Michael D. Moberly September 1, 2010
Most companies, through their management teams, boards, and employees create/produce a lot of assets, less so of the ‘brick and mortar’ type and more so of the intangible type. The latter being largely knowledge-based assets held between our ears, stored on our CD’s, issued to our company as patents (intellectual property) or merely a conglomeration of experiences and specialized know how that’s coupled with knowing how to use it effectively and efficiently.
In operating a successful business, as in conducting a successful scientific project, we seek the comfort zone of facts, numbers, and ratios, in other words the qualitative and quantitative. In these circumstances, our comfort zone is often easily attainable because the factors – variables we use-rely upon for our decisions and/or findings are often concrete, wherein a high number means one thing and a low number means something different.
But sometimes, that comfort zone of hard numbers, may be obscure and more ‘fuzzy’ than we like or are used to. In those instances today, management teams, boards, and employees alike, are challenged to push our conventional understanding beyond ‘tangible assets’ to ‘intangible assets’ and the relationship and contributory value the latter delivers to our companies and organizations.
So, welcome to the specialized corner of the information age and its outgrowth, the knowledge-based economy, wherein intangible assets now routinely play key roles as contributors – facilitators to most company’s value, sources of revenue, competitive advantages, sustainability, and future wealth creation.
But, despite the rising importance of intangible assets and the contributions they consistently deliver to company’s, in all industry sectors, they unfortunately remain, for some management teams and boards, difficult to define, challenging to recognize and differentiate, and seemingly impossible to measure.
Perhaps most frustrating. to those of us who consider ourselves intangible asset advocates, is the rather unhelpful languate used to define intangibles, e.g., they
– are the non-physical things of value that a company owns.
– have no set monetary value and no physical measurement.
– lack physical existance/presence, they can’t be seen or touched.
Nonetheless, advocates say, the development and effective use of intangible assets are essential to most company’s near term and long term success, i.e, viability, sustainability. To those unfamiliar with intangibles however, or those already suspect or dismissive of the assets’ contributory role, definitions like those above, standing alone, contribute little to bringing clarity and contributing to the much needed ‘ah ah’ moments of, I get it!
I have encountered countless situations in which management teams, boards, investors, and employees alike, literally struggle, to make sense of these seemingly ‘invisible’ assets that are seldom, if ever, reported on company balance sheets, even though a rapidly rising number of businesses today literally have very few tangible (physical) assets remaining. Instead, intangible assets have become their overwhelmingly dominant source – driver of value, revenue, and future wealth creation.
There’s little question that intangibles can be a source of frustration and for some companies, and, not just the so-called ‘knowledge intensive’ ones, intangible assets present real challenges to management teams and boards with respect to, for example, allocating resources to further the development of assets, which, according to the definitions, lack physicality and are difficult to measure both their performance and value?
(Adapted by Michael D. Moberly from the work of Thomas A Stewart, ‘Trying To Grasp The Intangible’.)
The ‘Business IP and Intangible Asset Blog’ is researched and written by Michael D. Moberly, president and founder of Knowledge Protection Strategies – http://kpstrat.com. The intent of Mr. Moberly’s blog is to provide insights and perspective to aid a cross-section of practitioners in identifying, assessing, valuing, protecting, utilizing, and extracting value from intangible assets. Your comments regarding my blog posts are welcome at firstname.lastname@example.org.
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