Michael D. Moberly May 23, 2014 ‘A long form blog where attention span really matters’.
Emergence and integration of intangible assets…
Intangible (non-physical) assets have quite literally transformed conventional business practices which had, certainly since the industrial revolution evolved around the production and utilization of tangible or physical assets. This economic transformation, i.e., from the tangible to the intangible became increasingly evident in the late-1980’s to the mid-1990’s as company decision makers, management teams, boards, and the innovation – R&D process globally found it in their interest to rethink and restructure their conventional business strategies to include exploiting internally produced or externally acquired intangible assets.
It was becoming clear that intangible assets, somewhat single handedly, were the real origins and foundations to most company’s value, their sources of revenue, and competitive advantages. More specifically, intangible assets had become the ‘building blocks’ for most company’s profitability, growth, and sustainability.
Thus, what ultimately is now referred to as the knowledge (intangible asset) based/driven global economy was an important facet to conducting business in the 21st century and intangible assets were playing increasingly integral and influential roles.
Professor Baruch Lev of New York University’s Stearn School of Business noted that (business) economic activity increasingly consisted of the exchange of ideas, information, expertise, and know how, all of which are intangible assets. Obviously then, a company’s collective competencies and capabilities to effectively develop and strategically exploit intangible assets, particularly intellectual, structural, and relationship capital was rapidly superseding the mere control over or use of physical – tangible assets and resources.
As more management teams have come to recognize the value of many physical (tangible) goods are increasingly based on the degree and/or how well intangible assets have been integrated in the products and/or services being produced, particularly high quality intellectual and structural capital that collectively morph into brand, creative presentation, and content, etc. So with the origins of company value and revenue showing convincing signs of moving from the tangible to the intangible globally, changers are obviously necessary.
This irreversible economic fact produces new risks…
One outcome of this irreversible change from the tangible to the intangible was that it became clear that while intangibles were being more fully integrated in company’s operational thinking, strategic outlook and planning, they were also having a strong bearing on the responsibilities of Corporate Security Officers. For example, CSO’s would become increasingly responsible for safeguarding and mitigating risk to intangibles which, when materialized tends to longer lasting, if not permanent adverse economic and competitive advantage affects. More specifically, the intangible asset side of a company’s business, i.e., its reputation, brand, image, goodwill, competitive advantages, sources of revenue, relationship capital, will likely experience the greatest impact.
Inevitability of intangible assets playing more significant roles…
So, it was inevitable that intangible assets would be playing increasingly significant roles in company operation, strategic planning, and the types of transactions and other business initiatives they routinely engaged. In other words, achieving consistent business success was now inextricably linked to the effective stewardship, oversight, management, and safeguarding of a company’s intangibles which includes the ability to:
- identify, unravel, and assess intangible assets collectively as well as their individual contributory value.
- sustain control, use, and ownership of the assets throughout their respective life, value, and functionality cycles.
- understand how to exploit intangibles’ contributory and collaborative elements and the competitive advantages they produce.
- monitor intangibles’ value, materiality, and risk in both pre and post (business transaction) contexts, and in designing and executing exit strategies.
Acquiring the necessary capabilities…
Acquiring these capabilities and skill sets were rapidly becoming managerial imperatives, regardless of a company’s size, location, maturation, or industry sector and each needs a multi-pronged strategic roadmap which includes demonstrating how to…
- put intangible assets to work for one’s company effectively and profitably.
- safeguard the contributory value of intangibles throughout their respective functionality (life) cycle.
- provide effective stewardship, oversight, and management, and of a company’s intangible assets, not optional tasks, rather as fiduciary responsibilities that can no longer be dismissed, neglected, or relegated to the uninitiated, e.g., it will get done as time permits, when the resources become available, or, when competitors are observed doing it.
Home grown intangible assets…
To be sure, I recognize that most every company produces – possesses intangible assets which for the most part are ‘home grown’, i.e., internally produced, distinctively relevant, and company specific, irrespective of its location, size, industry sector, or maturity.
In many, instances, however, ‘home grown’ intangibles may not be particularly well suited to one-size-fits-all managerial or company culture circumstances in other words, it’s increasingly unlikely, in my view, that such intangibles would be readily transferrable. Certainly, there is ample evidence – examples strewn about businesses in many different sectors in which intangible asset transferability simply did not work or perform as desired. Instead, they may require nuanced modifications and handling aligned – commensurate with…
- achieving the most effective and efficient use.
- maximizing their contributory-collaborative value, and
- building and strengthening a company’s structural capital and competitive advantages throughout its supply-value chain.
- specific types of (business) transactions a company most frequently engages.
However, what fits best tends to work best…
To ameliorate the challenges associated with (intangible) asset transferability, Iadvocate very individualized approaches to assessing, utilizing, bundling, managing, and safeguarding. intangibles’. This, I refer to as my ’what fits best tends to work best’ strategy. More specifically, my own experiences (anecdotally) suggest that ’what fits best’ for a company and its operating culture will usually ‘work best’ and produce the best outcomes insofar as helping achieve its business goals, objectives, and maximize the use of its intangible assets.
What fits best doesn’t require company management teams to step outside their areas of expertise…
An important message to convey is that my ‘what works best usually fits best’ approach does notrequire management teams to step outside their primary areas of managerial – operational expertiseto understand and apply the various principles and strategies presented. Instead, this approach is designed to build upon management teams existing expertise, but it adds challenging, relevant, and forward looking dimensions to those areas of specialization and expertise.
Too, my experience clearly suggests the ‘what fits best’ approach respects achievements of management team members while helping companies proceed more effectively and quickly insofar as their value, competitiveness, and profitability. Too, it renders companies less vulnerable to the ever growing array of risks and threats which can rapidly materialize to literally sap the value from intangibles and undermine – erode the value, margins, and competitive advantages of potentially lucrative (intangible) assets.
The countless companies and management teams I have encountered over the past 25+ years, with no exceptions that I can immediately recall, each produces (internally valuable, revenue generating competitive advantages and numerous other ‘building blocks’ that can lead to growth, profitability, and sustainability. Let’s try it together!
Mr. Moberly welcomes and encourages reader comments.