Michael D. Moberly April 10, 2009
Question #1 – If a tree falls in a forest when no people are around, does it make a sound?
Question #2 – If an asset is intangible, can you hear – see – feel it contributing to your company’s value, revenue, reputation, image, goodwill, competitive advantages, and overall sustainability?
While we clearly know the answer to Question #1 is yes, the answer to Question #2 remains less clear to many business decision makers because intangible assets (a.) lack a conventional sense of physicality, (b.) don’t follow traditional ‘mba’ precepts, and (c.) require different metrics for measuring their contribution.
One thing that would significantly contribute to addressing the outstanding issues in Question #2 is arriving at a (a.) clear and consistent ‘business’ definition of intangible assets, (b.) absent an accountancy or legal orientation, (c.) pass the mba smell test’, and (d.) generate understanding and confidence for intangible assets. (For a practical definition and examples of intangible assets see April 3d post at this blog.)
With respect to intangible assets, it may not always be a case of ‘use’em or lose’em’, but it’s always a case of ‘if you’re not using them, you’re not benefiting from them’, and that translates as lost or, at minimum, significantly reduced value, revenue, and sustainability. However, there’s one economic fact – business reality though that is perfectly clear; 65+% of most company’s value, sources of revenue, future wealth creation and overall sustainability lie in – are directly linked to intangible assets and IP.
Today, regardless of what products or services a company produces or whether it’s a Fortune 500, SME (small medium enterprise), or SMM (small medium multinational) it’s increasingly likely that internally developed, hard earned, and valuable proprietary experiences, know how, image, good will, and reputation, etc., underlie and are thoroughly embedded in that company’s products and/or services. For example, slight advances in technology, minor improvements in production, and/or small refinements in business processes (each of which can constitute an intangible asset) can produce substantial competitive advantages for a company.
For the intangible asset skeptics what’s needed is (a.) a clearer recognition-appreciation for the various forms intangible asset value takes, (b.) how to leverage – extract value from those (intangible) assets, and (c.) how to sustain (protect, preserve) control, use, ownership, and value of those (intangible) assets indeterminately!
Don’t be an ‘intangible asset skeptic’ and don’t permit your valuable intangible assets to go un-noticed, (un-) or undervalued and equally important, un-protected!