Michael D. Moberly June 17, 2014 ‘A long form blog where attention span really matters’.
Conventional strategic planning irrelevant if intangible assets are not at the center…
The increasingly competitive business terrain in which know how and other intangible assets have become the overwhelmingly dominant drivers and producers of value and revenue is clearly prompting many companies to re-examine the relevance of their often times, conventional and even static business plans and mission statements.
I am not suggesting there is anything inherently wrong with continuing to write business plans and mission statements, because they frequently do serve as a descriptive (Gannt Chart type) of roadmap of what leaders want their business to eventually look like and how to get there!
But, for analogous purposes, some (management teams, boards) are inclined to view business plans and mission statements in a ’constitutional’ like fashion, i.e., either as a ’living’ document that’s malleable and subject to flexible interpretations to reflect an evolving global business environment, or a more static document that can only be interpreted on the basis of its ’original intent’.
A law firms’ strategic plan, particularly one that incorporates client’s intangible assets, is a dynamic and on-going exercise. The reasons are that client’s intangible assets are often nuanced, business/company centric, seldom remain static, and frequently fluctuate relative to the materialization of risks, threats, and the nature and type of transactions engaged in which clients’ intangible assets will inevitably be in play.
Leaders, late adopters, or followers…
Law firms can choose to be leaders, late adopters, or followers. Today however, in an increasingly intangible asset intensive and global business – economic – transaction environments, a law firms’ initiative to devote attention and practice area resources to clients’ intangibles will reap benefits in terms of being more reflective and accommodating to client needs by, among other things, respectfully bringing clarity to the necessity for tactical and strategic stewardship, oversight, management, and assessment if intangibles other than IP, sometimes even before business clients become fully aware of their (the assets’) potentially favorable advantages.
Intangible asset relevancy to each practice area within full service firms is one in which each practice area can contribute through their respective and specialized lens.
Unfortunately, the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets, has yet to become so self-intuitive to management teams, c-suites, and boards that they instinctively recognize the necessity to identify, develop, safeguard, and exploit the intangibles their company produces internally and/or acquires externally.
Effective strategic planning produces client benefits…
Law firms have varying levels of experience and depth in IP matters. This makes it, in my view, all the more legitimate and necessary for firms to include, as part of their strategic planning, the acquisition of the necessary expertise to aid clients to recognize the various ways their company can elevate its value, add sources of revenue, and solidify its sustainability through better utilization, governance, and exploitation of its intangible assets.
Benefits to firm clients can occur not just by recognizing intangibles assets and their relevance to business profitability and market space, but also by taking affirmative steps to guide clients in identifying, unraveling, assessing, auditing, positioning, bundling, and exploiting intangibles and defending intangible asset intensive client companies in the intricacies intangible asset rooted disputes and challenges..
Thus, the more clarity a firm’s client decision makers achieve regarding the intangible assets their company produces or has acquired and the inevitably which they become embedded in the products and/or services a business client produces will lead to better – more informed decisions about the necessity to engage leading edge law firms that provide such services, as competitive leaders, not followers or late adopters.
When prospective clients – buyers of legal (IP) services, or merely consumer products for that matter, initially approach a law firm, if they find it challenging to distinguish/assess a firm’s comparative quality, particularly when such information is neither readily available or distinguishable, a percentage of those prospective clients will be inclined to promptly ask about pricing and fees.
More specifically, such circumstances often translate as an inability to quantify the value of what may appear, to prospective clients, as competing services and/or offerings because, unfortunately, pricing (fees) tends to be the primary form of measurement business decision makers understand insofar as distinguishing competing offerings – services. That’s because pricing (fees) tend to be a more readily recognized and presumably understood form of measurement..
So, a law firms’ ability to attract and secure new as well as retain existing clients, IP, or otherwise, particularly among increasingly frugal, discriminating, and cautious prospective buyers of legal services, can be rotted in a firms’ ability to articulate greater value in understandable and actionable contexts to benefit the client and exceed their respective needs and expectations. (Adapted by Michael D. Moberly from the work of Dale Furtwengler)
My primary rationale for advocating the inclusion of client company’s intangible assets in a law firms strategic planning is that by doing so, it will legitimately produce broader opportunities to re-engage existing clients as well as engage new – prospective clients on yes, a broader range of business legal issues, i.e., their intangible assets.
Too, by virtue of the connections between intangible assets and IP, law firms, particularly those with an IP practice, are pre-positioned and branded, so to speak, for guiding client businesses and companies to legitimately inquire and explore ways to more profitably utilize their intangibles.
Also, law firms, whether they recognize it or not, routinely become a repository of familiarity about ‘all things intangible’ regarding their business clients. It would seem prudent then for firms to develop strategic plans that call for a collaborative convergence, i.e., draw upon their existing practice area expertise, and various other complimentary domains to exploit that expertise and redirect a portion to business clients intangible assets.
However, the speed which intangible assets are coming to the forefront of business profitability and sustainability has produced some challenges for law firm business client services management that lead to maximizing intangibles value and creating opportunities for asset monetization and/or commercialization.
- One challenge is meeting the rising fiduciary responsibilities associated with the overall management of intangibles and the ability/competencies to simultaneously sustain control, use, and monitor asset contributory value and materiality, and risk to ensure that value, revenue producing and competitive advantage potential is neither undermined or lost.
- A second challenge, for law firm business clients and their management teams is recognizing that intangible assets are literally embedded in most every company’s processes, procedures, and practices (as intellectual, structural, and relationship capital) regardless of (company/client) size, maturation, or industry sector. The fact that most intangibles are embedded as noted above, can manifest as competitive advantages, brand, and reputation. What would matter most to clients is engaging a law firm that has already acquired the skill sets and experience to guide clients to identify – differentiate those assets and exploit their contributive – collaborative value as effectively and efficiently as possible.
- A third challenge is ensuring the necessary competencies are in place within a law firm to identify, unravel, assess, position, and bundle, if necessary, the assets and profitably apply-utilize (leverage) them in a broad range of business circumstances and transactions in which intangibles are routinely in play and/or part of a deal.
- A fourth challenge many, if not most client management teams experience is surviving, that is, remaining competitive, profitable, and sustainable while engaged in a global business (transaction) environment that is not just increasingly competitive, but aggressively predatorial, and often functions in winner-take-all business contexts.
These challenges of course, lead us to an even more compelling rationale for law firms to develop a strategic plan, of which one component, includes a viable path for converging a firms collective expertise to effectively address each of the following phenomena on behalf of clients because…
- There is no other time in business governance – management history when steadily rising percentages of company value, sources of revenue, and growth potential are so deeply rooted in intangibles.
- There is a necessity to re-frame the management, stewardship, and oversight of a company’s intangibles as fiduciary responsibilities that warrant enterprise wide collaboration and consensus.
- All too frequently, the contributions intangible assets make to company revenue, value, competitiveness, and market position are overlooked, dismissed, neglected, undervalued, left un-safeguarded, and ultimately lost, diluted, or leach out to competitors and the public domain.
- Intangible assets have become much more than mere tools to manage and/or enhance other (tangible, physical) assets. Instead, intangibles are now valuable and often times stand alone commodities that can be developed, positioned, integrated, and utilized to produce revenue, enhance competitive advantages, and otherwise add real value to a company.
- The financial reality that intangibles and intellectual property can advance a company (economically, competitively, etc.) only so long as control, use, ownership, value and materialty can be sustained.
- The time frame when company’s can realize the most value from their intangible assets generally remains variously compressed relative to an assets respective life, contributory value, and functionality cycles. In part, this compressed state is due to (a.) lower barriers to market entry by competitors, and (b.) rapid profits being achieved from, what I call, predatorially sophisticated and global product/service piracy and counterfeiting operations that consistently pollute and de-value legitimate supply chains.