Michael D. Moberly November 18, 2008
First of all, let’s agree at the outset, it is an indisputable economic fact – business reality that upwards of 75+% of most company’s value, sources of revenue, sustainability, and foundations for future wealth creation lie in – are directly linked to intangible assets.
That said, for a variety of reasons, there remains considerable unfamiliarity and even uneasiness amongst a significant percentage of business decision makers about precisely what intangible assets really are, and how to best utilize – leverage – extract value from something that’s yet to appear on their balance sheets.
Building the proverbial, but always essential ‘business case’ (rationale) for devoting the time and resources to identify, assess, value, utilize, and extract value from a company’s intangible assets begins with a thorough and practical understanding of intangibles.
Conceiving and presenting a ‘business case’ for any new or untested initiative which decision makers may be unfamiliar, as those with the insight and fortitude for such things know, can be a daunting task in which preparation, as always, is the key. The challenges associated with that task elevate:
– when the subject matter, in this case intangible assets, are, quite literally, intangible, in other words, they lack physicality.
– because many decision makers still carry misgivings, misunderstandings, and/or dismiss intangibles as being (too) esoteric, or worse, irrelevant to their company and circumstances.
The following represent (some) key factors that should be considered when conceiving and presenting a ‘business case’ to decision makers for identifying, utilizing, and exploiting a company’s intangible assets:
1. Bring definitional clarity to intangible assets through a strong and relevant repertoire of examples applicable to a cross-section of industries…
2. Describe best practices (and, why they’re necessary) to sustain (protect, preserve) control, use, ownership, and value of the assets…
3. Avoid (over) reliance on subjective – worst case scenario risks and threats as a tool to attract decision makers’ attention…
4. Describe plausible, practical, and understandable –‘economics 101’ – approaches for valuing the assets…
5. Describe how and why it’s necessary to identify and unravel asset origins, location, ownership, and who’s developing them…
6. Describe conventional factors for determining asset ‘suitability’, i.e., recognition, valuation, separability, transferability, life cycle, and risks…
7. Demonstrate practical/realistic connections, relationships, and linkages between the production, acquisition, and/or use of intangibles and their direct, supportive, and multiplier-effect contributions to company value, revenue, sustainability, and (positioning for) future wealth creation…
8. Describe ways to position and/or bundle particular assets (if feasible) to achieve broader leveragability and/or value potential…
9. Draw decision maker attention to the importance of practicing consistent stewardship, oversight, and management of intangible assets, framed as fiduciary responsibilities…
10. Describe intangible assets in revenue conversion and performance measurement contexts…
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