Archive for 'Managing intangible assets'
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 firstname.lastname@example.org.
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 email@example.com
Michael D. Moberly March 27, 2014 ‘A long form blog committed to elevating awareness about intangible assets and where attention span really matters’.
As readers know well, it is an economic fact that intangible assets collectively represent 80+% of most company’s value, sources of revenue, as well as serve as ‘building blocks’ for growth, profitability, and sustainability. It’s certainly not much of a leap in thinking then to recognize that key factors to effectively manage each of the above lies in company decision makers’ ability and commitment to…
- protect, preserve, (sustain), profitably utilize, and monitor any fluctuations in the assets’ ‘contributory value’ which is variously dependant on
- identify, prevent, and/or mitigate current and horizonal risks – threats which if – when they materialize, will, with little doubt, impair company growth, profitability, reputation, competitive advantage, and strategic planning.
In my view, one, if not the very first thing company decision makers should recognize is that, unlike patents, trademarks, or copyrights, which are conventional forms of intellectual property enforcement, there is nothing comparable issued by the government, or otherwise that says, ‘these are your intangible assets’. Doing so, is entirely the (fiduciary) responsibility of company management teams, that is, to acquire that know how independently or secure the services of an intangible asset strategist and risk specialist for strategic counsel and training.
Position business decision making to include the following…
- shift knowledge-based (intangible) assets away from being conceived and engaged as predominantly legal functions and/or processes to business management – decision functions and processes.
- align intangibles with economic, financial, and risk management planning, core business strategies, specific transactions, and the assets’ value – life – functionality cycle
- avoid costly and time consuming challenges over control, use, and/or ownership of their intangibles including misappropriation, infringement, and counterfeiting and other vulnerabilities that can lead to asset compromise and/or undermining.
- counter the expanding global risks and threats which when materialized, impede business momentum, delay or undermine transactions, competitive advantages, and erode asset value and performance.
Objective: bring managerial, business, strategic, and economic clarity to under-the-radar intangibles, i.e.,
- find’em, unravel’em, protect’em, preserve’em, defend’em, monitor’em, and enhance’em…
- the stewardship, oversight, and management of intangible assets
- monitor their value, risks, threats, and materiality
Distinguish intangible asset value…
- objective vs subjective value
- what’s the difference, why it’s important, and how can it be applied
Valuation of intangibles must be much more than mere snap-shots-in-time…
- business worth model
- market approach
- income approach
- cost approach – substitutions
Recognize circumstances in which intangible asset value can/will fluctuate…
- developmental and/or operational stage (value)
- market value
- industry (consumer) cycles
Recognize intangible asset value can be instantly undermined by…
- premature disclosure, leakage, misappropriation, theft
- entanglements and challenges over origin, control, use, and/or ownership
- global business intelligence and data mining
- counterfeiting, economic espionage
Recognize ‘rules’ for sustaining profitability and defensibility of intangible assets…
- don’t assume no one is interested in the know how you’re producing
- do assume your know how will be consistently targeted beginning at the earliest stages of its development and throughout its life – value cycle
- do develop ‘best practices’ to protect, preserve, and monitor its value
Reader comments and inquires are always welcome at 314-440-3593 (St. Louis) or firstname.lastname@example.org
Michael D. Moberly March 14, 2014 ‘A long form blog where attention span really matters’!
A starting point to achieving success! Whether you are part of a management team for a start-up, university-based research spin-off, or a young and still maturing firm built around a single invention, acknowledging and engaging the often multiple intangible assets embedded in that invention is an essential piece to the broader (strategic) puzzle for achieving commercialization success.
But first, as I often do here, let’s start with the unwavering economic fact that today, 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in or evolve directly from intangible assets! And, that percentage is likely to be substantially higher for early stage endeavors.
To serve as a strategically viable path to best achieve that desired end, I have compiled a series of essential questions which of course are related to the intangible assets most every invention produces as potentially ‘commercializable’ by-products. Respectfully, I encourage readers (inventors) to avoid assuming these questions need only be asked or answered once and then pushed aside so presumably more important issues can be addressed related to make a start-up an on-going and viable concern.
Instead, the questions I have framed below should be periodically or even routinely re-visited. My rationale is, acknowledging and effectively utilizing intangible assets which inhabit most every firm and frame its culture from inception, particularly intellectual, structural, and relationship capital and reputation will rapidly manifest, with the proper stewardship, oversight, and management, to become the keys to not just the commercialization success of a single invention, rather serve as ‘building blocks’ for a firms’ growth, profitability, and overall sustainability.
So, here are questions which business management teams and decision makers should be repeatedly asking. For a list of intangible assets please see http://kpstrat.com/blog/?p=2594.
- Are intangible assets consistent discussion (action) items in management team meetings?
- Do inventors’ – management teams know what percentage of contributory value (of their invention) lies in or evolves directly from intangible assets?
- Can inventors site specific and/or additional intangible asset(s) emanating from their research (invention)?
- Can inventors describe specifically how that – those assets will contribute to the inventions’ value, projected sources of revenue, and competitive advantages, i.e., commercialization?
- Is an inventory and/or audit of the contributing intangible assets driving and/or emanating from the invention being maintained, regularly assessed, and updated?
- If so, does the inventory-audit include an objective assessment of how, whether, or which contributory intangible assets continue to hold value, materiality and relevance to the invention and its inevitable spin-off company’s core mission and strategic plan?
- How are the inventions’ contributing intangible assets being managed, i.e., sustain control, use, ownership and monitor their value, materiality, and risk?
- Can you objectively assess which (contributory) intangible assets hold the highest investor appeal – attractivity, or market value, etc., if bundled, sold, licensed, or used in a separate strategic alliance and/or joint venture?
- Can inventors objectively identify which invention-related intangible assets are most vulnerable to risk, i.e., infringement, misappropriation, premature leakage, counterfeiting, etc.?
- Is there an organizational resilience (continuity – contingency) plan in place that specifically includes contributory intangible asset risk/threat mitigation and rapid recovery from the adverse impact of materialized risk(s)?
Reader comments and inquires are always welcome at 314-440-3593 (St. Louis) or email@example.com.
Michael D. Moberly March 13, 2014 ‘A long form blog where attention span really matters’!
Admittedly, the title of Michael Roberto’s book “Know What You Don’t Know, How Great Leaders Prevent Problems, Before They Happen”, may appear to some, at least initially, as having virtually nothing to do with intangible assets. I respectfully beg to differ!
There are numerous facets of Dr. Roberto’s book which, for me, merge well with any business – management team decision-making processes for putting a company’s intangible assets to work insofar developing and exploiting them to create new – additional sources of value, revenue, competitive advantage, etc.
But, before we get too far, let’s not overlook an important economic fact – business reality, which is, 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!
So, for example, Chapter 1 of Roberto’s book is relevantly titled “from problem solving to problem finding”. It commences with, what I believe, is a very apropos quote from G.K. Chesterton, and English author and theologian, which I slightly paraphrase here, 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’s value, revenue, and competitive advantage.
Roberto makes numerous other, equally introspective points throughout his book which I translate as being relevant to my, and other intangible asset strategists’ objective, which is for intangible assets to become routine discussion – action items on c-suite and management team agendas. Another example Roberto conveys, which is the effective theme of his book, lies in the necessity to move ‘from problem solving to problem finding’. That is, for a substantial percentage of companies globally, the intangible assets their employees and business practices routinely produce frequently come to be embedded in most every business function, operation, and transaction.
However, for various reasons, many of which have been addressed here previously, company’s intangibles remain unrecognized or, at least, not exploited to the level possible, even though most business processes and/or transactions are routinely and substantially underwritten by intangible assets. So, for companies in which intangibles remain unrecognized or under-utilized as contributors to value, sources of revenue, and profitability, this should constitute in any management teams’ thinking, significant ‘business problem’ that warrants management teams collective efforts to find and solve!
In the increasingly intangible asset rooted global economies and business transaction environments, recognizing how management teams can effectively and efficiently find and solve problems, merely by recognizing, developing, and exploiting (their) intangible assets, particularly those related to sustaining – enhancing profitability, market share, competitive advantages, value, revenue sources, reputation, brand, etc., is a strong example of moving ‘from problem solving to problem finding’.
Management teams that continue to disregard and dismiss the contributory value of their intangible assets, while it may not be ‘the’ problem, it is certainly ‘a’ problem’ And, its resolution does not require pouring over extraordinary amounts of information nor the extensive use of expensive resources or personnel time to effectively achieve.
Again, as readers know, one, time honored starting point for solving most any problem is by recognizing a problem exists, i.e., ‘finding the correct problem that warrants resolution’. From my experience, an example of finding the not a problem is seldom realized through a single seminar, conference presentation, or published article authored by a subject matter expert. Rather ‘problem finding’ is rooted, in my view, through introspection, which unfortunately, in the go fast, go hard, go global context which many executives and management teams have assumed, they argue leaves little time for.
Extracting ideas from a respectfully non-descript book which Roberto has authored versus the airport bookstore business books which are consistently framed in a ‘ten easy and quick steps to…’, represents a real and viable strategy for remedying this particular problem, that is management teams ‘finding and solving the problem’ through unlocking their intangible assets by adding, if you like, an anthropological and ethnographical approach to one’s repertoire of managerial expertise.
For example, an ethnographer would observe and identify a firms’ producers – developers of intangible assets from a ‘shop floor’ perspective, i.e., in their natural settings, wherever that may be. In other words, ‘finding the problem’ means avoiding merely asking employees how things are going, or relying on survey data or focus groups as the dominant sources of insight (problem finding). Instead, management teams should be obliged to actually observe what employees do, i.e., their tasks, processes performed, and internal – external interactions, etc., in a manner comparable to an anthropologist. That is, engage and observe how employees, customers, clients, and suppliers, etc., actually behave and interact.
Doing so, leads not only to ‘problem finding’ through recognition and appreciation for the intellectual, structural, and relationship capital (intangible assets) that are woven into each.
Conducting this level of observation through the lens of an anthropologist and/or ethnographer, management teams can become more effective ‘problem identifiers’ with a particular adeptness at distinguishing – analyzing the contributory value of intangibles without the interference of potentially misleading or over analyzed data that, in turn, can produce biases and preconceptions that may serve to taint what it is to be achieved.
Too, making these observations through an intangible asset lens, management team members are (a.) better positioned to not just identify what and how intangible assets are being used, (b.) if they are being used effectively, and (c.) which, if any, intangible assets need to be developed further or acquired and ultimately integrated to make a company’s processes more effective, efficient, and profitable.
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.
Reader comments and inquires are always welcome at 314-440-3593 (St. Louis) or firstname.lastname@example.org.
Michael D. Moberly March 12, 2014 ‘A blog where attention span matters’.
Management team’s fiduciary responsibilities now include taking consistent and affirmative steps to sustain control, use, ownership, value, defensibility, and potential monetization – commercialization of intangible assets.
Too, it’s becoming somewhat common, that at least one aspect of assessing the effectiveness of senior management team members is by how well they engage in the stewardship, oversight, and management (S.O.M.) of company intangible assets. When such, usually board level, assessments occur, areas assessed (examined) include effectiveness in…
- capturing, exploiting, and converting intangibles to enhance company value, create sources of revenue and strategies to sustain future growth.
- strengthening and building competitive advantages by creating environments in which employees (peoples) relationship, intellectual, and structural capital are being maximized and effectively utilized.
In my view, there’s solid rationale for incorporating the S.O.M. of intangible assets in personnel performance assessments. For one, intangibles are the undisputable dominant driver of most company’s economic and competitive advantage health and value. If (when) they are dismissed or neglected by company management teams, there is a substantial probability that such initiatives as new project launches, competitive advantages, marketing programs, and strategic planning will be stifled, undermined, or certainly less than their potential, with asset value eroding quickly or ‘going to zero’!
Conventional financial statements and balance sheets do not provide management teams, c-suites, and boards with a complete or necessarily clear picture of a company’s fiscal soundness. This is especially relevant in today’s increasingly knowledge (intangible asset) dominant business (transaction) global economy in which it’s an economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability lie in – evolve directly from intangible assets.
So, management teams continued (perhaps sole) reliance on conventionally framed financial statements that are absent direct reference to intangibles. This circumstance unfortunately contributes to minimizing the importance of intangibles and further contributes to a sense, among some management teams, of skepticism and dismissiveness about the necessity to acquire operational familiarity with intangible assets well beyond merely goodwill!
True enough, conventional financial statements describe whether or not financial targets are being achieved, etc. In that context, they remain relevant, but they simply don’t convey the whole story (picture) about a company’s status or its’ potential with respect to the production and exploitation of intangible assets.
Too, in fairness, conventional financial reports were not designed to capture qualitative aspects and/or what we now know more specifically today as vital signs – indicators related to businesses success and sustainability, particularly those found in – emanating from company’s intangible assets.
Today however, monitoring – measuring the performance of a company’s intangible assets is neither a time – resource luxury applicable only to Fortune ranked companies. Rather, those activities are a necessity and fiduciary imperative for most all firms, including SMM’s (small, medium multinationals) SME’s, (small, medium enterprises), start-up’s, early stage companies, and university-based spin-off’s.
The prudence of striking a better balance between the stewardship, oversight, and management, of tangible vs. intangible assets can produce positive benefits and multipliers that can favorably cascade throughout an enterprise.
There are numerous factors in play today that should be influencing management teams to pay more attention to (intangible) asset monitoring as indicators of performance and contributory value irrespective of company size, maturity, or industry sector. These factors include, among others…
- increasingly aggressive, competitive, and predatorial global competition.
- the growing connection between a company’s intangible assets, stakeholders, value-supply chain, profitability, and sustainability.
- a heightened respect for the risks to and value of a company’s reputation (image, goodwill).
- accelerated innovation, product development, and launch times.
- the geographically boundary-less speed which information (intangible assets) can be developed, acquired, and disseminated.
- increasing government regulatory emphasis (globally) on reporting and measuring (accounting for) the value, performance, and materiality changes of intangible assets.
Each blog post is researched and written by me with the genuine intent they serve as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community.
Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk. As such, my blog posts are not intended to be quick bites of information piggy-backed to other sources, or unsubstantiated commentary.
Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction. I always welcome your inquiry at 314-440-3593 or email@example.com
Michael D. Moberly May 7, 2013 ‘A blog where attention span matters’!
Asset risks can materialize instantaneously, sequentially, and simultaneously and rapidly cascade throughout an enterprise to produce long lasting, and with increasing frequency, permanent adverse economic (competitive advantage) effects, so, in today’s increasingly predatorial global business environment….
First, the responsibilities associated with safeguarding (preserving use, ownership, and monitoring value, materiality, and risk to intangible assets are now akin to fiduciary responsibility (Stone v. Ritter). They should not be construed as merely constituting new business jargon or optional tasks that can be dismissed or neglected, i.e., it will get done as time permits, when the resources become available, or when competitors do it.
Second, in today’s increasingly ‘flat world’ (Thomas L. Friedman) in which R&D, global business transactions, and company operations are routinely conceived, shaped, driven, and executed by the interconnected flow of data and information, i.e., intangible assets, it makes it all the more important that management teams converge their expertise to ensure the intangibles that are in play, are effectively safeguarded and positioned to realize the economic and competitive advantage benefits which they are capable of delivering without succumbing to risks, challenges, or other forms of asset compromises.
To better enable this, practices, processes, and strategies must be in place, along with a (enterprise-wide) culture that recognizes and appreciates intangible assets, and possess levels of alertness and skill to sustain sufficient control of and monitor key assets’ value, materiality, and risk.
Third, the time frame(s) when most companies can realize the greatest value from their increasingly intangible asset intensive products and services continues to erode, variously due to…
- the abbreviated value and functionality cycles’ of intangible assets.
- the absence of (conventional) market entry barriers and enforceable intellectual property law which allow for…
- global cadres of ‘instantaneous’ competitors and infringers, and
- extraordinary profits gleaned from (intangible) asset theft, infringement, piracy, and counterfeiting operations that pollute legitimate supply chains.
Fourth, intangibles’ development, acquisition, and utilization must be aligned with core business (and security and risk management) strategies rather than being considered primarily as intellectual property-based legal processes and/or decisions. That’s because, conventional forms of intellectual property enforcement, patents primarily…
- no longer serve as deterrents, safe harbors, or consistent indicators of asset (company) value.
- can advance a company (economically, competitively) only so long as a company can sustain unchallenged – undisputed use, ownership, and value, of its IP.
- are relatively easy prey (vulnerable) to global networks of legacy free players and increasingly sophisticated entities engaged in predatorial data mining, business/competitor intelligence operations and economic espionage.
Fifth, safeguards for intangible asset intensive firms and transactions can be best addressed not solely through legislative mandates which, while generally being politically well-intentioned, are often unenforceable on a global scale, particularly in regions with highly country-centric IP and technology transfer law. Rather, effective intangible asset safeguards are a product of real attitudinal and operational adjustments in a company’s outlook, strategic thinking and planning coupled with a strong recognition that key intangibles, particularly those linked to ‘operational know how’ are highly sought after globally, and therefore consistently at risk.
Sixth, it’s virtually impossible today to engage in any type of business activity or transaction in which intangible assets are not in play and integral to achieving a favorable outcome. Ultimately then, the line between a company achieving profitability and fighting for its financial survival is now more closely linked than ever before, to its ability to
- identify, mitigate, and safeguard against risks to its intangible assets ranging from disputes, challenges, theft, infringement, or other forms of (asset) compromise while simultaneously extracting – exploiting value and converting intangibles into sources of revenue.
Indeed, intangibles have become embedded in even the most routine business operation and/or transactions. Absent this acknowledgment, the result is often that substantial asset value, competitive advantage, company reputation, and market space may be irreversibly lost, undermined, or er
Each blog post is researched and written by me with the genuine intent it serves as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community. Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk. As such, my blog posts are not intended to be quick bites of unsubstantiated commentary or information piggy-backed to other sources.
Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction. I always welcome your inquiry at 314-440-3593 or firstname.lastname@example.org