Archive for September, 2010
Michael D. Moberly September 7, 2010
Here’s an interesting perspective once offered by Ashok Jain, a principal in the (IP) valuation services unit of Deloitte. He suggests that (his) interactions with large U.S. companies lead him to the conclusion that while most profess a fairly high-minded level of IP prowess, relatively few can answer substantive questions about the management of their IP, e.g., does your company maintain an inventory of its patents?, which patents (IP in general) are core to business operations and strategic plan? and, is your company exploiting its IP and other intangible assets to generate the greatest possible value?
Other experts (in the IP and intangible asset arena) suggest that many business decision makers who have achieved strong (national, international) reputations for creating and using new ideas is not matched by their willingness or ability to actually accept (assume) a personal role in the management (stewardship, oversight) of intellectual property and intangible asset matters. Instead, it’s reported that many merely delegate such responsibilities to either the technical and/or legal side of their business.
One possible explanation for this behavior is that technical - legal (business) units are typically portrayed as (assumed to be) cost centers, not profit centers which seemingly gives credence to the view that there is little interest among management teams and boards regarding the business (return on investment) aspects of utilizing IP and intangibles, i.e., to elevate company value, create sources of revenue, and serve as ‘building blocks’ for future (company) wealth creation.
Still, other IP and intangible asset experts suggest that a large percentage of companies literally give away – inadvertently relinquish valuable IP and intangibles without realizing it, and don’t effectively use (their) IP and intangibles (offensively or defensively) to block competitors, generate new revenue streams, or even increase leverage points within their respective supply – value chain.
Do all these perspectives constitute a crisis in the management and oversight of IP – intangible assets? While the term crisis may be too strong a term to explain current practices, it does, in my view, represent another example of management teams and boards not taking their (fiduciary) responsibilities for the oversight, stewardship, and management of (their) IP and intangible assets as seriously as they should, especially when looking at it through a business – return on investment lens.
Being a strong advocate of using intangibles; yes, I do believe companies (management teams, boards, etc.) need to take their intangible assets and intellectual property (IP) more seriously and not consider them to merely be ’sandboxes’ in which a little H2O can be periodically added to enable the erection of temporary ’castles’ that will quickly crumble or disolve into unrecognizable (non-value or revenue producing) lumps as the moisture evaporates.
Particularly today, when most all businesses are on the front edge of the knowledge-based global economy, wherein intangibles factually comprise increasingly higher percentages of company value, revenue, and future wealth creation, management teams and boards need to recognize how intangibles can be applied. This includes not overlooking the nuanced ways of using (leveraging, positioning, bundling) these assets as strategic weapons.
What’s interesting is that this can occur, sometimes very simply, by ensuring the right parties, with the right expertise are ‘at the table’. This means including specialists that hold, not merely legal – technical expertise about intangibles, but specialists with specific business acumen (sense) to make those assets literally execute, i.e., produce the value and revenue opportunities which, in most instances, they’re capable. So to, should product development and design meetings include specialists on sustaining control, use, ownership, and monitoring the value and materiality of intellectual assets.
The end game, of course, is to ensure that a company’s investments in and/or acquisition of intangibles, IP, and R&D, blend effectively with a company’s strategic and marketing planning. To be sure, there is a growing number of management teams and boards who not only ’get it’, but are ‘getting it right’. Often though, ‘getting it right’ has been preceeded by mis-steps or missed opportunities rooted in the presumption that intangibles and IP are strictly legal-technical functions, i.e., patent, trademark, copyright, etc., absent recognition for the (business) fiduciary responsibilities related to asset management, stewardship, and oversight. This, of course, underlies the reason why such large percentages of IP (and intangibles overall) are ‘non-practiced’. In other words, the R&D, IP, and intangible assets a company produces often go one way, while the strategic marketing group goes another way, and never the ‘tween shall meet’.
One result of course, is that a significant percentage of companies leave IP and intangibles ‘on the table’, i.e., either under-utilized or unused. There remain a lot of ‘Rembrandt’s, but they’re not all in a company’s attic, rather, they’re right in front of us. They merely need to be identified, unraveled, assessed, and put to work!
(This post was inspired and adapted by Michael D. Moberly from article in Chief Executive.Net, titled ‘Taking Intellectual Property Seriously’.) Reference to book authored by Kevin G. Rivetter and David Kline titled ‘Rembrandt’s In The Attic: Unlocking The Hidden Value of Patents’.
The ‘Business IP and Intangible Asset Blog’ is researched and written by Michael D. Moberly, president and founder of Knowledge Protection Strategies – http://kpstrat.com. The intent of Mr. Moberly’s blog is to provide insights and perspective to aid in a cross-disciplinary approach for identifying, assessing, valuing, protecting, utilizing, and extracting value from intangible assets. Your comments regarding my blog posts are welcome at firstname.lastname@example.org.
While visiting my blog, you are encouraged to browse other topics/subjects (left column, below photograph) . Should you find particular topics of interest or relevant to your circumstance, I would welcome your inquiry about consulting, conducting an assessment, training program, or speaking engagement to your company or professional association at 314-440-3593.
Michael D. Moberly September 1, 2010
Most companies, through their management teams, boards, and employees create/produce a lot of assets, less so of the ‘brick and mortar’ type and more so of the intangible type. The latter being largely knowledge-based assets held between our ears, stored on our CD’s, issued to our company as patents (intellectual property) or merely a conglomeration of experiences and specialized know how that’s coupled with knowing how to use it effectively and efficiently.
In operating a successful business, as in conducting a successful scientific project, we seek the comfort zone of facts, numbers, and ratios, in other words the qualitative and quantitative. In these circumstances, our comfort zone is often easily attainable because the factors – variables we use-rely upon for our decisions and/or findings are often concrete, wherein a high number means one thing and a low number means something different.
But sometimes, that comfort zone of hard numbers, may be obscure and more ‘fuzzy’ than we like or are used to. In those instances today, management teams, boards, and employees alike, are challenged to push our conventional understanding beyond ‘tangible assets’ to ‘intangible assets’ and the relationship and contributory value the latter delivers to our companies and organizations.
So, welcome to the specialized corner of the information age and its outgrowth, the knowledge-based economy, wherein intangible assets now routinely play key roles as contributors – facilitators to most company’s value, sources of revenue, competitive advantages, sustainability, and future wealth creation.
But, despite the rising importance of intangible assets and the contributions they consistently deliver to company’s, in all industry sectors, they unfortunately remain, for some management teams and boards, difficult to define, challenging to recognize and differentiate, and seemingly impossible to measure.
Perhaps most frustrating. to those of us who consider ourselves intangible asset advocates, is the rather unhelpful languate used to define intangibles, e.g., they
- are the non-physical things of value that a company owns.
- have no set monetary value and no physical measurement.
- lack physical existance/presence, they can’t be seen or touched.
Nonetheless, advocates say, the development and effective use of intangible assets are essential to most company’s near term and long term success, i.e, viability, sustainability. To those unfamiliar with intangibles however, or those already suspect or dismissive of the assets’ contributory role, definitions like those above, standing alone, contribute little to bringing clarity and contributing to the much needed ’ah ah’ moments of, I get it!
I have encountered countless situations in which management teams, boards, investors, and employees alike, literally struggle, to make sense of these seemingly ‘invisible’ assets that are seldom, if ever, reported on company balance sheets, even though a rapidly rising number of businesses today literally have very few tangible (physical) assets remaining. Instead, intangible assets have become their overwhelmingly dominant source – driver of value, revenue, and future wealth creation.
There’s little question that intangibles can be a source of frustration and for some companies, and, not just the so-called ‘knowledge intensive’ ones, intangible assets present real challenges to management teams and boards with respect to, for example, allocating resources to further the development of assets, which, according to the definitions, lack physicality and are difficult to measure both their performance and value?
(Adapted by Michael D. Moberly from the work of Thomas A Stewart, ‘Trying To Grasp The Intangible’.)
The ‘Business IP and Intangible Asset Blog’ is researched and written by Michael D. Moberly, president and founder of Knowledge Protection Strategies – http://kpstrat.com. The intent of Mr. Moberly’s blog is to provide insights and perspective to aid a cross-section of practitioners in identifying, assessing, valuing, protecting, utilizing, and extracting value from intangible assets. Your comments regarding my blog posts are welcome at email@example.com.
While visiting my blog, you are encouraged to browse other topics/subjects (left column, below photograph) . Should you find particular topics relevant to your company or circumstance, I would welcome your inquiry about consulting, conducting an assessment, training program, or speaking engagement to your company or professional association at 314-440-3593.