Today, intangible assets are the primary drivers of a company’s competitive edge and financial performance. However, under current accounting standards, many intangible assets are off-balance sheet, mispriced or inaccurately reported.
Research has consistently shown that companies that focus on intangible assets consistently outperform their peers and industry benchmarks. By understanding what your intangible assets are you can then understand how they drive business growth, what they are worth, the risks around them, and how to monetize them.
Top 10 questions to ask
Here are the top ten questions that Boards and Management teams should be asking to ensure that they understand how to identify, manage and leverage these valuable assets:
What are our intangible assets?
How do these assets drive economic and strategic value for our business?
How much are these assets worth?
Is the full value of our intangible assets being captured in our company valuation?
How can we unlock additional value from our intangible assets?
What is our intangible strategy? Are we actively managing these assets?
Do our employees and management teams understand how important these assets are?
What are our primary intangible asset risks?
What is our strategy to manage and mitigate these risks?
What systems and processes do we have in place to manage and mitigate these risks?
Addressing these questions will help you take a more measured view of how to manage and utilize your intangible assets. It will also help you to identify which of your intangible assets are critical business assets and the strategic tools that will help you to drive value and profitability moving forward.
So now you know what questions to ask, what is the best way to go about answering these questions?
Auditing your intangible assets
The best way to work through these questions is to undertake an intangible asset audit. An audit will help you to better understand what intangible assets you already own and will enable you to isolate what your current and potential competitive edge is.
Once you understand what is driving your competitive edge, you can then work out how to transform it into business value by developing an intangible asset strategy that best reflects where your business is now and where you want to be.
From here, you’ll move forward to developing a step-by-step implementation plan that includes specific actions, milestones and metrics to track your progress.
By working through this process, the next time your organisations innovates, invests in new R&D, develops a new brand or acquires a company, you will be able to objectively assess the intangible asset position of the new initiative and determine what strategy to utilize in order to unlock value and mitigate any risk around the asset.
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Intangible assets are a company’s greatest source of hidden value and hidden risk. Make the valuable visible in your organisation.
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