Michael D. Moberly November 29, 2011
“If it can’t be measured, it can’t be managed”, an adage attributed to Peter Drucker that, in my view, carries more relevance today than when it was initially uttered. That’s because increasing percentages (65+%) of company’s value, sources of revenue, and foundations for growth evolve directly from intangible assets including intellectual properties, proprietary know how, brand, goodwill, etc.
In fact, there is no other time in company governance history when measuring and managing the value of knowledge-based assets (intangibles) is more necessary to a company’s growth and profitability.
By consistently monitoring – assessing the value of a company’s intangibles, management teams can be positioned to recognize, in a timely manner any:
- erosion – undermining of asset value and competitive advantages through misappropriation, infringement, and counterfeiting
- materiality changes in assets relative to Sarbanes-Oxley and FASB
- asset obsolescence
Asset valuation must constitute much more than periodic snap-shots-in-time however. Rather, it behooves management teams today to have on-going asset valuation processes because (asset market and company relevance) value and materiality can fluctuate relative to the assets’ vulnerability – attractivity to internal and external influences such as theft, misappropriation, infringement, etc.
When such adverse events occur, an assets’ value and competitive advantage deliverance, i.e., stability, defensibility, and fragility can be significantly impaired hence, a company’s (project’s) anticipated profitability and sustainability can rapidly be undermined or stifled altogether.
Again, by being able to consistently monitor and measure the value of key assets, companies and their management teams can be more responsive to:
- the inevitable challenges, disputes, and external targeting that routinely occurs
- meeting their ever expanding fiduciary responsibilities insofar as protecting, preserving, strengthening, and managing their intangibles.
- allocating – directing asset protection resources more efficiently and effectively commensurate with an assets’ life and contributory value cycle.