Five Reasons to Focus on Optimizing Intangibles in 2010
December 16, 2009 by Mary Adams
I am more and more convinced that 2010 will be the year of intangibles, intangible assets, intangible capital, intellectual capital, knowledge assets or whatever else you want to call them. There are five big reasons why:
- Intangibles already get the majority of your investment dollars. Estimates are that at least 60% of the money organizations invest in their future productive capacity is in intangibles. If you are already spending money, isn’t time you created a way to track intangibles performance?
- Intangibles dominate valuation. The data is clear: 70% of value in the average company is intangible. This includes human capital, relationship capital and structural knowledge in systems, processes, databases and intellectual property.
- Intangibles drive performance. If you need to improve the performance of your organization, do you go out to a factory and tweak the settings on a machine or do you pull in your team and talk about how your IT-enabled processes are working to help you connect with and perform for your customers? If the latter is true, then your organization depends on intangibles for performance.
- Intangibles provide the foundation for innovation. Bright ideas are a dime a dozen. But converting ideas into real revenue–the goal of innovation–is only possible when you have the right intangibles in place: smart people, the right culture, good relationships and excellent knowledge and processes.
- Intangibles drive reputation. Your ability to make a profit next year is not determined by last year’s profits but rather by today’s reputation. You earn your reputation through effective management of your intangible capital.
Investment-Valuation-Performance-Innovation-Reputation. The future of your business depends on intangibles. Are you going to get it right in the coming year?
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I agree! Perhaps 2010 might not be the year, but the process of focusing on intangibles, on optimizing intangibles is now ongoing, strongly. And even the Chinese has found out this and are focusing heavily on building up their Intellectual Capital. They are going out to compete globally, not on products but rather on the turf of intangibles.
Thanks Thomas - Is 2010 the year? I think it is because of the huge need for innovation in the global economy. How can we do it without improving the use of IC? Mary
Hi Mary,
Love when your 4th point!
It is what we try to say to people: are IP assets (speaking in my field) that enable innovation to be able to be monetized. And it is that monetization that creates value and wealth, both to people and nations (regions…)
And here in Portugal, “innovation” is the fashion word for everything… always forgetting this fundamental and structural need.
[...] So, while I agree with Brooks that the US and other countries need to focus more on intellectual property protection, I will choose to spend my time trying to demonstrate to people why and how they need to understand where their organization’s value lies and how to successfully capture it. In other words, experts and pundits can say it is so—I intend to make it so. Here’s looking forward to the Year of the Intangible Asset! [...]
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