Michael D. Moberly    May 18, 2012

We all know about the increasingly competitive business terrain in which intangible assets, e.g., intellectual, structural, and relationship capital have become the dominant drivers (producers) of most company’s value and sources of revenue.  This economic reality is influencing, as well it should in my view, entrepreneurially-minded management teams to re-examine the relevance and applicability of a conventionally structured business plan.

Let’s be clear, I am not suggesting business plans are irrelevant because they can serve as useful and descriptive (projective) roadmaps of what one wants a business to eventually look like and how to get there!

The issue, in my judgment, is that there is an inclination on the part of many management teams, c-suites, boards, and other stakeholders to symbolize a business plan in somewhat of a constitutional law context as if Justice Scalia was debating whether it is a living document that’s malleable and flexible as circumstances warrant or a more static (stationary) document that should only be interpreted relative to its original intent.

Personally, I am finding more management teams, at least those which I have the pleasure of engaging, exhibiting a greater sense of responsiveness, adaptivity, and preparedness to rapidly execute to accommodate the immediacy which business opportunities are, with more regularity, being framed.   Put simply, there appears to be less interest in – necessity for being bound to the rigidity associated with a conventional business plan.  In other words, there appears to be more emphasis on the tactical, while not overlooking or neglecting the strategic!

Let me be clear though, most of my engagements, by choice, are with small, mid-size, and early stage companies where assembling a structured and strategically focused business plan may be subordinate to merely trying to remain viable in this this extended economic downturn (recession).

Respectfully, business plan development and construction is still portrayed in many college (business) textbooks and curricula, as being the very first step one should take toward starting a business. Interestingly, in an MBA (business management) course I’ve taught numerous times, this somewhat alternative view about business plans was purposefully presented to classes in which there were numerous ‘entrepreneurial spirited’ students who aspired to start their own business, with some already in the early stages.

For many, my (alternative) view prompted numerous, but generally opposing reactions, particularly from individuals who had already toiled over writing a business plan and now felt wedded to it.  Such reactions are understandable and respected.  Some types of businesses, whether large, midsize, or small may require more structure than others, thus a strong and detailed business plan may be necessary.

But again, it’s simply not uncommon to find myself visiting companies which, at first blush, appear to be, for lack of a better term, somewhat ‘rudderless’ in that they are continually evolving, emerging, and even, what appears to some I’m sure, as being in a perpetual state of ’re-inventing themselves’. The reason or rationale for this still, rather un-conventional management style is that it works for some firms, pure and simple!  This translates to the necessity to retain sufficient flexibility and maneuverability internally to accommodate their particular transaction – business space as quickly and effectively as circumstances warrant.

Of course, I attribute much of this change to company management teams that have achieved confidence in identifying and using their intangible assets which don’t always mesh well, in my view, with conventional, highly structured, and inflexible ‘roadmap’ perspectives found in a business plan. Admittedly too, a substantial portion of the lending community finds little, if anything, to be enamored with this alternative view.  For them, a well-developed and practical business plan serves as the starting (focal) point for most any lending discussion.

All that said, this alternative view does require, in most instances, much more attention and oversight from a management team and board. That is, they need to literally epitomize (embrace) flexibility, intellectually and conceptually, by being prepared to adapt, change, and have the necessary information, at the ready, to make sound decisions as rapidly as a new deal, proposal, or circumstance warrants.

There should be little question now that intangible assets have become the key and irreversible underlier to the success and profitability of most companies, that is, if the intangible assets being produced are recognized, developed, and used (exploited) effectively.   An important marker for demonstrating the effective use of intangible assets, in my view, occurs when management teams…

• recognize intangibles as being very maneuverable, flexible, adaptable, and ‘bundable’ to accommodate the development and execution of a new product, service, or transaction.
• know when, where, and how to use them best to achieve particular objectives, i.e., the wisdom, timing, and sense of foreseeability.

In other words, there should be a ‘company culture’ in place that, among other things, includes consistent stewardship, oversight, and management of intangible assets!

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