Reader comments about my blog posts are interesting…respectfully however, some are disconcerting, especially those which convey a sense of dismissiveness (disregard, casualness) regarding my oft repeated arguments that it is a prudent necessity, if not a fiduciary responsibility today, for business leaders and management teams to acquire operational level familiarity with, and engage, their intangible assets. https://kpstrat.com/2009/08/17/intangibles-are-strategic-assets-for-smes/
Somewhat disappointingly, a few comments…convey uncompromising positions about intangible assets, some bordering on denial by questioning the authenticity-validity of intangible asset intensive and dependent businesses. Those comments often include some variation of this is the way we have always operated, it seems to have worked fine thus far, why should this company change its processes – structures now?
I want to interpret such remarks…as being expressed by business leadership who, for various reasons, unfortunately, must first run head-on into the proverbial brick wall, sometimes repeatedly, before change will be considered, in this instance, recognizing and engaging the dominance of intangible assets insofar as their contributory roles to company-business value, revenue generation, competitiveness, and sustainability, etc.
Hence, the ‘brick wall’ reference...in some instances, manifests as a necessary prelude to becoming (more) receptive to reversing the erroneous presumption that tangible – physical assets remain dominant to business operation and outcomes, and instead, acknowledge the meteoric rise in intangible asset intensive and dependent businesses. https://kpstrat.com/2011/01/06/cfos-intangible-assets-strategic-planning-and-the-information-gap/
For the leadership of any business…achieving operational familiarity (with their intangible assets) translates to…
- being sufficiently familiar to consistently distinguish, develop, assess, and lucratively and competitively exploit intangibles, and
- apply safeguards when – where necessary to mitigate the materialization of risk that will adversely affect the assets’ value, ability to generate revenue, and sustain competitive advantages.
To the many practitioners who read this blog…it should come as no surprise, there will always be business leaders and management teams whose repeated interactions with ‘brick walls’ will not be sufficient, standing alone, to influence change, ala blah, blah, blah…bang!
To be sure, I respect business leaders…who recognize their obligation to elicit input and objectively debate any substantial departure from past (time honored) practices, relative to thoughtfully and cautiously exploring the cost-benefits of introducing change.
- deny these economic facts and business operational realities, relative to intangible asset intensity and dependency, or
- assume your company is somehow exempt from or an exception to those facts and realities,
- regard intangible assets with a sense of casualness and/or dismissiveness, is foolish at best.
There are now two plus decades of unequivocal economic study and evidence…that demonstrates ‘80+% of most company’s value, sources of revenue, competitiveness, and sustainability today lie in – emerge directly from intangible assets. Ill-advised perceptions to the contrary are frankly, baffling.
Role of FUD factors…I suspect, at least in part, business leadership – management team passivity to and not recognizing the necessity to engage their intangibles, at least in part, can be attributed to decision-making, action, and execution are variously influenced by ‘FUD factors’, i.e., fear, uncertainty, and doubt. There is little doubt that FUD can and frequently does influence people to act, i.e., purchase an advertised product and/or service in which FUD factors have ben artfully and purposefully embedded throughout.
Of course, the relevance business leadership – management teams attach…to FUD, as precipitators – drivers toward change carry numerous variables. Those who may question how the introduction of fear, uncertainty, and doubt can and do influence decisions are encouraged to observe – listen to television commercials developed by pharmaceutical companies, personal injury lawyers, and senior home product and service firms, etc., which are routinely aired during time periods when viewer demographics show high percentages of seniors.
For some business leaders and management teams…irrespective of their company’s size, products-services produced, or location, prolonged discussion on issues that should warrant change, but, are seldom acted on, action deferred, or execution tabled, may be politically prudent, i.e., proceed slowly and cautiously. In numerous instances, this is because company stakeholders and boards to whom the leaders report and rely, may not sense the same level of immediacy or necessity to act.
An analogy of climate change and intangible assets...e.g., to defend against (future) climate change, which for many remains variously intangible to many citizens, unless – until the adverse effects become personal.
Interestingly, there is ample psychological literature examining our perceptions of risk…many sources demonstrate that what we fear, we will demand protection from! More specifically, the (climate) risks which people can recognize and acknowledge may directly affect them, i.e., the consequences of the inevitable and advanced melting of icecaps and icebergs in both the northern and southern hemisphere. Of course, for some, either will occur too far into the future to dissuade them from buying beach property along the Virginia (Atlantic) coast.
On the other hand, when one voluntarily partakes in a survey…regarding climate change, ala the environment, they are likely to express concern. But, the environment, as a (standalone) issue, seldom translates to favorable action in a voting booth. What’s more, we may acknowledge the inevitable realities of climate change, ala adverse effects on-to our environment, it’s unlikely to materialize as action, unless-until citizens sense forthcoming-immediate adversities with personal affect.
In part, that’s because future issues…seldom translate as imminent risk, i.e., vulnerability, probability, or criticality. But, citizens who sense (translate) future issues in more personal contexts, will likely seek (demand) mitigative action, while those dependent on the prevailing politics may do little more than continue their discussions without taking-action.
Deconstructing why the psychology of intangibles…may translate as being ‘a difficult fit’ for conventional (politically dependent) business leaders and management teams. The science of human behavior, particularly the psychology how people perceive – interpret risk, suggest most apply two approaches to make their judgments about risk…
- reason and affect.
- facts and feelings.
In other words, it is naïve to disregard these truths about intangible assets…by presuming reason and intellect, standing alone, will produce the appropriate – most correct strategic decisions about their exploitation and contributory role and value to a company’s revenue generation, competitiveness, and sustainability. That’s just not how most human’s (ala business leaders and management teams) are inclined to act. Even as potentially catastrophic as continued dismissiveness of company’s intangible assets will be, if business leadership does not recognize precisely how intangibles contribute to enterprise wide benefits, i.e., the costs of action are worth it.
Readers are invited to examine other relevant resources I have produced at https://kpstrat.com/books/, i.e., books, papers, blog posts.
Insights for this post were gleaned from reading the fine work below…
- “Risk: A Practical Guide for Deciding What’s Really Safe and What’s Really Dangerous in the World Around You (Houghton Mifflin, 2002), David Ropeik with George Gray.
- A 2002 New York Times interview with David Ropeik on the “fear factor.”
- Blog post titled ‘Are We Stuck With ‘Blah, Blah, Blah, … Bang’? by Andrew C. Revkin
August 4, 2008 8:24