Intangible Assets Must Become Consistent Fixtures On Board and Management Team Agendas…

Michael D. Moberly   June 29, 2009

Rob McLean’s fine article ‘Intellectual Asset Strategy and the Board of Directors’ (IAM December/January 2006) still carries considerable relevance today, particularly his analysis that ‘boards are frequently drawn into intellectual asset management issues (only) when there is a crisis, such as a lawsuit involving IP rights’.  Unfortunately, ‘few boards’, McClean points out, ‘deliberately allocate time to intellectual asset issues as a matter of course’. 

There is a growing body of anecdotal evidence however, that indicates boards and management teams of most all company’s, regardless of size, lack interest and/or appreciation for the (a.) fiduciatry responsibilities associated with stewarding, overseeing, and managing intellectual (intangible) assets, and (b.) administrative necessities that intangible assets become routine fixtures (action items) on board and management team agendas.  One consequence of this lack of interest and appreciation for intangible assets in terms of their contributions to (company) value, sources of revenue, sustainability, and future wealth creation, is that a lot of (company and/or transaction) value is literally overlooked, neglected, or dismissed and ultimately left on the proverbial negotiating table unrecognized by its rightful owner.

With respect to boards’ and their management teams’ actually engaging intellectual property and intangible assests as (a.) business management decisions, rather than (b.) separate legal processes, Mr. McLean describes four levels of awareness and understanding…

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

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

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

Level IV – boards and management teams 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.

Speaking volumes, McLean believes that if boards and management teams ‘are being honest, most would characterize themselves at (just) Level I or II’.

As insightful as the ‘level approach’ is, its equally important to send unequivicol messages to boards and management teams that say, however full your respective company management plate is, consistent stewardship, oversight, and management of intangible assets, with special emphasis on sustaining, enhancing, positioning, leveraging, and extracting value from them, should be permanent fixtures on business agendas.



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