Using Intangible Assets To Weather The Recession – Part III

Michael D. Moberly    March 18, 2009     (Part 3 of 5 Part Post)

If it can’t be measured, it can’t be managed…

Respectfully, business decision makers who engage their work in that time honored ‘if it can’t be measured, it can’t be managed’ approach are likely to harbor some misgivings about the role and contributions intangible assets can and do make toward (a company’s) value, revenue, profitability, sustainability, and their ability to be utilized-leveraged to mitigate the real (in your face) financial risks and challenges prompted by the recession.

Confining oneself to conventional ‘mba precepts of, if it can’t be measured, it can’t be managed will also likely dampen a company’s motivation-rationale to take the time necessary to closely examine-assess their intangible assets and devise viable (but perhaps, outside-the-box) strategies to survive the recession (or even prosper) through better positioning, utilization, and leveraging of their intangible assets.  

Still, for many decision makers, when they reflect on (consider) their company’s assets, they’re apt to focus on physical (tangible) assets such as property, plants, equipment, cash, accounts receivable, and various types of securities (Nir Kossosvky, Steel City Re).  In other words, attention is focused primarily, if not solely, on those assets that are reported on company balance sheets, e.g., those which banks and creditors are most familiar.  In large part this is due to their realities that intangible assets:

1. lack physicality

2. are frequently perceived as merely being a subset (addendums) to intellectual property, therefore represent legal concerns, not business decisions 

3. have no agreed upon (single) framework (standard) for measuring their financial management, contributions, or effectiveness, thus, are not routine fixtures on company balance sheets.

4. are not readily ‘translatable’ as collateral for lending. 

For company’s to continue to express a dismissive attitude about the relevance of intangible assets to their (potential) survivability and sustainability insofar as weathering the recession remains common, but, all the more unfortunate given the economic fact – business reality that 65+% of most company’s value, sources of revenue, and future wealth creation (sustainability) lie in – are directly linked to intangible assets!