Michael D. Moberly June 11, 2009
Why is it important to ensure a company’s intangible assets are aligned with its core business, and why would such an exercise be a worthy use of a management teams’ time? There are five good reasons!
1. 65+% of most companies’ value, sources of revenue, sustainability, and future wealth creation, irrespective of (company) size or industry sector, lie in – are directly linked to intangible assets…
2. unlike the issuance of a patent or trademark by the government, there are no other confirmations made that say ‘additional company value lies in other intangible assets’ which management teams have the sole responsibility to identify, unravel, assess, position, leverage, maximize, and extract value…
3. company’s that do not recognize how integral intangible assets are to sustaining core business will leave competitive advantages, revenue, and value on the negotiation – business transaction table…
4. left unrecognized and un-utilized, a company’s intangible assets will become readily available (vulnerable) for competitors and adversaries to acquire and exploit and, once gone, intangibles become largely irreplaceable, irretrievable, and extraordinarily costly and time consuming to re-build…
5. when thoughtfully and effectively executed, the act of aligning intangible assets with core business will produce processes, practices, and a culture that is able to identify, assess, position, and ultimately execute opportunities to maximize and/or extract value from intangibles at earlier stages of their respective value and functional life cycles.
Good, first steps to aligning a company’s intangible assets with its core business is to bring clarity, relevance, and context to intangibles, i.e., they are…
– embedded in a company’s distinctive processes, procedures, and practices and its overall culture in ways that set it apart from its competitors by creating efficiencies, enhancing internal-external relationships, and providing special competitive advantages in the market place. (Michael Moberly)
– unique knowledge a company and its employees possess and the special value that comes with the understanding and ability how to use it best. (McKinsey)
Management teams can kick start the process of aligning their intangible assets with their core business by considering this guidance, (a.) determine who, how, and where intangibles are being produced and/or exist internally, and (b.) identify relationships, connections, and/or contributions (value) those assets produce (internally, externally) relative to benefitting a company’s core business, i.e., its products, services, brand, goodwill, image, reputation, and revenue etc.
Five broad examples of positive, company-wide outcomes resulting from aligning a company’s intangibles with its core business are:
1. mining and applying employee expertise, technical know how, and institutional memory for inter-business unit applications to address/solve current problems, challenges and/or contribute to new/existing products and services vs. hiring outside consultants…
2. extrapolating (proprietary) employee training materials to marketing, sales, and customer service units to elevate familiarity and/or understanding of certain products, services, or even conducting ‘trouble shooting’ to elevate goodwill, reputation, image, sales, and/or introduce new – prospective customers to those products and services…
3. making company websites especially ‘user relevant’ to (a.) build and enhance loyalty, (b.) explain new services and products, and (c.) facilitate the introduction and marketing of other relevant opportunities of interest to website users…
4. critically examining the findings (insights, perspectives) from competitor-market research and focus groups for relevance beyond traditional (exclusive) application to marketing, sales, or new product development units…
5. reviewing and extrapolating insights gleaned from all business units about ‘what works and what doesn’t work’ to become more efficient, competitive, and less likely to pursue paths of ‘reinventing the wheel’…
Aligning a company’s intangible assets with its core business and strategy means recognizing that most all decisions related to the utilization of intangible assets, i.e., IP, know how, and competitive advantages, etc., are business decisions, not solely legal processes! Therefore, management teams are obliged (as fiduciary responsibilities) to exercise more management, oversight, and stewardship of those assets and the internal and external network of connections and relationships those assets produce.
