Experience tells us that when business’s open their wallets…it’s likely, what awaits them, are yet-to-be exploited, perhaps even dormant, intangible assets (i.e., intellectual, structural, and relationship capital) which can, with effective guidance, be exploited as lucrative, competitive, and revenue generating assets. https://kpstrat.com/wp-admin/post.php?post=5978
On the other hand, there are plenty business leaders that believe…the act of opening their wallets too far, too quickly, will manifest as either a prelude or invitation to (inevitable) risk. For these business leaders, following numerous engagements and discussions, its seldom precisely clear what types of risk they believe will materialize, should they elect to open their wallets.
Through my lens, those who hold such notions, it conveys…a sense of short-sightedness. But, after all, I am an intangible asset strategist and risk specialist, and I am inclined to characterize most risks as being manageable and subject to mitigation in line with a clients’ tolerance (for risk).
So, generally, I prefer business leaders occasionally peel back their wallets…perhaps in my presence, providing it is, at least initially, done with discretion and confidentiality…
- to determine – assess if there may be any dormant, latent, embryonic, undeveloped or under-developed and potentially lucrative and competitive intangibles that could be effectively leveraged, applied, sold, and/or otherwise exploited.
When businesses do open their wallets, often the reason is to buy ‘x’ or invest in ‘y’…the objects of the buy – invest are, in my experiences, likely to be a form-category of intangible asset which leadership believes (assumes) they do not presently possess or can develop internally.
That said, there is a globally universal economic fact that warrants being a factor to such decisions, which is…
- 80+% of most company’s value, sources of revenue, innovation, competitiveness, future wealth creation, and sustainability lie in – emerge directly from intangible assets, primarily in various forms of intellectual, relationship, and structural capital.
And, as posted here numerous times…when company engage in effective intangible asset due diligence (pre-post transaction) most, if not all of the presumed risk can be mitigated within the levels of risk tolerance, if not prevented from materializing.
That said, seasoned (experienced) business decision makers and strategists recognize that most innovation…business in general, and markets, do not miraculously develop, grow, and expand without decision-makers executing on a willingness to engage in some level of risk, which again, will inevitably involved intangibles.
The assumption of risk is routinely preceded by a series of bold (tactical, strategic) moves…preferably executed in a sequential fashion. Preferably, actual and/or prospective competitors have yet to recognize this, or have exhibited little, if any, willingness – receptivity to take – engage in the level of risk. https://kpstrat.com/wp-admin/post.php?post=1108
My varied experiences as an intangible asset strategist and risk specialist…I have found most business initiatives seldom must rise to the level of ‘rocket science’ to mitigate or prevent. To be sure however, there are numerous c-suites and boards who view ‘taking risk’ primarily (or, only) involving the acquisition of sufficient capital to execute. But, through my lens, ‘capital’ need not be characterized exclusively as money, instead it may consist of investments in intangible forms of capital, which likely already exists – is present, if parties are aware and look. In these instances it becomes a matter of, if a company has not already done so, identifying, unraveling, developing, exploiting, and monetizing its internal intangibles.
As Russell Pearlman aptly asks in a February 15th, Korn Ferry Briefing Paper…where would Netflix be if it hadn’t poured billions into the unorthodox step of making its own television shows and movies, or Coach, if it hadn’t expanded well beyond its conventional style of leather hand bags?
To be sure, these are two, of countless examples in which decision makers have engaged in what I often refer to as ‘risk by necessity’, i.e., a company either elects to do it, and if not, its sustainability will be adversely and perhaps irrevocably marred.
Rarely has ‘the decision to open company wallets ever been so hard’, Pearlman suggests…but, a more prudent question in my view is, is business in-the-midst of a reviving global economy in which decision makers sense (believe, are advised) it’s the perfect time to be bold, i.e., a risk taker? Or, are stakeholder activists and stockholders questioning – balking at investment outlays, posits Pearlman? Is there a single right tract?
Risk taking almost always pares difficult decisions…however, if decision makers are receptive to viewing ‘opening the proverbial company wallet’ as a potential bounty of unrecognized, unused, under-utilized, and unvalued intangible assets (i.e., intellectual, structural, and relationship capital, in particular) then possibly, how risk is perceived may necessarily, be favorably altered!
Michael D. Moberly February 22, 2018 St. Louis [email protected] ‘The Business Intangible Asset Blog’ since May 2006 https://kpstrat.com/blog ‘where one’s attention span, intangible assets, and solutions converge’.
Readers are invited to explore other blog posts, papers, and books I have published at https://kpstrat.com/blog/papers