Michael D. Moberly July 7, 2009
In the pre-internet and dotcom era, company value and sources of revenue overwhelmingly evolved from tangible (physical) assets, i.e., machinery, equipment, buildings, inventory, property, vehicles, etc. Necessarily, business continuity and contingency planning focused primarily on (contingencies for) the recovery (continuity) of those tangible assets.
As the Internet and dotcom era’s evolved and their affects became more pronounced and evident, the drivers – sources of most company’s value, revenue, and sustainability shifted. No longer were tangible-physical assets dominant, instead, intangible assets, i.e., intellectual property, proprietary know how, human and intellectual capital, competitive advantages, brand, goodwill, image, etc., were collectively becoming the foundations to a knowledge-based economy! Today, 65+% of most company’s value, sources of revenue, sustainability, and future wealth creation lie in – are directly linked to intangible assets, not tangible assets!
Consequently, the time honored continuity/contingency planning practice of trying to contain loss and/or damage to a company’s tangible/physical assets, was becoming less relevant. Continuity-contingency planning for businesses needed to shift a large part of their focus to sustaining (protecting, preserving) (a.) control, (b.) use, (c.) ownership, and (d.) value of intangible assets to elevate the probability for a speedier, stronger, and more complete economic, competitive advantage, and market share recovery.
Some continuity – contingency planners however remain skeptical about the role and contribution intangible assets make to company value, revenue, and sustainability, and making intangibles more of the plans’ focal point. But, for company’s and communities that have experienced significant disruptions or natural disasters of late, had their continuity/contingency plans included intangible assets it would clearly have made a difference, e.g., New Orleans’ business community following hurricane Katrina, Mattels’ toys found to include high levels of contaminants from a manufacturing process, consumable foods and health products being suspect of contamination, and Starbuck’s communication misques on 911.
In most instances, a company’s tangible (physical) assets can be re-purchased, rebuilt, and/or replaced in fairly rapid order following a disaster or business calamity. Intangibles, on the other hand, are not off-the-shelf assets. They’re more fragile, volatile, and mobile and are not nearly as easy to recover without an effective and comprehensive continuity/contingency plan that specifically accounts for intangible assets.
Marketing studies routinely find that consumers and clients will frequently shift, if not totally abandon, brand loyalty for example, in lieu of other products or services when (a.) one or the other are even temporarily unavailable, and/or (b.) their quality becomes suspect. Its expensive and time consuming to re-build intangible assets. Employees (human intangibles) and the intellectual capital, experience, and know how they possess are mobile, that is they can leave and go elsewhere during downtimes, sometimes to competitors which makes recovery all the more difficult and drawn out.
Another motivator for management teams to ensure their company’s continuity/contingency plan includes intangibles is the reality that competitors globally will take full advantage of – exploit any such opportunity to advance themselves when they see competitors stumble!