Whenever a businesses intangible assets go un-noticed…un-respected, (un-) or undervalued, and un-protected, or routinely dismissed, business leadership, investors, and shareholders should not anticipate valuation miracles to occur anytime soon!
If a single tree in a forest is struck by lighting and falls to the ground, and…no living creatures, ala humans, are present to hear or observe it, will either of those acts register in the form of sound? As most obviously recognize this long held aphorism, has been variously applied – phrased in education environments to incite critical thinking and challenge convention.
To bring a slightly different perspective to this aphorism….it is an economic fact – business reality that growing larger percentages of companies, organizations, and institutions globally are undergoing or already variously immersed in becoming intangible asset intensive and dependent entities, i.e., largely, emanating from the three primary forces of intangible – non-physical assets ala intellectual, structural, and relationship capital.
Unfortunately, in numerous instances, this transition occurs…irrespective of an organization leadership’s awareness or familiarity with the intangible asset sides to their business. These transitions are very evident to myself and colleagues holding operational familiarity with intangible assets, i.e., whenever, why ever, however, and where ever intangible assets are in play, at risk, and should be exploited.
We recognize how non-physical assets can…tangibly contribute to an organization’s value, sources of revenue, competitive advantages, reputation, image, and goodwill, etc.! Countless experiences in the intangible asset business arena – and interactions with clients, prospective clients, seminar attendees, etc., over the course of 25+ years, the consistent operational chasm lies with business leader’s holding to unrelenting and conventional sense’s of physicality still embedded in far too many ‘mba’ contexts and ultimately become married to routine business operations and processes, irrespective of the irreversible economic fact, that today…
- 80+% of most company’s value, sources of revenue, competitiveness, and sustainability lie in – emerge directly from intangible assets, not tangible (physical) assets!
Through my lens as an intangible asset strategist and risk specialist…it’s quite clear a concise, and relevant definition of intangible assets…stoked with business examples which are intangible asset specific, and not dominated by accounting rules, regulations, or legal orientations which are dismissive of or interpreted to over-rule the economic facts and business realities stipulated above.
While attending a conference a few years ago at the National Academies in Washington, DC…titled ‘Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth’, one speaker euphemistically, but quite condescendingly, characterized, for a 200+ attendee audience, the difference between tangible and intangible assets in the following manner…
- ‘if you can kick it, drop it, and stub your toe on it, then its a tangible asset’. Otherwise (presumably) its an intangible asset?
That’s hardly the kind of definition that will ‘pass an mba smell test’…or generate the still, much needed appreciation for…
- intangible assets’ distinctive, consistent, and powerful contributory role and value to companies globally, and to
- more fully capitalize on the economic fact that 80+% of most companies’ value, sources of revenue, and future wealth creation lie in – emerge directly from intangible assets.
So, today, regardless of what…products or services a company produces or, whether its a large multi-national or a small, medium size enterprise, it is increasingly likely that…
- hard earned and valuable proprietary experiences and know how underlie and are thoroughly embedded (applied, used) in those products and/or services.
However, what’s far too frequently missing in…businesses value – competitive advantage equations, are…
- a clearer recognition-appreciation for the various forms – contexts of intangible asset value.
- recognizing and respecting that ideas, i.e., intellectual-structural-relationship capital produced, developed, and executed internally constitute intangible assets!
- how to position, extract, and exploit value from intangibles, and
- how to sustain (protect, preserve) control, use, ownership, and value of those assets indeterminately!
Instead, intangibles are routinely and unceremoniously…embedded in products, services, and outcomes without fully appreciating their contributory role and value to reputation, goodwill, and delivering competitive advantages.
And, whenever these (intangible) assets go un-noticed…un-respected, (un-) or undervalued, and un-protected, business leadership, investors, and shareholders should not expect valuation miracles to occur anytime soon
Michael D. Moberly August 5, 2008 St. Louis m.mobe[email protected] Business Intangible Asset Blog, since May 2006 https://kpstrat.com/blog ‘where attention span, business realities, and solutions converge’.
Readers are invited to explore other blog posts, papers, and books published at https://kpstrat.com/blog/papers