Michael D. Moberly November 1, 2008
Today’s business (economy) is very different from the past, and the past, in this instance, is measured in just a few years, not by generations or eras, unless of course, you’re talking about ‘generations’ of technologies, which we’re not! Rather, I’m referring to company’s intangible assets which have become the primary, if not dominant, driver (source) of value, revenue, sustainability, and the basis for future (company) wealth. There clearly is something novel about the ‘new (intangible asset driven) economy’ as Dr. Kenan Jarboe points out. Intangible assets, he says, include knowledge, ideas, skills, relationships, and organization, and have taken on greater worth, and monetization of those intantible assets is one step in the process of value creation’. (Kenan Jarboe, ‘Intangible Asset Monetization: The Promise and the Reality’. Athena Alliance, 2008, p. 88).
More to the point, steadily rising percentages, as much as 75+%, of company value today, lie in – are directly linked to intangible assets. While this percentage may vary somewhat, depending on the industry, it is, by all objective measures, an indisputable economic fact – business reality which should not be dismissed or left unconsidered relative tobusiness (strategic) planning.
Unfortunately however, this gargantuan shift from a tangible to intangible asset-based economy has yet to become fully operational and as useful as it can be, primarily with respect to achieving consensus and consistentcy in accounting (of-for intangibles). As Dr. Jarboe points out again, ‘there are numerous reasons for this, one of which is, there’s no standardized financial tools for businesses to (literally) capture the value of intangible assets’.
What we’re striving for at the Business IP and Intangible Asset Report and Blog is to elevate the overall level of awareness of business decision makers for conceptualizing a clear, viable, consistent, lucrative, and strategic pathway to monetize (value, securitize, leverage, and extract value from) their company’s intangible assets.
So, am I suggesting the entire business community must wait indeterminately for:
1. state and federal agencies to reach cross-agency consensus about reporting and accounting of intangibles, or
2. the financial markets to similarly reach consensus for determining (intangible) asset (a.) recognition, (b.) valuation, (c.) separability, (d.) transferability, (e.) duration, and (f.) risk?
No, not necessarily. Rather, what I’m suggesting is that waiting indeterminately for an incentive and/or consensus about the financial structuring of intangibles literally leaves, in the interim, trillions of dollars of value ‘largely hidden away and unavailable for financing purposes’. (Jarboe, p.6)
In today’s financial crisis, monetization of intangible assets, i.e., leveraging them, extracting value from them and turning them into revenue as another tool to sustain a company through this crisis, should be ratcheted up on the growing list of priorities!
