Michael D. Moberly January 12, 2010 (Part Two of Two Part Post)
There should not be any particular mystery, managerial, or otherwise, about best practices for utilizing-exploiting a company’s intangible assets! Yes, there is some specialization that is helpful insofar as identifying, unraveling, positioning, leveraging, and maximizing the value of intangibles. In most instances, that expertise can be readily achieved without the encumbrances of conventional ‘mba’ speak that tends to (a.) favor tangible (physical) assets, and, (b.) be out-of-step with business realities of the knowledge-based (global) economy in which 65+% of most company’s sources of value, drivers of revenue, and building blocks for future wealth creation and sustainability lie in – are directly related to intangible assets and intellectual property (IP).
Some key ‘managerial mysteries’ about intangible assets that must be overcome are:
1. inhibitions (reluctance) to advocate and/or develop strategies to measure – count them in relatively absolute terms.
2. the assets’ lack of physicality, i.e., one knows they exist and recognizes their contributory value and the economic-competitive advantages they deliver, e.g., brand, reputation, image, goodwill, intellectual capital, etc., but one can’t necessarily touch or see those assets in the same manner as physical (tangible) assets, e.g., plants, equipment, inventory, capital, etc.
To further help demystify intangible assets, its important to recognize they exist in three broad categories:
1. Intangible goods and products whose value can be established in the marketplace, e.g., licenses, franchises, patents, trade secrets, and brand value, etc.
2. Intangible competencies which include distinctive and perhaps proprietary processes and routines, e.g., know how and intellectual capital held and practiced by employees and capable of being created and deployed to the right people at the right time in ways that deliver competitive advantages, value, and bottom-line profits.
3. Latent capabilities which include such things as reputation, image, leadership, innovativeness, and the caliber (capability, capacity) of the workforce to create, identify, and respond to market opportunities to accommodate todays hypercompetitive, aggressive, predatorial, and winner-take-all (global) business transaction environment.
Becoming a more forward looking – forward thinking company through more effective stewardship, oversight, management, and reporting of intangible assets carries some degree of risk, most of which can be mitigated while accruing significant business benefits.
(Perspective on this post was gleaned by Mr. Moberly from long term research conducted by faculty of the Cass Business School, City of London, UK)