Intangible Asset Conscious Business Community

Michael D. Moberly    August 17, 2015    ‘A blog where attention span really matters’.

An important initial step to…achieving a more IA conscious business community, lies in bringing more operational clarity to what IA’s are, what they’re not, and how to consistently identify and how to assess and utilize them effectively. Unfortunately, there remain some challenges in the business community insofar as defining and explaining precisely what intangible assets are, how, by whom, and when they are produced, and perhaps most importantly how they contribute to an organization’s value, sources of revenue, competitiveness, and sustainability. After many years of work, research, and client engagements in the IA arena, even with more experienced, astute, and successful management teams, the words ‘intangible assets’ are seldom part of their routine discourse, integrated in their lexicon.  The reasons respectfully vary, along a continuum of…

  • not fully understanding or appreciating what intangible assets actually are.
  • being unaccustomed – uninitiated to identifying, assessing, or exploiting IA’s compared to tangible assets.
  • erroneously assuming IA’s are the (exclusive) domain of accountancy and/or intellectual property (legal) counsel.
  • wholly dismissing IA’s because they’re not sensed as constituting standalone assets or commodities because they are not routinely reported on company balance sheets or financial statements, unless ‘lumped together’ as goodwill.

Thus, recognizing the necessity to engage and exploit an organization’s IA’s or determine – measure their contributory value or performance which unfortunately, but frequently perceived as being neither necessary or justifiable, even though today 80+% of most organization’s value, sources of revenue and ‘building blocks’ for growth, sustainability, and profitability lie in –  evolve directly from IA’s. These are economic facts – business realities that absolutely should not be dismissed, overlooked, or disregarded as somehow being irrelevant to leaders – decision makers professionally or the organization they may own and/or oversee. As noted above, even the most astute and experienced organization leaders often mistakenly characterize IA’s as being…

  • more aligned with – the exclusive domains of accountancy or legal.
  • mere theories best espoused in university lecture halls than actionable agenda items in boardrooms, c-suites, and among strategists.

Another critical hurdle to explaining the relevance and importance of IA’s…to organization decision makers evolves from the reality that IA’s are just that, they’re intangible. But, intuitively their presence, absence, or changes can be sensed (measured) as declines in and/or erosion of an organization’s reputation, image, goodwill, intellectual – competitive capital, etc. So, regardless whether these assets are intangible or not, it often boils down to management teams’ inclination and curiosity to identify, unravel the origins, assess, manage, monitor, and measure these increasingly critical, valuable, and certainly strategic assets. Years of conversations with organization owners and management teams…I find all know their sector competitors, particularly those which have effectively and profitably exploited their IA’s compared to those who haven’t, can’t, or won’t. But, when expressing same, seldom will there be any reference to the term ‘intangible asset’. Instead, actual IA products, i.e., reputation, brand, and goodwill will be uttered, the reason, I suspect, is they are not aware the former are actually types/categories of IA’s. For these and other reasons, IA specialists-strategists like myself…who regularly conduct briefings, awareness training, seminars, and/or consult with organization leaders about their IA’s, should always be prepared to field an array of skeptical, even dismissive, but necessary questions, particularly regarding IA valuation, reporting, and (assets) contributory value. IA specialists-strategists must also assume responsibility…for bringing as much clarity as possible to IA’s, e.g., articulating and demonstrating smarter rationales and more effective techniques for organizations to engage their IA’s, i.e., capture, utilize, manage, monitor, and monetize, and/or commoditize their intangible assets. This includes, as noted previously, clearly distinguishing…

  • what intangible assets are and what they’re not.
  • the various forms – categories of IA’s.
  • how IA’s originate and develop, and equally important,
  • how and when IA’s can be effectively and profitably applied as ‘building blocks’ to enhance an organization’s value and create (new) sources of revenue and competitive advantages.

In today’s 24/7 globally predatorial and competitive business environment…it would be expressions of wisdom should organization management teams and their boards aggressively seek – be receptive to strategies – techniques to specifically engage and exploit IA’s to the fullest extent possible. One bottom line though is, some organizations find it challenging to step outside their conventional comfort zones to engage concepts and strategies which…

  • they have no formal or current awareness training.
  • depart rather significantly from past practice and conventional asset reporting and accounting practices, and
  • remain well under mba – business school radar.

Successful companies are typically operated by successful management teams, or so the adage goes. For the most part, successful management teams are realists and pragmatists, but still, forward looking-thinking risk takers. Understandably, their brethren, who may not be quite as successful and reluctant to knowingly engage risk, may be quite satisfied with past-current practice and therefore be skeptical and reluctant to ‘take their IA’s out for a ride’! When such skepticism translates into organizations and management teams becoming restrictively tied to practices and strategies of a tangible (physical) asset era versus the current, and for the foreseeable future, global business economy who’s future is solidly pegged to IA’s which are irreversibly embedded and climbing rapidly in all aspects of transactions, trade, and competitiveness. The former are just not likely to experience the growth, profitability, value, and revenues which most are still capable should they elect to shuffle away from practices thought to still be reliant – dependent on tangible (physical) assets.

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