Tuesday, June 23, 2009

The Intangible Principle and Innovation Perspectives

What are Intangible Assets?

Intangible Assets are assets that are not physical in nature. Corporate Intellectual Property (items such as patents, trademarks, copyrights, business methodologies), good will and brand recognition are all common intangible assets in today's market place. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it always stays with the company as long as the company's operations continue.

Unfortunately in today's current accounting systems and rules, the valuation of intangible assets is a not an easy task, and often unrecognized or underestimated in valuing assets. For example, a company such as: Coca Cola would not be as nearly as successful were it not for the high value obtained through its brand-name recognition. Although brand recognition is not a physical asset, you can see or touch, its positive effects on bottom line profits can prove extremely valuable to firms such as Coca Cola, whose brand strength drives year over year growth. Good books to read are The Hidden Value of Intangibles, Testing Balance Sheet Strength, and Can you Count on Good Will?

A few other points that we think are key to understand the value of intangible assets are:

1.) Intangible Assets are identifiable non-monetary assets that cannot be seen, touched, or physically measured, which are created through time and/of effort that are identifiable as a separate asset.

2.) There are two primary forms of intangibles (eg: customer lists), copyrights, patents, trademarks, and goodwill and competitive intangibles such as knowledge or know-how activities such as knowledge, collaboration activities, leverageble team value dynamics for speed and trust making. Legal intangibles are IP, and generate legal property rights defensible in a court of law.

Competitive Intangibles, whilst legally non-ownable, directly impact effectiveness, productivity, wastage, and opportunity costs within an organization - and therefore costs, revenues, customer service, satisfaction, market value, and share price. Human Capital is the primary source of competitive intangibles for organizations today.

Why are Intangible Assets key to the manufacturing sector?

First, tangible assets are easily replicated due to reverse manufacturing and engineering capabilities. Competing on product and price is a no win proposition. Manufacturing companies by extending their customer services value chain to create closer customer loyalty and branding experiences that increase customer servicing, professional service offerings, community ecosystems with new channel partners to extend a core business model are all areas that need a focused business plan for growth acceleration.

Jim Basille Founder of RIM, and who help drive the MIN ecosystem forward, has a new corporate mantra internally with his employees - is is Collaborate or Die? Although Jim was not the first to coin this phrase, he like many SMART CEO's understand growth from networks and community ecosystem knowledge flows will drive more value that simply investing in only products for distribution. In Today's increasingly global economy - the realities are we need a collaboration leadership approach to talent management, and also to develop more open and collaborative business processes to achieve competitive advantage.

I wrote Collaboration Commerce a book that is now 3 three years old, but still sells actively on Amazon - we were the first to define Collaboration Commerce as a business process with linkages to innovation and growth impacting strategic planning methods and toolkits.

One of the Informative Google Groups I have joined is the Value Networks Group whose evangelistic leaders, John Maloney and Verna Allee are daily acting as global change agents to help change the world and help companies understand the value of business is in its networks. Unfortunately, the accounting and enterprise risk management realities of most F500 do not have mature innovation or value realization centers of excellence focus on Intangible Asset Management (IAM).

One of the postings I quite enjoyed reading last week from John Maloney was he asked this Quiz:

Q - What do these names have in common: Caliber, Pacifica, Aspen?
A - They are all current products from Chrysler.

I have never heard of them - perhaps you also have not. However when you think of our past history, every North American would always know the names of all contemporary Chrysler products. Remember: Charger, GTO, Barracuda.

***

These models were all important muscle branded cars and branded as such. Muscle cars were important as guys liked them - muscles or not. More importantly the advertising ads reinforced that women liked guys that drove them so guys thought this was the car they needed to drive. This double loop intangible branding strategy around a brand called muscle cars - was a very successful lifestyle and contemporary marketing strategy.

Chrysler strayed from it score in lifestyle marketing from the 60's and like many of the automotive giants simply did not focus on the intangible story/branding.

Just look at Opel the prize division of GM -- rich with intangible branding value - which Magna is in the process of closing for a 20% stake in the business (>300M Euros).

Toyota is another company that focused very hard on engineering fun into their branding and offerings. Arrogant Executives in Detroit ignored the fun imagery of Toyota and well the rest is history.

This week Sabaru introduced their new marketing approach. What makes a Subaru a Subara? Love.

Yes it is love.

Some of the reasons many of us believe the automotive sector is in the situation it is in NA is due to five key reasons:

1.) Not diversifying its manufacturing operations outside of NA

2.) Not focused on Intangible Value clarity

3.) Union Excess

4.) Corporate Narcissism

5.) Focusing on tangible Product /Feature positioning without (2) lifestyle marketing clarity.

**

As Canadian manufacturers plan their growth and innovation strategy, engaging with partners that understand value ecosystem strategy, intangible asset management, customer services innovation, and customer loyalty strategy are critical for CEO's and leadership teams to embed new talent into or around their organizations.

In addition to these realities a core competency for manufacturing executives will be on collaboration commerce, knowledge management, and leveraging new ways of working. These are all areas Helix Commerce specializes in. We simply help our clients leap frog ahead in new ways. The only competitive advantage remaining in business is human and customer capital strategies - leapfrogging for growth advantage requires more courage, not necessarily investment dollars.

What is clear is that if organizations do not think outside the box and collaborate to find new solutions - they will simply die.

Collaborate or Die - Jim Basille has this line RIGHT!

5 comments:

Robert said...

Interesting!

I feel like there is a scarcity of good marketing today. Good marketing means which can convert the leads into sales. The only marketing that has moved me in the last couple of years is Social Media Optimization.

jaya said...
This comment has been removed by a blog administrator.
Dr. Cindy Gordon said...

Thanks Robert. Great marketing also include Brand and memory recall -- nothing beats a tall cold iced latte on a hot day. The interesting reality on Social Media is the incredible network dynamics -- perhaps we are just really cyborgs :)
Thnks for writing.

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