Michael D. Moberly March 23, 2012
I have found many management teams and business decision makers in SME’s (small, medium enterprises) and SMM’s (small, medium multinationals) are inclined to interpret the phrase ‘knowledge-intangible asset based global economy’ to be more cliché than reality and more relevant to Fortune 1000’s, presumably rich in intellectual property, know how, and R&D.
Frankly, I don’t share those interpretations. Instead, I advocate this reality…unless and until more management teams, c-suites, D&O’s, shareholders, investors, and other SME and SMM stakeholders recognize:
- intangibles today comprise 65+% of most company’s value, sources of revenue and building blocks for growth and sustainability
- the prudence of engaging intangibles through consistent stewardship, oversight, and management
- the necessity to develop practical strategies to sustain control, use, ownership, and monitor asset value and materiality
…such interpretations and perceptions will likely persist.
Should such intangible asset illiteracy persist, two, among numerous potential adverse outcomes will be; significant unrealized (asset) value and exploitation opportunities are left on the proverbial table, and the assets will remain vulnerable to the myriad of economic and competitive advantage adversaries (globally) to acquire and exploit to enhance their company or client.
In a respectful defense of SME and SMM management teams and decision makers though, many lack sufficient familiarity with intangibles or perhaps the inclination today to take the time to try to turn their intangibles into potentially revenue generating assets. Too, SME decision makers are, broadly speaking, realists and exhibit more aversion to what they interpret as risk, i.e., engaging in a new initiative like intangible assets. Admittedly, such sentiments may be more central to their decision making and planning during this extended recessionary period in which business futures remain unsteady.
Also, experience suggests, many leaders of SME’s with their inclination for pragmatism, recognize that before embarking on any new initiative, particularly one that departs from what they interpret as being very workable past practices, i.e., engaging intangible assets, three things, at minimum, must be in place (up front):
- availability of practical and relevant training that provides sufficient familiarity with intangibles to be immediately useable/applicable with respect to identifying, assessing, and exploiting, i.e., maximizing and extracting value from the assets as sources of revenue, enhancing company value, and/or foundations for growth and sustainability
- financial incentives, i.e., specific tax advantages and direct (immediate) financial inducements, etc., and/or
- regulatory mandates that require every company to commence reporting and accounting for their intangible assets.
While #1 and #2 above would obviously require legislative action, #3 is essentially independent. That is to say, forward looking – forward thinking SME management teams, decision makers, boards, and stakeholders are obliged in my view, as a fiduciary responsibility, to seek and achieve the necessary familiarity with intangible assets that enables them to successfully engage those assets through effective stewardship, oversight, management, and monitoring practices.
While visiting my blog, you are respectfully encouraged to browse other topics/subjects (left column, below photograph) . Should you find particular topics of interest or relevant to your circumstance, I would welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com
Leave a Reply