Michael D. Moberly April 13, 2009
First of all, let’s agree at the outset, it is an economic fact – business reality that upwards of 65+% of most company’s value, sources of revenue, sustainability, and foundations for future wealth creation lie in – are directly linked to intangible assets and intellectual property (IP) including reputation, image, and goodwill.
For various reasons however, there remains considerable uneasiness among business decision makers about precisely what intangible assets really are, and how to best utilize – leverage – extract value from something that’s yet to appear on their balance sheets.
Building the proverbial, but always essential ‘business case’ (rationale) for devoting the time and resources to identify, assess, value, utilize, and extract value from a company’s intangible assets begins with a thorough and practical understanding of intangibles.
Conceiving and presenting a ‘business case’ for any new, and, for some, untested (risky) initiative as those with the insight and fortitude for such things know, can be a daunting task and responsibility in which preparation, as always, is the key. The challenges associated with that task elevate, in part because:
– the subject matter, in this case intangible assets, are, quite literally, intangible, in other words, they lack physicality.
– many decision makers still carry misgivings, misunderstandings, and/or literally dismiss intangibles as being (too) esoteric, or worse, irrelevant to their company and circumstances.
The following represent (some) key factors that should be considered when conceiving and presenting a ‘business case’ to decision makers for identifying, utilizing, and exploiting a company’s intangible assets:
1. Bring definitional – operational clarity to intangible assets, e.g., what they are, what they aren’t, and how they’re relevant…
2. Describe a repertoire of relevant and current examples of intangible assets applicable to a cross-section of industry sectors, products, and services…
3. Describe why it’s necessary to sustain (protect, preserve) control, use, ownership, and value of the assets, e.g., it may not be a case of ‘use’m or lose’m, rather use’m or don’t receive any economic – competitive advantage benefits…
4. Avoid reliance on subjective – worst case scenario risks and threats as the dominant method to attract decision makers’ attention, e.g., business decision makers are frequently risk takers and are often well atuned to distinguishing subjective risks vs. reality…
5. Describe plausible, practical, and understandable –‘economics 101’ – approaches for valuing the assets, not extraordinarily complicated mathematical formulas with subjective outcomes…
6. Describe how and why it’s necessary to identify and unravel asset origins, location, ownership, e.g., to avoid having the assets become ensnared – entangbled in costly, time consuming, and (project) momentum stifling legal challenges…
7. Describe conventional (understandable) factors for determining/assessing asset ‘suitability’ (recognition, valuation, separability, transferability, life cycle, and risks) etc…
8. Demonstrate practical/realistic connections, relationships, and linkages between the production, acquisition, and/or use of intangibles and their direct, supportive, and/or multiplier-effects (contributions) to company value, revenue, sustainability, and (positioning for) future wealth creation…
9. Describe ways to position and/or bundle particular assets (if feasible) to achieve broader ‘leveragability’ and/or value potential, e.g., examine how some of the assets are sufficiently ‘intertwined’ to be bundled together for added attractivity and/or value…
10. Emphasize the importance of practicing consistent stewardship, oversight, and management of intangible assets, framed as fiduciary responsibilities…
11. Describe practical strategies for measuring the contributions – performance of intangibles and converting same to value, revenue, sustainability, competitive advantages, reputation, image, goodwill, etc.
