Michael D. Moberly   March 17, 2014   ‘A long form blog where attention span matters’!

There is certainly both fact and legend to the premise that company success and profitability often lie in being first in the market place. However, management teams which are operationally unfamiliar with the intangible asset side of their business, particularly the inter-connectedness of intellectual, structural, and relationship capital that routinely pave the road for getting a company’s product(s) to the correct market place ahead of its competitors are now obliged to acquire such familiarity.

As readers know, for an ever expanding range of companies globally, 80+% of their value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in –  emerge directly from intangible assets.

So, to pave the most effective and efficient road maps, it’s essential to elevate clarity and bring choice to the stewardship, oversight, management of each company’s intangible assets that contribute value, competitive advantages, and other valuable virtues related to achieving business success, e.g., identifying, unraveling, developing, positioning intangibles to maximize and extract as much value and competitive advantage as possible.

As more business persons are coming to realize, there is no other time in business management history when larger percentages of a company’s value, sources of revenue, competitive positioning, earnings potential, and overall sustainability are more rooted in intangible assets.

Again, small company management teams are obliged to recognize the roadmap to securing the preferred and profitable outcome to any transaction, marketing program, and/or R&D project undertaken is routinely paved with…

• the significant and inevitable roles they play in achieving preferred outcomes, along with
• recognizing the necessity that intangibles be developed and positioned to accrue as much leverage as possible.

All too frequently however, the various contributions intangible assets make to a company, insofar as distinguishing their contributory value are overlooked, dismissed, undervalued, and unrecognized.  A response I seem to hear most from company management teams for this evolve around intangibles’ lack of physicality.  That is, intangibles are often ‘taken for granted’, not distinguished as value contributors, and otherwise become deeply embedded over time in routine (company, business) operations, processes and/or functions which tend to fall under the conventional business-minded radar this is often still fixated on tangible assets.

But, this is where small company management teams need to be, i.e., with respect to the intangible assets their companies produce and possesses…

• Michael Porter, Harvard Business School, has described intangible assets as distinctive and unique blends of business activities, processes, know how, and customer/client relationships, in other words, combinations of intellectual, structural, and relationship capital, which companies can and should exploit to differentiate them from competitors, and thus create contributory value.
• Similarly, Weston Anson of CONSOR, describes intangible assets as internally developed know how, i.e., intellectual capital primarily,…
• that supports specific proprietary methods, processes, and best practices, and
• the ways in which that information – those assets are used and applied.
• Ultimately, intangible assets, says Dr. Baruch Lev, NYU, Stearns School of Economics, typically come at…

                      – the beginning of a process as ideas,

                      – the middle of a process as patents, and

– at the end of a process as commercialization and distribution channels.

A particularly frustrating misnomer that still frequents intangibles’ characterization is that they only reflect a company’s goodwill, brand, or possibly trademarks?  Readers of this blog of course, realize intangible assets reach far beyond such limitations, for example, the…

• American Institute of Certified Public Accountants defines ‘goodwill’ as all of the intangible assets and supporting assets that contribute to ‘advantage’ that an established business has over its competitors or comparable businesses about to be started which include image, customer base, reputation, and perceptions…
• British, on the other hand, broadly define ‘goodwill’ as the probability that a company’s customers would continue to do business with it and value its products and services above those available from competitors…

For every company, with respect to the various types of (business) transactions they typically engage, it’s advisable that business management teams and decision makers recognize the…

• various forms intangible assets manifest.
• various circumstances a company’s intangible assets will be in play.
• actions necessary to sustain control, ownership, and contributory value of those assets, for the duration of their respective life, value, and functionality cycle.

Below are various examples – contexts of intangible assets.  For management teams, boards, and other business decision makers for which, most respectfully, this may be their initial foray into the intangible side of their business, they may find it useful to seek the expertise of an intangible asset strategist insofar as translating these intangibles into operational and/or transaction contexts.

Technology:  internally developed (proprietary, unpatented) software, databases, source code, custom applications, and technology sharing agreements…

Marketing:  advertising concepts, focus group findings, subscription lists, music, promotional characters/devices, newsletters, credit information files…

Engineering:  designs, drawings, blueprints, schematics, diagrams…

Relationship – Organizational Capital:  customer/client relationships, mailing lists/data bases, retrieval systems, distribution channels, 1-800 numbers…

Competitor Research:  actionable business intelligence, i.e., competitors plans, intentions, and capabilities…

Real Estate: zoning, permits, water/mineral/development rights, easements, location visuals and proximities, options…

Human-Intellectual Capital: work force in place (experience, education, training), training manuals, operating processes, non-compete/disclosure agreements (if transferable), the sum total of employees’ specialties, skills, attitudes, abilities, competencies, and technical (proprietary) know how, insurance enrollment/expirations

Internet:  domain names, website design, B2B/e-commerce capabilities, web links, accessibility, use, URL’s…

Company/Business Identity:  image, goodwill, reputation, trade name, logos, brand…

Contracts/Agreements:  most any contract that has a definable life and some form of exclusivity, i.e. employment, affiliation, advertising, sales, subscription, service, long term lease, non-compete covenants, joint ventures, value of future purchases due to special relationships with vendors, royalties, technology sharing/joint ventures…

Products/Services:  warranties, production capability, order/production back log, operating permits, licenses, renewals, processes, expirations, retail shelf space, distribution rights/networks…

Intellectual Property:  patents, copyrights, trademarks, trade secrets, trade dress, trade name, service marks, mastheads, logo design, brands… 

R&D:  (in-process) studies, formulas, processes, assembly data, regulatory agency approvals, collaborative alliances, formulas, outstanding RFP’s, specialized technical repositories, libraries…

Communications:  methods, cable/transmission rights, FCC licenses, certification, bandwidth…

Structural Capital:  structures and processes employees develop to increase productivity and performance (business process/method patents)

Adapted/modified by Michael D. Moberly from various sources including ‘The Intangible Assets Handbook’ – Maximizing Value From Intangible Assets.  Weston Anson.  American Bar Association 2007 and ‘Global Brand Integrity Management’. Richard S. Post and Penelope N. Post. McGraw Hill. 2007