Fiscal Cliff and Intangible Assets: It’s Time Companies Put Their Intangible Assets To Work!

Michael D. Moberly   June 11, 2012

These are serious financial times that demand equally serious strategies to elevate a company’s probability of survivability and sustainability (post recession).  Sometimes those strategies are new, or one’s that have been around for awhile but have been dismissed, overlooked, or subordinated like, for instance, more effective utilization and exploitation of intangible assets.

Few respected economists or business persons would disagree with the reality that, at least in their lifetime, there has been no other period in company governance (managerial, financial) history when intangible assets are more integral to a company’s value and revenue generating capability.

My initial intent here is to draw attention to the business reality that a company’s intangibles comprise, what I refer to as ‘in your face’ assets.  They manifest in various forms, e.g., intellectual property, intellectual, relationship, and structural capital, reputation, goodwill, etc.  What’s important though, is that intangibles, effectively used and exploited will genuinely aid companies to ‘weather’, what’s now projected to be, a recessionary period that may extend well into 2013 should Congress not develop and pass effective and strategic legislation to avoid the ‘financial cliff’ that is most certainly looming.

For the still ‘bricks and mortar’ (tangible asset) thinkers it’s all-to-easy, unfortunately, to maintain a subordinate and/or dismissive attitude toward intangibles insofar as whether they can actually serve as viable and strategic ‘building blocks’ to surviving this economic downturn. In large part, that’s because intangibles…

  • don’t appear on balance sheets or financial statements unless they’ve been acquired or formatted only as goodwill.
  • lack physicality which some still find challenging therefore, to measure their performance and/or value with replicable precision,.
  • require a departure from conventional ‘mba’ (tangible asset oriented) precepts.

It’s difficult though to totally dismiss or ignore the economic fact that 65+% of most company’s value, sources of revenue, and foundations for growth evolve directly from intangible assets.

My second intent here is to respectfully signal to c-suite, boards, and management teams, regardless of industry or sector, that identifying, positioning, and exploiting intangible assets now, is not only a necessary and relevant exercise, it’s a fiduciary responsibility that can contribute to literally thousands of small, medium enterprises (SME’s) and small, medium multi-nationals (SMM’s) better weather this financial crisis.

There are, of course, important fundamentals with respect to intangible assets, that every business decision maker should acquire familiarity relative to their company, i.e.,

  • what intangible assets does my company produce, possess, and own, and what forms do they take…?
  • how does my company unravel and assess (internally, externally) its intangible assets…?
  • how can my company determine whether its intangible assets actually deliver – contribute to company value and sources of revenue…?
  • what best practices are available for the stewardship, oversight, and management of intangible assets…?
  • once my company’s revenue and competitive advantage producing intangible asset have been identified, how can their control, use, ownership, and value be sustained…?
  • what strategies should my company consider relative to positioning, leveraging, and extracting as much value and competitive advantages as possible from its intangible assets…?

Let’s be realistic though, better utilization – exploitation of a company’s intangible assets standing alone, probably won’t constitute the silver bullet necessary to completely survive the recession unscathed.  But, devoting even minimal time to acquire an operational familiarity with intangible assets, by reading this blog, among many other fine sources, can certainly elevate decision maker’s receptivity to considering and understanding intangible assets as being effective pathways to…

  • experience measured growth despite the recession.
  • sustain and build stronger competitive advantages.
  • advance a company’s intellectual, structural, and relationship capital, and
  • identifying new opportunities to build and/or strengthen strategic (business) alliances.

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