Getting Intangible Assets On Board and Senior Management Agendas…

Michael D. Moberly   November 21, 2008

I’m extrapolting here somewhat, but according to Rob McLean’s fine piece ‘Intellectual Asset Strategy and the Board of Directors’ (IAM December/January 2006), which I believe is still very much apropos today, ‘boards are frequently drawn into intellectual asset management issues when there is a crisis, such as a lawsuit involving IP rights’.  ‘Few boards’, McLeans suggests, and which I believe still reflects reality, ‘deliberately allocate time to intellectual asset issues as a matter of course’. 

I can’t say for sure whether McLean’s references to ‘boards’ were directed to larger, Fortune 1000 types of companies or small medium enterprises and multinationals, i.e., SME’s and SMM’s respectively?  While, much of my professional interests tend to be focused on the latter, my experience suggests that boards and senior management in either group still convey little overt (interest) incentive (a.) for consistent stewardship, oversight, and management of intellectual (intangible) assets, (b.) in intangibles being routine action items on board and/or c-suite agendas, and (c.) in deliberating – taking action on intangibles because they’re primarily perceived as legal processes versus fiduciary business decision.

With respect to boards’ actually engaging intellectual (intangible) assests, Mr. McLean describes four levels of engagement in which he characterizes boards’ in…

Level I – are generally unaware of the importance of intellectual (intangible) assets and related strategies relative to company strategy or competitive industry trends…

Level II – may be peripherally aware that intellectual (intangible) assets have some importance in strategy and competitive trends at the company level…

Level III – have a high-level understanding that intellectual (intangible) assets have some importance in strategy and competitive trends at the company level…

Level IV – have a detailed understanding of the role that intellectual (intangible) assets and strategy play in strategic planning at both the company and business unit level…

McLean further suggests (with respect to company boards’), that if ‘they are being honest, most would situate themselves at Level I or II’, a perspective which I belive is still reflective of today’s circumstance however it may stunt current fiduciary responsibilities.

For those who find Mr. McLean’s (level approach) portrayal and assessment of board engagement with intellectual (intangible) assets to reflect their observations and experienes, it does present numerous challenges and conundrums to intangible asset specialists.  One in particular is sending unequivicol messages to boards and senior management that however ‘full their managerial/fiscal plate may already be’, their stewardship related to sustaining – enhancing – leveraging – extracting value from internally produced and/or acquired intangible assets should be permanent fixtures on their respective agendas.

From the board and senior management perspectives, there are three broad, yet quite plausible, starting points to achieve this:

First – consider changes in company governance structure and practices to genuinely reflect and be aligned with the reality that as much as 75+% of a company’s value, sources of revenue, sustainability, and foundations for future wealth creation are very likely to lie in – directly linked to intangible (intellectual) assets.

Second – takes steps to ensure the right people receive the right information that allow them to focus on the right areas with respect to the company’s intangible assets.  This includes information and insights related to maximizing, leveraging, and extracting value and whatever else can position those assets to deliver (more) value and competitive advantages.

Third – the underlying/foundational responsibilities for identifying, assessing, and sustaining (protecting, preserving) control, use, ownership, and value of those assets should reflect a collaborative effort amongst intangible asset specialists, legal counsel, security, risk management, IT, and relevant business units where the intangibles often originate and percolate!



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