Research has found intangible resources explain performance variation in firms. To be precise, the interaction and combinations of resources create sustainable competitive advantage according to Galbreath & Galvin (2006, 164).
However, simply possessing resources does not translate them into value (Priem and Butler 2001). Firms achieve value creation by gaining, combining and utilizing resources (Grant 2002).
This strategic management view of the firm environment implies, that the right mix of resources and communication should achieve sustainable competitive advantage. But what exactly is the right mix for what type of company? And when is it the right time to develop the mix?
Moreover, to me the nature of intangible assets are more suggestive than definitional, more holistic than functional and more relational than rational.
Key decision-makers must learn to communicate that intangible assets serve as managerial business function. IA’s are there to facilitate and create business processes that integrate cross-functional teams and outcomes. If managers can stop wasting their time on eternal expenditure justification intangible assets can be understood and successfully integrated by financial and operational strategy.
The MINI car brand launched their ‘Clubman’ model yesterday in Perth. There is a dealership monopoly in this town and so it was easy to gather the key stakeholders in one spot from one customer list. And quite a gathering it was.
This year the local dealership tried their hands on something other than embarrassing clowns, hot dogs and a department store catwalk in a family entertainment stadium. This is a first-hand account of a local brand product launch gone the other way…
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As I discussed in my earlier post about the Intangible Asset Value Chain, small firms and start-ups are particularly exposed to the ‘chicken and egg’ situation. Should they just invest in ‘tangible asset’ creation and development? And when and how is the time ripe for ‘intangibles’?
To clarify this, we firstly need to look closer at small business research. Although over 96% of Australian businesses are employing less than 20 people, the majority of management recommendations and findings is deducted from academic research into large industry organisations.
This is pretty much the case for the US, Japan and other industrialised countries as well. (more…)
Accounting terminology describes ‘goodwill’ as that part of business value over and above the value of identifiable business assets.
Business goodwill is a key intangible asset that represents the portion of the business value that cannot be attributed to other business assets.
(Btw: For a quick definition on institutional, professional, practice and practitioner goodwill, see for example here or Wikipedia.)
IA’s are according to this:
- Intangible assets can be identified and described. They must be a specific property, not an idea.
- Intangible assets are legal property. Just as tangible assets, the owners can assert their legal rights to and defend their possession of intangible assets.
- Ownership of intangible assets can be transferred. For example, the owners can sell them or give them away.
- Evidence of intangible existence. Documentation is a typical way to establish that. Examples are customer lists, blueprints, contract documents, software source code printouts.
- Intangible assets have a life span.
Why is it locked out of the definition of an intangible asset when all you have to do is follow through with this logic and place ‘idea’ in the above bullet points? So tell me, what did my last idea not do to increase business value?
I carried it around, I gave it to somebody, I wrote it down, it got me a good reputation, I was paid for it and in the end it might be a good one to keep for solving a specific problem in the organisation later on. A bit of goodwill, anyone?
Consensio has specialised in start-up brands for the local Australian market since 2001. It is evident that successful start-up brands undergo a process of intangible asset development, ideally underwritten by everyone in the organisation.
Parts of the organisation traditionally dealing in ‘tangibles’ are the finance and sales departments. HR and Marketing are the domain of the intangible asset.
The process of developing a linear intangible asset chain can be described in this model. They are presented here as linear, because in my experience, setting them in random order is not creating sustainable competitive advantage in the long-term. Step 3 to 7 are intrinsically linked and are more like layers than consecutive steps as they are initiated simultaneously. (more…)
