent a new component for business development in Russia but has yet to witness significant successes, particularly for companies still expressing reliance on conventional tangible (physical) assets. The leadership of these firms were less able to cope with the globally competitive markets.
- related to the composition and structure of intangible assets, particularly intellectual capital. In many other research papers I have read, researchers describe the structure and/or composition of intangible assets and then try to define the primary component that (most) affects the assets’ ‘contributory’ value. Drs. Garanina and Volkov claim there is no known uniformity, i.e., means, mechanisms, etc., to address this aspect in Russian business as yet.
- their views on (intangible asset) market capitalization value over periods of time. Even though, a number of theoretical works have stressed the strategic importance, as well as the role of intangibles as key value drivers for company’s competitiveness (Edvinsson, Malone, 1997; Sullivan, 2000; Wenner, LeBer, 1989); there remain, the authors believe, an absence of approaches to evaluate those mechanisms in terms of how intangible assets actual contributory value to a company. (Carlucci, Schiuma, 2007).
An obvious result, Garanina concludes is that more studies are needed in order to better understand…
- the relationship between intangible assets,
- the way these assets are clustered, and
- their contributory role in value creation
As always, reader comments are welcome and respected, and please read and submit a review of Mike’s newest book ‘Safeguarding Intangible Assets’ http://safeguarding-intangibles.com/
Michael D. Moberly January 12, 2015 A blog where attention really span matters!
A managerial resolution for 2015…Should you still be looking for a 2015 resolution, try engaging in more ‘introspection’!
Peering inward…Introspection means taking time to recognize the prudence of, at least periodically, directing ones thoughts inward, that is, to think about our actions, reactions, and responsibilities and how they relate outside our respective circles of professional specializations.
Professionally, I am convinced the managerial responsibility to be introspective is a valuable and positive intangible asset! That is, a leader or management team’s recognition that introspection is a necessary and quite valuable attribute to possess, and, in the context of this post, a positive, strategic, and personalized intangible asset!
Knowing what you know and what you don’t know…Introspection as characterized by James Drogan, business professor at SUNY’s Maritime College is…
“…knowing what you know, knowing what you don’t know, and knowing who knows what you don’t know and knowing, when things are going really well, you’ve probably missed something”.
For some readers I suspect, the language Professor Drogan used to characterize introspection, may sound eerily reminiscent of former U.S. Defense Secretary Rumsfeld’s response to a question posed to him during a Pentagon briefing regarding fighting in Iraq and Afghanistan, which to date, remains frequently characterized as being smug, arrogant, or perhaps somewhat dismissive, at the 30,000 foot altitude anyway, of the increasingly challenging events the U.S. military were experiencing in both countries.
Intangible value of introspection…On a more relevant note, Martin Christopher, Emeritus Professor of Marketing & Logistics at Cranfield’s School of Business (UK) and author of Logistics and Supply Chain Management, states that…
“introspection is valuable, important, and perhaps even critical to successful business operations”.
I am wholly in agreement with Professor Drogan’s important characterization of introspection as well as the value which Professor Christopher attaches to introspection.
Introspection among colleagues, co-workers, superiors, and decision makers…It’s important to not go astray from my intended premise, which is, effective and consistent introspection by management teams and decision makers is a strategically valuable asset, albeit intangible, which most any organization and their management teams should aspire.
One example, during my 20+ years in academia is that I routinely observed students, both graduate and undergraduate, rapidly review and presumably assess written assignments in a manner similar to their approach to essay exam questions. In both circumstances, I sensed students had a felt need to speedily regurgitate all they assumed they knew about a topic, then leaving it to my interpretation, which I presume they hoped would track their intent.
I am confident many management teams and business decision makers have observed similar behaviors exhibited by colleagues. I am confident such habits, to be kind, have minimal introspective thought processes at work. Through my lens, introspection is absolutely necessary for effective, profitable, and sustainable business operation, particularly in today’s aggressively competitive, predatorial, and global business (transaction) environment. So, introspection, should it become a respected attribute to a company’s overall management can also be a very positive and valuable intangible asset that favorably contributes to most any decision maker and/or managerial role.
Introspection is not self-doubt…Managerial introspection is not merely an exercise to confirm what one already believes to be true, rather introspection is a tool for self evaluation and review of pending activities or strategies. Introspection can be rooted in one’s desire to identify and assess a particular, usually strategic, path that provide a means to achieve an objective inner assurance, given the ever increasing array of potential variables, that a particular course of action is appropriate and that relevant obligations have been acknowledged. In other words, introspection encompasses a strong sense of personal self-confidence which allows a manager – decision maker to be intellectually and operationally receptive to…
“knowing what you know, knowing what you don’t know, and knowing who knows what you don’t know and knowing, when things are going really well you’ve probably missed something”
More specifically, Donald Clark raises other relevant issues about managerial introspection in ‘After Action Review’, as he correlates introspection to learning…
“…what worked, what didn’t work, why it didn’t work, what one needs to do about it to make it work and work better, and what one should do differently the next time’?
Introspection is managerial self-confidence…I believe most management team members and business decision makers can practice introspection providing there is an environment in which self-confidence is appreciated and respected not confrontational arrogance Unfortunately, I am short on examples of business leaders or managers who have successfully crossed the chasm of arrogance to introspection.
But, introspection is not solely about adding individual contributory value to their organization, rather, by extension, making a company more valuable, thus, an intangible asset positive!
What happens when managerial introspection is absent…When the elements of introspection are absent from a company’s routine strategic – tactical deliberative processes, i.e., ‘after action reports’. Through my lens, the absence of managerial – leadership introspection can be significant, particularly when it becomes a precursor for reputation risks to materialize.
Too, my experience suggests that in far too few instances do those in leadership roles recognize introspection to be an important skill set integral to personal, professional, and intellectual growth that will serve them and their company well.
Most readers are adept at projecting potential adverse outcomes for projects and transactions when leaders and managers lack of introspection. The consequences can be severe, leading to the failure of a new business initiative, transaction, or an entire company.
It’s far from being a secret that people, as well as business managers and leaders possess an innate proclivity for gravitating and endeavoring to replicate tasks – behaviors which resonate as being…
- relevant to a current challenge or problem, or they sense are
- strategically necessary, i.e., personally, professionally, to achieve success.
But, through all of this, let us not overlook two things…
- the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability globally lie in or evolve directly from intangible assets, and
- a manager or leaders’ desire and ability to be introspective is a respected and valuable intangible asset.
As always, reader comments are welcome!
Michael D. Moberly December 2, 2014 ‘A blog where attention span really matters’!
During initial engagement conversations it’s instructive when clients convey indifference to or underestimate intangibles’ various contributory roles as sources of value, revenue, competitiveness, reputation, etc. Since I began researching, publishing, and consulting in the intangibles’ arena, I have encountered clients and company management teams who…
- are unfamiliar how to identify, unravel, assess, and exploit intangibles’ to fit their company, its circumstances, and various transactions it engages.
- find it challenging to distinguish how certain intangibles’, e.g., intellectual, structural, and relationship/social capital are embedded in routine (company) processes, procedures, and/or practices.
- are inclined to characterize activities related to the management, development, value preservation, and exploitation of intangible assets as…
- being too difficult or time consuming to do.
- unappealing because intangibles are not reported on company balance sheets or financial statements.
- an uncompetitive activity until competitors are observed doing it.
Of course, the opposite sentiments are what management teams should be expressing because it’s an economic fact today that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets!
And, intangible assets are not exclusive to early stage or newly launched companies’ nor are they subordinate synonyms for intellectual properties, rather they are relevant to any company regardless of size, sector, product/service offerings, revenue, or transactions.
Michael D. Moberly November 24, 2014 ‘A blog where attention span really matters;!
Admittedly, having worked almost exclusively on the intangible side of businesses for 20+ years, this question still is not an easy one to answer, nor perhaps, should it.
In part, I suspect, it’s because a company’s reputation is the epitome of an intangible asset, and unfortunately, for far too many company management team members…
- intangible assets have yet to be operationally integrated into their lexicon.
- have yet to cross the ever narrowing chasm which distinguishes conventional PR issues and the ‘over night’ rapidity which they can transform into full blown, costly, and irreversible reputation risks.
Perhaps, one distinction between a public relations issue (problem) and a materialized reputation risk is…
- the time frame in which either can and/or will ‘fester and/or exacerbate’ among consumers, shareholders, stakeholders, and investors to the point,
- someone, often a previously voiceless individual quantifies its adverse affects – impact to the company’s reputation and articulates the connection.
But, using ‘consumer festering time’ as a metric for distinguishing public relations and reputation risk assumes each company has the capability to correctly assess – distinguish public relations issues for their near term gravity and/or criticality, i.e.,
- through a lens exclusive of the lens of consumers, investors, and other stakeholders, and
- possess a clear understanding of the various intangible assets which collectively comprise a company’s reputation.
Exacerbating the issue further is another reality, which is, decision makers’ inclination to calculate adverse affects in quarterly contexts, regardless how an event is being characterized, i.e., as a public relations or reputation risk problem. Through my lens, calculating adverse affects in quarterly contexts is more aligned with the notion of assuming there are quick public relations ‘fixes or patches’ versus more strategic reputation risk management!
As always reader comments are welcome and respected.
Michael D. Moberly July 11, 2014 ‘A long form blog where attention span really matters’!
Know what you don’t know about intangible assets…
So, how is Michael Roberto’s book ‘Know What You Don’t Know, How Great Leaders Prevent Problems, Before They Happen’, relevant to intangible assets? While, I dislike having to make such an admission, there is this lingering that still, a probably significant, but actually unknown percentage of business management teams and c-suites, etc., remain operationally and financially unfamiliar with their firms intangible assets.
As an intangible asset strategist and risk specialist, the obvious theme of Dr. Roberto’s book, i.e., its title, translates very well with one of my themes’ expressed consistently throughout this blog, that is, elevating intangible asset awareness among company c-suite’s and management teams and putting a company’s intangible assets to work as tools to elevate and sustain a company’s value, create new streams of revenue, and fortify competitive advantage. In other words, prevent problems before they occur.
The initial path to ‘preventing problems before they occur’ begins by encouraging business policy and decision makers to genuinely engage, and let’s be clear on this, the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today lie in or directly evolve from intangible assets!
From problem solving to problem finding…
In Chapter 1 of Roberto’s book for example, appropriately titled by the way, ‘from problem solving to problem finding’ the author commences with a very relevant quote from G.K. Chesterton which I take the liberty of paraphrasing somewhat, i.e., ‘it isn’t that management teams can’t see the solution, rather it’s that they often can’t see the problem’. The problem not seen, in my view, resides in overlooking and/or dismissing intangible assets as comprising the real sources of most company value, revenue, and competitive advantage as noted above.
The author (Roberto) makes many other introspective points, which I genuinely believe translate as strikingly relevant paths for not merely elevating management team awareness and operational familiarity with intangible assets, but also, for intangibles to become routine discussion – action items on c-suite and management team meeting agendas.
To pursue this example further, I am confident that numerous company management teams would agree, there are benefits to occasionally reversing conventional thinking, i.e., from problem solving to problem finding! By this I mean, for a substantial percentage of companies globally, the intangible assets their businesses routinely produce, frequently become embedded in various operations and transactions, but remain unrecognized, undistinguished, and otherwise not exploited to the level possible.
So, put another way, in a global business environment in which such substantial and irreversible percentages of business growth, competitive advantages, value, sources of revenue, and transactions, in general are essentially being underwritten with parties’ intangible assets, too me, this signals a significant ‘business problem’ if senior members of a company’s management team remain operationally and financially unfamiliar with the intangibles in play, and leave them unrecognized and undistinguished insofar as their contributory role and/or value are concerned.
Simply stated, this is no longer an arguable point and its resolution merely requires recognition of intangibles. For me, this constitutes a reasonable and certainly valid motivator for management teams and c-suites, whose companies may be experiencing challenges, to shift from problem solving to problem finding. Problem finding may well lie in the absence of or poorly executed practices for…
- sustaining control, use, ownership, and monitoring intangible assets’ value, materiality, and risk
- enhancing a company’s value, sources of revenue, market share, reputation, brand, and competitive advantages, and
- mitigating risks intangible assets.
More specifically, exhibiting disregard of, or dismissiveness toward a company’s intangible assets, particularly those with most companies routinely produce can be and often is ‘the’ problem’ and its resolution is straightforward as described here in numerous posts under the category of ‘training’..
To continue though, as readers know, a time honored starting point for solving most problems is conventionally speaking, recognizing a problem exists and/or risk has materialized with ‘problem finding’ coming through management teams’ introspection that preferably follows. So, ‘taking a page’ from Roberto’s book, one strategy for remedying high value problems companies experience, should commence by finding/identifying the intangible assets in play.
In the context of‘ ’knowing what you don’t know and how great leaders can prevent problems for they happen’ means adding personal characteristics of anthropology and ethnography to one’s managerial repertoire.
For example, in the context of this blog, being an ethnographer would encompass identifying and observing a firms’ producers – developers of intangible assets on the proverbial shop floor, i.e., in their natural settings, wherever that may be. In other words, ‘finding the problem’ means avoiding simply asking employees how things are going, or relying on survey data or focus groups as the dominant or sole methods for acquiring insight, i.e., problem finding. Instead, management teams should actually ‘watch what employees do, in the same manner as an anthropologist. That is, engage and observe how employees, customers, clients, and suppliers, etc., actually behave and interact.
This leads not only to ‘problem finding’ but more importantly recognition and appreciation for the intellectual, structural, and relationship capital (intangible assets) that are woven into each.
By conducting such observations through an anthropological and ethnographic lens, management teams can become more effective and confident ‘problem identifiers’, in large part because they have become more adept at distinguishing – analyzing the contributory role and value of their firms’ intangible assets absent subjective, misleading, or over analyzed data that sometimes leads to biases and misconceptions.
Too, by making observations through these distinctive lens, management team members are better positioned to not just identify what and how intangible assets are being used, but, if they are being used effectively, and which, if any, intangible assets need to be developed or acquired and ultimately integrated to make those processes better.
This post was inspired by Michael A. Roberto’s book ‘Know What You Don’t Know…How Great Leaders Prevent Problems Before They Happen’, Wharton School Publishing, 2009.
I always welcome your inquiry at 314-440-3593 or email@example.com.
Michael D. Moberly May 23, 2014 ‘A long form blog where attention span really matters’.
Emergence and integration of intangible assets…
Intangible (non-physical) assets have quite literally transformed conventional business practices which had, certainly since the industrial revolution evolved around the production and utilization of tangible or physical assets. This economic transformation, i.e., from the tangible to the intangible became increasingly evident in the late-1980’s to the mid-1990’s as company decision makers, management teams, boards, and the innovation – R&D process globally found it in their interest to rethink and restructure their conventional business strategies to include exploiting internally produced or externally acquired intangible assets.
It was becoming clear that intangible assets, somewhat single handedly, were the real origins and foundations to most company’s value, their sources of revenue, and competitive advantages. More specifically, intangible assets had become the ‘building blocks’ for most company’s profitability, growth, and sustainability.
Thus, what ultimately is now referred to as the knowledge (intangible asset) based/driven global economy was an important facet to conducting business in the 21st century and intangible assets were playing increasingly integral and influential roles.
Professor Baruch Lev of New York University’s Stearn School of Business noted that (business) economic activity increasingly consisted of the exchange of ideas, information, expertise, and know how, all of which are intangible assets. Obviously then, a company’s collective competencies and capabilities to effectively develop and strategically exploit intangible assets, particularly intellectual, structural, and relationship capital was rapidly superseding the mere control over or use of physical – tangible assets and resources.
As more management teams have come to recognize the value of many physical (tangible) goods are increasingly based on the degree and/or how well intangible assets have been integrated in the products and/or services being produced, particularly high quality intellectual and structural capital that collectively morph into brand, creative presentation, and content, etc. So with the origins of company value and revenue showing convincing signs of moving from the tangible to the intangible globally, changers are obviously necessary.
This irreversible economic fact produces new risks…
One outcome of this irreversible change from the tangible to the intangible was that it became clear that while intangibles were being more fully integrated in company’s operational thinking, strategic outlook and planning, they were also having a strong bearing on the responsibilities of Corporate Security Officers. For example, CSO’s would become increasingly responsible for safeguarding and mitigating risk to intangibles which, when materialized tends to longer lasting, if not permanent adverse economic and competitive advantage affects. More specifically, the intangible asset side of a company’s business, i.e., its reputation, brand, image, goodwill, competitive advantages, sources of revenue, relationship capital, will likely experience the greatest impact.
Inevitability of intangible assets playing more significant roles…
So, it was inevitable that intangible assets would be playing increasingly significant roles in company operation, strategic planning, and the types of transactions and other business initiatives they routinely engaged. In other words, achieving consistent business success was now inextricably linked to the effective stewardship, oversight, management, and safeguarding of a company’s intangibles which includes the ability to:
- identify, unravel, and assess intangible assets collectively as well as their individual contributory value.
- sustain control, use, and ownership of the assets throughout their respective life, value, and functionality cycles.
- understand how to exploit intangibles’ contributory and collaborative elements and the competitive advantages they produce.
- monitor intangibles’ value, materiality, and risk in both pre and post (business transaction) contexts, and in designing and executing exit strategies.
Acquiring the necessary capabilities…
Acquiring these capabilities and skill sets were rapidly becoming managerial imperatives, regardless of a company’s size, location, maturation, or industry sector and each needs a multi-pronged strategic roadmap which includes demonstrating how to…
- put intangible assets to work for one’s company effectively and profitably.
- safeguard the contributory value of intangibles throughout their respective functionality (life) cycle.
- provide effective stewardship, oversight, and management, and of a company’s intangible assets, not optional tasks, rather as fiduciary responsibilities that can no longer be dismissed, neglected, or relegated to the uninitiated, e.g., it will get done as time permits, when the resources become available, or, when competitors are observed doing it.
Home grown intangible assets…
To be sure, I recognize that most every company produces – possesses intangible assets which for the most part are ‘home grown’, i.e., internally produced, distinctively relevant, and company specific, irrespective of its location, size, industry sector, or maturity.
In many, instances, however, ‘home grown’ intangibles may not be particularly well suited to one-size-fits-all managerial or company culture circumstances in other words, it’s increasingly unlikely, in my view, that such intangibles would be readily transferrable. Certainly, there is ample evidence – examples strewn about businesses in many different sectors in which intangible asset transferability simply did not work or perform as desired. Instead, they may require nuanced modifications and handling aligned – commensurate with…
- achieving the most effective and efficient use.
- maximizing their contributory-collaborative value, and
- building and strengthening a company’s structural capital and competitive advantages throughout its supply-value chain.
- specific types of (business) transactions a company most frequently engages.
However, what fits best tends to work best…
To ameliorate the challenges associated with (intangible) asset transferability, Iadvocate very individualized approaches to assessing, utilizing, bundling, managing, and safeguarding. intangibles’. This, I refer to as my ’what fits best tends to work best’ strategy. More specifically, my own experiences (anecdotally) suggest that ’what fits best’ for a company and its operating culture will usually ‘work best’ and produce the best outcomes insofar as helping achieve its business goals, objectives, and maximize the use of its intangible assets.
What fits best doesn’t require company management teams to step outside their areas of expertise…
An important message to convey is that my ‘what works best usually fits best’ approach does notrequire management teams to step outside their primary areas of managerial – operational expertiseto understand and apply the various principles and strategies presented. Instead, this approach is designed to build upon management teams existing expertise, but it adds challenging, relevant, and forward looking dimensions to those areas of specialization and expertise.
Too, my experience clearly suggests the ‘what fits best’ approach respects achievements of management team members while helping companies proceed more effectively and quickly insofar as their value, competitiveness, and profitability. Too, it renders companies less vulnerable to the ever growing array of risks and threats which can rapidly materialize to literally sap the value from intangibles and undermine – erode the value, margins, and competitive advantages of potentially lucrative (intangible) assets.
The countless companies and management teams I have encountered over the past 25+ years, with no exceptions that I can immediately recall, each produces (internally valuable, revenue generating competitive advantages and numerous other ‘building blocks’ that can lead to growth, profitability, and sustainability. Let’s try it together!
Mr. Moberly welcomes and encourages reader comments.
Michael D. Moberly April 12, 2014 ‘A long form blog where attention span really matters’.
Often, the unrecognized and under-valued intellectual and structural capital initiators to intellectual property rich corporate – university R&D collaborations are the numerous intangible asset underliers, i.e., intellectual and structural capital which inevitably play a significant role in an invention and/or technology transfer initiatives, in general.
But, when the stewardship, oversight, and management of an invention’s (IP’s) contributing – supporting intangible assets are neither acknowledged nor safeguarded, at the outset, those asset’s value, competitive advantages, value, and sources of revenue which they may have the potential for producing for their holder can quickly be undermined, substantially diminished, or even ’go to zero’!
To avoid or substantially mitigate the vulnerability, probability, and criticality which such asset risks will materialize, I find a quick, but effective, project-wide (self-) assessment is useful. The assessment consists of eight managerially focused questions with each designed to respectfully influence R&D project leaders, inventors, researchers, and technology transfer – commercialization teams to genuinely reflect on how, whether, and to what degree the key – relevant intangible asset initiators have, thus far, been managed, utilized, and safeguarded.
Admittedly, a rather transparent agenda to this assessment is elevating (managerial) awareness and operational familiarity with the economic fact that 80+% of most invention’s, and eventually startup and/or spin-off company’s value, projected sources of revenue, and ‘building blocks’ for successful (asset) commercialization evolve directly from the initiating – supporting (underlying) intangible assets, not IP per se.
An unfortunate, but persistent reality (risk) is that intangible assets can quickly become mired in costly, time consuming, and momentum stifling challenges and disputes or become subject to misappropriation or infringement if left unacknowledged, or negligently meld into the public domain – open sources. As suggested, when either occurs, the asset commercialization potential (of these intangible assets, including the IP itself) can be irreversibly lost or, at minimum, severely obstructed in their contributory role.
I routinely find clients can complete this assessment in 7-10 minutes. Readers are encouraged to not infer the speed in which the assessment can be completed and its brevity, i.e., seven questions minimizes its significance and benefits. In framing this (self-) assessment I recognize that more comprehensive assessments do not necessarily produce – influence superior or more genuine (personal) reflection that translates to action and more profitable outcomes, particularly with respect to the oversight, management, and status of the key (most critical and contributing) intangible assets. Too, I am respectfully, and humbly confident the assessment itself, as well as each of the nine questions can echo throughout an enterprise to the point they become routine discussion and action items in conference rooms, board rooms, technology transfer offices, and particularly amongst the scientists, researchers, and inventors who stand to benefit from effective and consistent stewardship, oversight, and management of the research they initiated.
Seven critical questions affecting invention commercialization outcomes…
As corporate – university R&D project management teams engage the assessment questions below they are encouraged to recognize that intangible assets, primarily in the form of intellectual and structural capital are not always specific to a single invention. Instead, they may ultimately become initiators – underliers to other projects as well as being integral to most every stage of the instant invention process, i.e., at the (a.) idea formation stage, (b.) invention and product development stage, and (c.) commercialization (technology transfer) stage.
- Are intangible assets consistent discussion (action) items in management team meetings?
- Can research project management teams and the relevant inventors distinguish – or find consensus about the specific intangible asset(s), i.e., intellectual, structural capital, emanating from the initial research, and now have measurable contributory value to the product being proposed for commercialization to create sources of revenue, competitive advantages, reputation, market space, etc.?
- Are project managers – management teams maintaining an inventory (audit) of the contributing (underlying, supporting) intangible assets that emanate from and/or drive the invention/commercialization process? If so, are those processes being regularly re-assessed, updated?
- Do the inventory-audit updates specifically include an assessment of how, whether, or which intangible assets sustain value, materiality, relevance, and mitigate risks to the invention itself, the commercialization process, and the inevitable spin-off – startup company’s core mission and strategic planning?
- Have invention commercialization project managers identified which (contributing) intangible assets hold the highest probability for investor attractivity, value, and sustainability, price points, fees, royalties, etc., if they were sold, licensed, or used in a strategic alliance and/or joint venture?
- Have invention commercialization project managers and inventors identified which invention relevant intangible assets, particularly intellectual and structural capital are most vulnerable to risk, e.g., pre and post commercialization, technology transfer, and business transaction to infringement, misappropriation, premature leakage, counterfeiting, etc.?
- Have invention commercialization project managers implemented an organizational resilience (continuity – contingency) plan that specifically includes (a.) contributory intangible asset risk/threat mitigation, and (b.) rapid recovery from the adverse impact of materialized risk(s)?
In sum, are there processes – procedures in place, with respect to the invention commercialization process to…
- ensure mission critical (intangible) assets hold (their) value, deliver revenue, or remains relevant to the spin-off company’s core mission and strategic plan, and
- remain aligned with the development and/or acquisition of additional intangible assets necessary to achieve the inevitable spin-off company’s core mission, and strategic (market) planning?
- identify who is responsible and how will such responsibilities will be executed regarding the on-going management, monitoring and measurement of intangible asset performance relative to sustaining – enhancing company value, sources of revenue, competitive advantages, reputation, etc.
Reader comments and inquires are always welcome at 314-440-3593 (St. Louis) or firstname.lastname@example.org