Michael D. Moberly December 20, 2011
It’s good practice now for company management teams and boards to make a commitment to laying the necessary foundation for the development of a company culture that consistently extracts value and competitive advantages from the intangible assets it produces or acquires.
The single biggest business reason for doing this is that rising percentages (65+%) of most company’s value, sources of revenue, and ‘building blocks’ for growth lie in – are directly linked to intangible assets!
Irrespective of the broad global acceptance of this business – economic reality, there remains resistance from some management teams and boards about the necessity to acquire the necessary skills and undertake the fiduciary responsibilities to profitably exploit and effectively safeguard the intangible assets.
Anecdotally, five reasons often cited by management teams and board for expressing skepticism or being dismissive about intangibles assets include…
- a genuine lack of familiarity what intangible assets really are
- their lack of a conventional sense of physicality or ‘tangibleness’ and thus are portrayed as being difficult to quantify and/or measure insofar as determining their contributory value and performance
- they don’t appear separately on balance sheets or financial statements, instead are lumped together into indistinguishable bundles of goodwill
- they tend to fall outside of Peter Druckers’ time honored ‘mba’ precept, i.e., if they can’t be measured, they can’t be managed
- they require outside-the-mainstream strategies to extract value, drive/sustain competitive advantages, monetize, or used as collateral.
During most client engagements, one of my objectives is to devote a portion of time to identifying the principles and benefits of building a resilient and profitable intangible asset focused company culture.
My interest in building – advancing company cultures, particularly one devoted to intangible assets evolves from the superior work done by Dr. Edgar Schein in building productive and sustaining company cultures. Dr. Schein points out that a company culture begins with ‘shared assumptions that employee’s learn while solving (internal) problems’.
Standing alone, Dr. Schein’s perspective may appear, for the yet to be convinced, more suitable for a university lecture hall than the increasingly aggressive and competitive real world of globally operating companies and business transactions. But, when management teams factor 65+% of (their) company’s value and sources of revenue evolve from intangibles, even the most reticent should correctly conclude that devoting even the most minimal time and resources to building an intangible asset conscious company culture would be an exercise that will deliver favorable and long lasting outcomes.
But, how would management teams know there was a payoff to a fully functioning (intangible asset) company culture? Again, referring to Dr. Schein’s work it would become evident at the point in makes perfectly prudent business sense to assume that a significant percentage of the challenges and problems companies face relative to stagnation are variously related to their reluctance or inability to effectively identify, assess, and extract value and competitive advantages from their intangible assets.
So, what’s a bottom line to building a company (enterprise wide) culture that recognizes, produces, measures and sustains control, use, ownership, and monitors the value and materiality of its intangible assets? It’s a shared and well-linked set of characteristics, beliefs, assumptions, and behaviors that intangible assets…
- are real, credible, and convertible sources of value, potential revenue, and ‘building blocks’ for growth and sustainability
- should guide – underlie business decisions, transactions, and strategic planning!
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