Michael D. Moberly July 2, 2009
The challenges associated with getting management teams to be more receptive to intangible assets through training often begins with two phrases, (1.) ‘knowledge-based economy’ which some interpret as being more cliche’ than reality, and (2.) ’65+% of company value and sources of revenue lie in intangible assets’, while factually true, is often assumed to be relevant only to the Fortune 500’s, not SME’s and SMM’s.
Management teams are pragmatists for the most part, who remain appropriately focused on costs and return-on-investment and will likely continue to be dismissive of and/or reluctant to seek training to improve their company’s utilization of intangible assets until the following are aligned:
1. incentives, i.e., sufficient, low risk financial inducements reflective of their particular company, its sector, market, and size…
2. regulatory agency mandates that are consistently enforced, i.e., every company and/or sector competitor is doing it…
3. availability of quality training that will produce economic clarity and sufficient familiarity on the utilization of intangibles to inspire (permit) management teams to independantly conduct their own assessments, i.e., identify, unravel, and develop viable and effective strategies to leverage and exploit (maximize and extract value from) their intangible assets…
It’s well recognized that fulfilling #1 and #2 above requires consensus among the relevant regulatory bodies, as well as adminstrative/legislative action, much of which is already ‘on the books’. But, intangible asset awareness training for management teams, i.e., #3 is quite independant from #1 and #2 and should not be interpreted as requisites, nor rationales for holding back and not seeking such training.
An adverse outcome of the status quo however, i.e., low interest in engaging intangible assets, is that significant and unrealized (asset) value will likely be ‘left on every negotiating table’ when intangibles are in play as key components to a transaction. Another adverse outcome is that those assets ‘left on the negotiating table’ will be readily available for competitors and adversaries to capture, frame to their interests, and exploit for their profit and gain.
In defense of those management teams that are reluctant to engage intangible assets, some may not have the means, internal support-inclination to secure training to turn idle assets into value, revenue, and further enhancing a company’s image, goodwill, reputation, and brand.
Insofar as fiduciary responsibilities are concerned, forward looking management teams are now obliged to secure intangible asset awareness training on behalf of their boards, stakeholders, and investors. This training is not merely designed to achieve familiarity, but also the necessary practical confidence to enable effective stewardship, oversight, management, and monitoring of the assets to maximize and extract as much value as possible. Awareness training is indeed a worthy endeavor for management teams that will produce/deliver many returns and multipliers!