Companies often fail to notice that their asset base has or is shifting from traditional tangible assets to an intangible asset base, and that concurrently, their approach to strategy and management must also change to effectively deploy and leverage the shifting asset mix.
When the success of an enterprise is based largely on the deployment of tangible assets, such as property, plant and equipment, managerial competencies and strategies must be built upon achieving economy, operational effectiveness, scale, and marketplace dominance.
However, when the asset base shifts significantly toward intangible, intellectual capital assets like brands, intellectual property, corporate reputation, and knowledge, new and different managerial competencies become the order of the day.
Asset Based Managerial Competencies
Today, and for the foreseeable future, most businesses will remain a mix of both tangible and intangible assets and will require an analogous mix of the appropriate asset-based managerial competencies to develop the strategies needed to deploying such assets to build increasingly hybrid organizations.
Many managers and executives are well-versed, through years of practice, at working with tangible assets. They understand efficiency, cost-effectiveness, and operations. Most of the senior managers of today cut their teeth on the tangible asset base, and have developed great proficiency at trimming fractions of a cent off costs, increasing the quality and through-put of a manufacturing plant while also delivering reduced cost of goods, or deploying marketing vehicles for incremental gains against competition in market share. This is well and good, as these disciplines have built the modern industrial world and provided the ground of modern capitalism.
However, these very same managers are often less adept at managing ideas and focused innovation, strategizing and leveraging intellectual property, creating value, building brand equity, or building the reputation of an enterprise through human resource development and social responsibility initiatives.
While organizations continue to optimize their tangible assets, they must also gain the ability to manage intangibles assets, or run the risk of greatly under-optimizing their combined asset base and thus too their corporate performance.
Intangible Asset Competencies
As assets shift, there are two important considerations to keep in mind. First and foremost, managerial competencies shift because it takes a different mindset to mange intangible assets. And secondarily, each asset base has its own type of strategies that can differ widely.
Briefly, what are some of these intangible asset management competencies that impact all organizations irrespective of their industry?
1) Capturing Ideas and Driving Innovation
Intangible assets are knowledge-based assets, and therefore capturing ideas and turning them into innovation involves recognizing good ideas and concepts, and putting them to work within the organization.
Good ideas and well thought through concepts are central to the future viability of all enterprises, and strategies that recognize ideas as currency, serve the management of these assets by creating a flow of ideas throughout the organization that eventually lead to the creation of innovative products and services.
While many managers today would agree with the importance of innovation, most organizations have no actual strategies in place to manage their knowledge or to encourage creation and innovation. With the high levels of advanced education and intelligence evident at all levels within today’s workforce, it is more important than ever to learn how to manage human capital. Good ideas today, are new products and services tomorrow.
2) Leveraging Intellectual Property
Many organizations fail to obtain, manage, or leverage their intellectual property. These organizations see patents, trademarks, and copyrights as something they have to obtain, much as one may need to obtain a license to do business. And while this perspective is part of the truth, another part is that intellectual property is a corporate asset that necessitate strategic thinking and planning.
However, when the asset base shifts toward intangibles, managerial competencies are needed that see intellectual property as a valuable asset, and know how to leverage it successfully and significantly. This intangible asset managing competency sees intellectual property as an asset to be deployed no less that does the tangible asset mentality see a manufacturing plant or real estate as important assets to be managed well. All assets, be they tangible or intangible, must be engaged to produce income, benefit, or increased value.
Intellectual property strategies are based upon the recognition that, unlike tangible assets that are consumed by their use, intangible assets increase in value through use. For example, use and adoption drive the value of the internet, much as licensing technology or co-branding a product (cf. “Intel Inside” on a Sony laptop computer) increases the value of such assets.
3) Brands and Brand Strategy
All organizations and enterprises have, de facto, a brand because all such entities operate under a name. But most enterprises fail to develop a strategy for building that name into brand equity.
The management of the brand should be a topic for strategic planning because brand building develops quantifiable brand equity, and because as all markets reach greater levels of saturation and consumption tops out, brands will be necessary to shop every category.
Thus, brand strategies focus upon concentrating and building favorable brand awareness by embodying and expressing a consistent, recognizable, and intelligible set of attributes and qualities.
4) Reputation and Social Responsibility
That corporate reputation flows from the acts and behaviors of an organization is obvious to many, but again, these acts and behaviors are not often consciously made the subject of strategic thinking and strategy development.
Our turn of the millennium crises in business and public ethics, are demonstrating that choices and decisions, character and ethics, and integrity and reputation can and must be the subject of top level corporate strategies.
On-going ethical education and the new social responsibility that emerges from it, demonstrates that corporate character can be leveraged and deployed to drive the bottom line, intangible asset values, while benefitting the surrounding society.
Such strategies adopt education and teaching to develop character, instill habits, and build reputation.
Successful Asset Management
Successfully managing such intangible assets, and others like knowledge, per se, and talent, can deliver significant internal and external benefits to an organization and should be primary strategic considerations as the asset base shifts increasingly toward intangible assets.
Of course, the focus must remain upon using the right competencies to manage and fully leverage the asset base, whether tangible or intangible assets predominate. In the future, well led organizations will develop a strategic fluency that is support by management teams that are equally fluent with both tangible and intangible assets. Today, well led organizations obtain the competencies they need to ensure that strategies for leveraging assets are fully developed and executed to provide competitive advantage, enhanced valuations, and market capitalization.
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