Intangible Assets: A Mere Theoretical Concept...Not!

Michael D. Moberly   June 10, 2013    ‘A blog where attention span matters’!

I routinely have the opportunity to talk with a cross-section of business leaders and entrepreneurs about my favorite topic; intangible assets.  One particularly stimulating conversation occurred with a very astute colleague and yes, it was about intangible assets.

My colleague certainly intended no disrespect to me or other intangible asset advocates and strategists by suggesting, that the development, use, and exploitation of intangible assets remains largely theoretical. Without elaboration, I presumed she meant intangibles in general, lacked sufficient practical, business (bottom line) relevance to move outside the theoretical realm, a position which I obviously disagree!

Having taught in higher ed for 25+ years, I can say, without hesitation, that a significant percentage of the time when I uttered the word theory in a classroom or at a professional association presentation, the initial reaction among students as it often is with even the most astute business persons, is fairly consistent and tends to occur in the following order, (1.) a muffled, but audible sigh, followed by (2.) a glazing of the eyes, as if to say, we’re going to take a nap now while this guy (me) tries to explain a theory which we're already inclined to presume has little, if any, relevance to the ‘real business world’.

As a reaction to the consistency of such scenes, I adapted my classroom and now business presentations to characterize ‘theories’ somewhat differently, by pointing out that theories, be they about intangibles or other issues are merely thoughtful and generally well researched attempts to explain particular activities, behaviors, or phenomena.  This approach has worked better and one I still apply today as a more seasoned intangible asset trainer and strategist.

Unfortunately however, there remain some audiences who are inclined to rudely characterize theories as merely constituting an academics’ guess, hunch, untested opinion, or supposition which is certainly not applicable to intangible assets.

Still it's frustrating to hear otherwise intelligent, experienced, savvy, and successful business persons be dismissive or worse, reject well established and globally recognized economic facts about intangible assets by characterizing them as unsubstantiated (theories) that will not hold up to the scrutiny, rigors, and stresses of today’s aggressive and competitive business (transaction) environment.

In my business realities, a theory is an expression of a concept or idea that is testable, replicable, and is based upon well-grounded hypotheses. And, in the world of business management, economics, and organizational behavior intangible assets have become an undeniable economic fact and global business reality wherein 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, stability, sustainability, and profitability lie in – evolve directly from intangible assets!

In my judgment, what prompted Brookings Institution, Athena Alliance, IC Knowledge Center, the Intangible Asset Finance Society and other prominent 'think tanks' and professional associations over the years to engage intangibles was by delineating and demonstrating…

  • their conspicuous role in most all business transactions...
  •  the need for effective stewardship, oversight, management, exploitation, and monetization of the assets...and
  • the forward looking role for intangible assets in routine business contexts/transactions...
  • the unrelenting reality that conventional financial statements and balance sheets no longer convey an adequate, nor complete picture of a company’s entire (real) financial health absent fully addressing the role and contributory value of intangible assets.

The inclusion of a company’s intangible assets in valuation and management is, to be sure, a more comprehensive, and Im might add, correct approach to accurately describing a company’s value, its sources of revenue, its future wealth creation potential, its sustainability, profitability, and overall stability.  Thus, to respectfully appeal to the various business persons who remain reluctant and/or skeptical insofar as applying intangible assets to their business and/or circumstances, what follows are real definitions, categories, and examples of intangible assets!

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