Michael D. Moberly
A prudent requisite to any business transaction or new initiative is recognizing the need for (and executing) a ‘compelling business case’ for safeguarding key intangible assets that will inevitably be in play. Of course, the ‘business case’ (of the type I am referring) should be normative in content and context. For example, it should include, as specific as possible, strategies for safeguarding intangible assets that will actually play roles in achieving (a.) return-on-investment, (b.) margins, (c.) marketing, (d.) pricing, and (e.) sustainability, etc.
With respect to the still relatively new practice of safeguarding intangible assets, a key starting point for management teams, c-suites, and boards is recognition – acceptance of the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability lie in – evolve directly from the intangible assets a company produces, acquires, and possesses.
Below represents my views – perspectives of key components/elements for building a compelling business case for putting in place effective practices to safeguard a company’s intangible assets!
For starters, let our attention be drawn to the business realities associated with we live, work, and conduct business (transactions) in (a.) an increasingly aggressive, competitive, and predatorial (global business) environment, and (b.) a global (business) economy exists, largely driven by knowledge, knowhow, and other intangible assets such as intellectual property, brand, and reputation. That’s undisputed.
In this regard, a compelling business case for safeguarding intangible assets should, at minimum…
A. A demonstration of ways to quantify ‘return on security/safeguard investment’, i.e.,
- how to effectively articulate intangible asset safeguard (IAS) services to decision makers in ways that they (1.) readily understand, (2.) are more receptive to, and (3.) build credibility with IAS practitioners
- elevate decision maker receptivity to a business case, by positioning IAS practitioners as business professionals first, and IAS practitioners, strategists, analysts, researchers, and educators second…
B. Demonstrate (articulate) precisely what the organization/company can expect to receive, i.e., benefits, by describing how and when stages in which ‘net present value’ will be realized for the organization, i.e.,
- decrease asset fragility
- elevate asset stability
- elevate (as multiplier effects) organization integrity and customer/client confidence
C. Avoid focusing on conventional risks and threats contexts or formats, i.e., identify, assess, mitigate using the conventional ‘FUD’ approach, i.e., highlighting fear, uncertainty, and doubt. Rather, the business case should demonstrate:
- how it fills an existing process-procedural void
- how it enhances – strengthens an existing process-procedure
- that it’s not merely a duplication or new twist to an existing service or procedure
D. Reflect (incorporate) an organizations’ culture and operating characteristics in terms of key factors – drivers of decision makers’ receptivity to new (additional) initiatives.
E. Demonstrate how IAS’s can effectively influence conventional perspectives of business risk taking by preventing – mitigating losses and/or depreciation in the assets’ contributory value or as sources of revenue, and that intangibles and competitive advantages should no longer be:
- accepted as ‘just another risk of doing business’ which organizations may knowingly or inadvertently assume as preludes to developing new markets or products.
- characterized as probabilities, rather as inevitabilities if effective IAS’s, risk assessments, and due diligence has not preceded every transaction…
F. Know precisely, in ‘return on security investment’ terms:
- what should-must be measured
- how it is to be measured
- when it can be measured (especially relative to the life-value cycles of the assets that are the subject of the risk assessment – due diligence…
G. Avoid portraying IAS’s as merely a snapshot-in-time process. IAS’s should be flexible and self adjusting as circumstances warrant, i.e., as asset value – functionality – risk cycles change or fluctuate.
H. Consider including intangible asset reporting (risk, accounting, materiality breach) mandates in Sarbanes-Oxley and FASB (141, 142) should be integrated into IAP business cases by demonstrating how IAP services can be aligned with those mandates to achieve – bring additional efficiencies and effectiveness, i.e.,
- Merely developing (quantitative) risk equations may add little, if any value unless-until those equations are and/or can be linked (tied) to the organizations’ strategic planning and regulatory mandates it must abide by, i.e., SOX, FASB, etc.
- Identifying – describing ‘particular indicators (practices, activities, etc.) known to elevate an organizations’ vulnerability – probability that their IP, intangible assets, and/or proprietary competitive advantages may be challenged or contested
I. Draw attention to our professional role as intangible asset strategists to not to impede or necessarily stop a transaction, rather to:
- facilitate and enable more secure, sustainable, and lucrative transactions
- elevate the probability that when a deal and/or exit strategy is being planned and executed the value of an organizations’ intangible assets, proprietary competitive advantages, and IP will remain stable and intact.
Michael D. Moberly March 20, 2013 St. Louis [email protected] ‘A business intangible asset blog where attention span really matters’!