Michael D. Moberly July 10, 2009 Part Two Of Two Part Post
Regardless of how well intentioned and designed a business case may be for utilizing intangible assets, there’s plenty of well deserved skepticism among company management teams about intangibles, particularly in the areas of monetization and value extraction. It’s prudent then for ‘business cases’ to convey that intangibles are still occasionally perceived in the business community as being esoteric and theoretical concepts, which sometimes makes translating them to real business world applications suspect. Too, management teams are, generally speaking, realists and therefore reluctant to embrace (accept) a business case that is overly optimistic in positive outcome projections and/or espouses too much simplicity in execution.
Equally important, its unacceptable for a ‘business case’ advocating the use of intangible assets to be framed or designed as merely a regurgitation of a warmed over or generic version of a conventional (tangible-physical asset oriented) business case. Intangible assets are unique, but pervasive contributors to company value, revenue, sustainability, and future wealth creation and, as such, warrant independant, experienced, and forward thinking in the design of a ‘business case’.
The following are some key, but representative issues that should be addressed in the design and presentation of a ‘business case’ to company management teams for utilizing intangible assets…
1. Bring definitional clarity to intangible assets through a strong and relevant repertoire of examples applicable to a cross-section of industries applying understandable ‘economics 101’ techniques for valuation, revenue convertion, and measuring asset performance.
2. Avoid reliance on subjective – worst case (risk/threat) scenarios as a primary tactic to attract management team attention, but respectfully acknowledge that intangibles, left unrecognized and un-utilized, are vulnerable to exploitation-use by competitors and adversaries, and once gone, they’re not easily replaced or retrieved, and are extraordinarily costly and time consuming to re-build.
3. Demonstrate best practices for sustaining (protecting, preserving) control, use, ownership, and value of a company’s intangible assets and, why consistent stewardship, oversight, and management are essential.
4. Describe and explain conventional factors for determining (intangible) asset ‘suitability’, i.e., recognition, valuation, separability, transferability, life cycle, and risks.
5. Demonstrate connections, relationships, and linkages between a company’s intangible assets, i.e., their production, acquisition, and use, and the contributions and multiplier-effects they bring to company value, revenue, sustainability, and future wealth creation.
6. Describe practical strategies to position and bundle intangible assets (when feasible) to achieve broader positioning, leveragability and/or value potential.