Michael D. Moberly April 2, 2012
We’re well into the 21st century and the role intangible assets’ are playing as value, revenue, and growth creators has been widely discussed and presumably understood and accepted at the 5,000 foot elevations in business communities globally.
At those elevations, it’s a reasonably well-known and accepted economic fact that steadily rising percentages, i.e., 65+%, of most company’s value, sources of revenue and building blocks for growth and sustainability evolve directly from intangible assets. In other words, one of the many products of the present knowledge-based global economy is that a significant and probably permanent shift has occurred from tangible (physical) assets to intangible (non-physical) assets representing company’s dominant sources of value.
One persistent question for me is, why hasn’t this economic fact – business reality resonated more with the U.S. business community? Why hasn’t it sparked a broader sense of urgency among management teams, c-suites, and boards to engage intangible assets their companies have very likely already produced and routinely use?
I, like other voices advocating greater recognition and utilization of intangible assets, meet with astute, intelligent, and extraordinarily talented and successful business leaders who are apt to use sophisticated techniques and/or software to schedule employee work schedules to reduce overtime pay, but, mention the words intangible assets and eyes quickly begin to glaze over!
What’s equally puzzling to me is, why aren’t these decision makers acting on this information, whether it comes from me or other sources? Why are these ‘within hands reach’ sources of value and revenue essentially being overlooked, neglected, or, in some instances, literally dismissed?
In part, the lack of business enthusiasm for intangible assets may be attributed to:
- accountants who may not fully recognize the contributory significance – value of intangibles to their business clients
- accountants who find reporting and/or accounting (valuing intangibles) too subjective or challenging, therefore are reticent to introduce or explain their relevance to clients…
- faux strategic planning which is really akin to near term – quarterly-based thinking that leaves little, if any, room for longer term thinking – planning about utilizing, acquiring, or extracting value from intangibles…
- a general tendency to define – explain intangibles as being synonymous with intellectual property, i.e., patents particularly, which for a majority of companies, has little or no relevance because they do not hold any IP, nor do they anticipate developing any IP in the future…
- a self-deprecating assumption by some management teams that their company neither possesses nor develops any intangible assets of value worthy of their time to identify and assess…
- the mere lack of physicality of intangible assets, or as the British often refer to them as ‘invisibles’…
- business consultants that inappropriately characterize the process of identifying, assessing, and extracting value from intangible assets as being far more complicated and time consuming than necessary, and I hasten to add, is the reality…
Understanding and taking affirmative steps to utilize and extract as much value and competitive advantages as possible from intangible assets is not rocket science, rather, it’s just good business!
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
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