Michael D. Moberly December 20, 2012
By now, readers know that it is an irreversible economic fact (business reality) that steadily rising percentages (65+%) of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability globally evolve directly from intangible assets!
Ensuring the necessary control, use, ownership and value of those assets is sustained, but only for their respective contributory value and functionality cycle is a significant departure from the conventional practice of lifetime safeguards, but is, in my view, a more practical, efficient, and probably a more prudent strategy given the extraordinary pace and speed assigned to business processes, transactions, and the accommodation of consumer preferences and demands.
I am the first to admit there will be exceptions. However, my primary rationale for safeguarding key intangibles for periods commensurate with their contributory value and functionality cycle is, in large part, due to the assets’ increasingly integral, but, at the same time, often short-lived role and/or relevance to a particular business process or transaction. In other words, intellectual, structural, and relationship capital can translate into very lucrative ‘magic’ when generated and applied to accommodate specific business needs, i.e., activities, processes, or transactions. But, in today’s globally competitive, nanosecond, and predatorial business (transaction) environments, most any assets contributory value can erode, be undermined, its competitive advantages existinguished, or simply be overtaken by improvements in very quick order.
Central to this perspective is the the necessity to incorporate continuous monitoring of intangible assets’ contributory value, particularly the intellectual, structural, and relationship capital which the assets are premised.
But, companies are essentially on their own to find the requisite services and expertise to not just understand intangible assets and their respective contributory values, but identify, unravel, safeguard, preserve, and monitor their stability, fragility, sustainability, defensibility, i.e., contributory value. Too, such services and expertise are rapidly becoming fiduciary responsibilities which fall exclusively to management teams, c-suites, and boards to articulate and execute as a foundation to gain and sustain asset value and competitive advantages efficiently, effectively, and consistently.
More specifically, the actual and contributory value of many, if not most intangible assets fluctuates, sometimes in cyclic fashion in accordance with an assets’ contribution and/or functionality to a particular project, initiative, business unit, transaction, or a company as a whole.
A perhaps crude, but relevant characterization of an assets life, value, and/or functionality cycle is akin to what a doctor once told me about the need for a particular prescription medicine, i.e., ‘you will know when you don’t need it anymore when you start forgetting to take it and realize you’re feeling fine without it’.
Too, the cyclic aspect to intangible assets’ (contributory) value, renders most conventional, snap-shots-in-time or one-size-fits-all (asset) valuation techniques less relevant and certainly less useful, because among other things, they…
do not factor materialized risks – threats to assets that can literally diminish their contributory value to zero almost instantaneously, and
provide little, if any, strategic (post transaction) context to certain intangible asset’s contributory value, in light of the consistent presence of asset risks and threats.
I can say with a high degree of confidence that once an (intangible) asset is compromised, infringed, misappropriated, or undermined, etc., its contributory value to a company or to a specific initiative can begin to unravel and hemorrhage rapidly, globally, and in many instances, irrevocably.
For me, this makes it all-the-more-prudent to monitor intangible assets life, functionality, and contributory value cycles! The point in time in which assets’ contributory features no longer carry the value they once did, i.e., deliver competitive advantages, sources of revenue, etc., it’s logical to assume there is less need to devote time and costly resources to preserving – safeguarding their proprietary status and/or value. This suggests those resources and that time should be devoted elsewhere, perhaps to newly developed and more valuable intangible assets!
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