Michael D. Moberly May 11, 2012
I have yet to encounter a company or a management team that does not want to survive this recessionary period. While this statement may appear self-evident, I have encountered countless c-suites and other members of company management teams who express virtually no or, at best, little interest in the economic fact that an increasingly significant key to sustaining, even strengthening, a business during this extended economic downturn is to understand their cheese has indeed, been moved. That is, their company’s success and sustainability is directly linked to how well they identify, nurture, manage, and exploit their intangible assets.
For those unfamiliar with this ‘cheese movement notion’, there is a very brief, but quite reflective book authored by Spencer Johnson and Kenneth Blanchard titled Who Moved My Cheese?: An Amazing Way to Deal with Change in Your Work and in Your Life. Those who have read it, I’m quite confident, found the 30+/- minutes required to read it, was time well spent. By the way, ‘cheese’ of course, is a metaphor for what one want’s to have in life…whether it is a good, well paying job, acquisition of certain possessions, good health, or merely peace of mind, etc.
Should you elect to read Johnson and Blanchard’s thought provoking book, I offer one suggestion intended to help make the concept of ’who moved my cheese’ more relevant to busy, time constrained business decision makers, management teams, and c-suites. That is, substitute the words ‘intangible assets’ every time the word ‘cheese’ appears in the narrative. This simple exercise facilitates readers identifying with the intangible assets their company and its employees produce and the importance of recognizing how intangible assets, individually or collectively play a significant contributory role relative to company value, revenue streams, and sustainability, and profitability.
Thus, the ’cheese that’s been moved’ represent a company’s tangible (physical) assets! That is, for an overwhelming majority of company’s (globally) their tangible assets, i.e., property, buildings, equipment, inventory, etc., have been permanently, and to add emphasis, irreversibly moved to playing lessor contributory roles relative to a company’s overall value and revenue, etc.
In other words, tangible (physical) assets no longer, as they have in previous decades represent the dominant drivers or sources of most company’s value, revenue, and/or ‘building blocks’ for growth, wealth creation, sustainability, or profitability.
Instead, for most, and a continually growing percentage of companies globally, their primary sources of value and revenue have transitioned, largely as a product of companies and economies being increasingly ‘knowledge-based and knowledge intensive, thus greater reliance on intangible assets ala intellectual, structural, and relationship capital, reputation and brand, etc. (To see a representative list of intangible assets go to https://kpstrat.com and ‘click on’ brochure and scroll to ‘what are intangible assets’.)
To try to bring additional clarity to these points, allow me to describe the remarks of the keynote for a entrepreneurs’ seminar I recently attended. The speaker was a well-known and by most measures, a highly successful local restauranteur. For those listening carefully to her 30 minute presentation, at least 20 minutes included the speakers’ obviously experienced sense of the restaurant chain’s culture which he contributed to developing. I have noted numerous times how company-business culture can, quite literally, be the foundation for any company’s sustained success and profitability, in this instance, a 35+ year career in the restaurant business.
Without exception, each of the factors the speaker identified as being embedded in his restaurant’s (dining experience) culture contributed to building and sustaining a successful and profitable trend, even during the recession – economic downturn and the increasingly competitive dine out market space. Again, without exception, each factor – variable the speaker identified clearly constituted an intangible asset which were now firmly embedded. However, much to my chagrin, not once did the speaker utter the words or otherwise refer to these factors as intangible assets!
Another example is also worth noting. During another seminar I attended, much like the one described above, a very successful business person (keynote speaker) offered a somewhat emotional characterization, in somewhat of a laundry list fashion, the various factors that collectively, over a period of time, became the self–described foundations of this company’s success, profitability, and sustainability, again, even during this recessionary period.
Being the avid note taker I am, I cited no less than 17 factors which the speaker described as contributors to the success his company enjoyed and would likely continue to enjoy for the foreseeable future. As you may have concluded already, all 17 factors were in fact, intangible assets. Unfortunately however, like the previous speaker, not once were the words ‘intangible assets’ uttered during the presentation, nor were they addressed in an extensive Q&A period that followed.
It’s true, in both examples cited above, these one-time entrepreneurs had achieved considerable success by most anyone’s measure. But, these examples also give rise to the posibility of how much more profitable and sustainable their respective ventures may be merely by recognizing and practicing
the economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability lie in – evolve directly from intangible assets, and
the ability as business leaders’ ability to consistently exercise the necessary stewardship, oversight and management of the intangible assets they, their company, and its employees developed, i.e., sustain control, use, ownership, and monitor the value and materiality of those assets. Because, in both instances, their collective success is directly attributable to intellectual and structural capital and a particularly strong company culture built on compliance and relationship capital.
For those dedicated to elevating awareness, use, and accountability for their company’s intangible assets, the process starts with management teams literally acknowledging and verbalizing their success and profitability being attributed to, in large measure, the effective and sustained development, nurturing, and utilization of intangible asset cheese!