Michael D. Moberly June 8, 2009
Experience suggests that there’s still a significant percentage of management teams representing SME’s (small, medium enterprises) and SMM’s (small, medium multinationals) who characterize the phrase ‘knowledge-based economy’ as being more cliche’ than reality. Similar skepticisms are expressed by SME and SMM decision makers about the notion that 65+% of most company’s value, sources of revenue and sustainability now lie in intangible rather than tangible (physical) assets. Many decision makers perceive the latter to be more (or, only) relevant to the Fortune 500’s which they perceive to be rich in intellectual property, R&D, proprietary know how, brand, etc., each of which, of course, are intangible assets!
Engaging intangible assets begins by ensuring that management teams, D&O’s, and investors recognize (1.) what intangible assets are, (2.) their contributions to company value, revenue, and sustainability, and (3.) how intangibles are literally embedded in – interact with company processes, procedures, and operations to enhance – create efficiencies and produce competitive advantages.
Engaging a company’s intangibles is basically complete then when two things occur. First, intangibles become routine action items on business – strategic planning agendas’ i.e., positioing, maximizing, and leveraging the assets to extract value. Second, management teams begin practicing consistent stewardship, management, and oversight of their intangible assets which includes sustaining control, use, ownership, and monitoring their value.
One outcome will be that unrealized asset value will no longer be ‘left on the table’ untouched and readily available for competitors and adversaries to acquire and exploit themselves.
But, in defense of SME’s and SMM’s, many may not, as yet, have the inclination, confidence, or means to engage and assess/measure their intangibles as proposed here and convert them into potentially revenue generating assets. Business decision makers are generally realists, that is, before they take the time and devote the resources to embark on a new initiative, be it intangible assets or something else, three things must be in place:
1. incentives and outcomes, i.e., financial inducement, specific competitive advantages…
2. regulatory mandates, i.e., other companies are doing it…
3. quality training that creates a strong and confident familiarity with intangibles and how to identify, unravel, assess, leverage, and exploit (maximize and extract value from) them.
Forward looking – forward thinking management teams are now obliged, as a fiduciary responsibility, along with their boards to proceed ‘with all deliberate speed’ to achieve a level of familiarity with intangible assets that enables them to regularly engage their company’s intangibles through effective stewardship, oversight, management, and monitoring to maximize and extract as much value as possible.