Reshaping business and the world by leveraging knowledge intangibles
The value proposition for providing (intangible asset) services to SME's - SMB's...
As IC Knowledge Center members know, a 'value proposition statement' describes the tangible-quantifiable results/benefits that a company can expect, i.e., what's in it for me! Value propositions that are service (versus product) oriented however, tend to be, at least in my view, more challenging to frame in terms of conveying a readily understood 'return on investment'?
When presenting a management team with a value proposition for services directed to their intangible assets, their familiarity with intangibles (I find) is often shaped/influenced by, and/or limited to their experiences, i.e., what they believe to be relevant to their particular company, industry sector, and/or professional domain. An important objective in these instances, is to respectfully expand and elevate the management teams' familiarity with their company's (other) intangibles so they may become more receptive and understanding of the 'value proposition'.
I look forward to your thoughts, perspectives, and insights on this matter.
Mike Moberly
Tags: Intangible, asset, propositions., value
Views: 69
Replies to This Discussion
-
Permalink Reply by Geoff Turner on -
Mike,
An interesting issue and one on which I agree with you wholeheartedly. My perception is that the majority of SME managements are not well versed in intangible assets and IC in particular. At the same time, trying to educate them with a universal approach is not likely to work either because each SME is different in every conceivable way.
How should we go forward then? We need to draw on their experiences as you identified. This will give us a bank of situations around which we are able to develop relevant value propositions. Then we need to pick from the box those that are relevant to any particular organisation, put the jigsaw together and create a consolidated value proposition to sell to the SME's management. Not an easy task to be sure, but perhaps the only way we'll be able to place sufficient emphasis on IC to ensure it gets the same amount of management attention as normal operational activities.
What do others think?
Geoff Turner
-
Permalink Reply by Mike Healy on -
Guys,
I agree with you both, in principle.
It seems to me that smaller companies will dance to what ever tune the piper plays. Who is the piper for these smaller companies that would make them sit up and take notice of intangibles?
It seems to me that the value proposition re: the value of intangibles, would be important only to those who wish to sell their company in a trade sale and who feel that intangible valuations would help them get a price for the company. Maybe the target for education is both the investor/buyer as well as the management team of the seller.
Since standard accounting methods would appear to "disregard" intangibles in the balance sheet, I am not sure how "intangibles" can be "beefed up" to improve earnings/profits per annum.
I am not an accountant, I am focused more on human and social capital and the value they have in increasing future earnings. I know how to organise human and social capital, but I have problems explaining the "value" in doing that to management teams who wish to minimise costs.
Mike
-
Permalink Reply by Michael D. Moberly on -
Geoff Turner said:Mike,
An interesting issue and one on which I agree with you wholeheartedly. My perception is that the majority of SME managements are not well versed in intangible assets and IC in particular. At the same time, trying to educate them with a universal approach is not likely to work either because each SME is different in every conceivable way.
How should we go forward then? We need to draw on their experiences as you identified. This will give us a bank of situations around which we are able to develop relevant value propositions. Then we need to pick from the box those that are relevant to any particular organisation, put the jigsaw together and create a consolidated value proposition to sell to the SME's management. Not an easy task to be sure, but perhaps the only way we'll be able to place sufficient emphasis on IC to ensure it gets the same amount of management attention as normal operational activities.
What do others think?
Geoff Turner
-
Permalink Reply by Michael D. Moberly on
-
Michael D. Moberly said:Geoff Turner said:Mike,
An interesting issue and one on which I agree with you wholeheartedly. My perception is that the majority of SME managements are not well versed in intangible assets and IC in particular. At the same time, trying to educate them with a universal approach is not likely to work either because each SME is different in every conceivable way.
How should we go forward then? We need to draw on their experiences as you identified. This will give us a bank of situations around which we are able to develop relevant value propositions. Then we need to pick from the box those that are relevant to any particular organisation, put the jigsaw together and create a consolidated value proposition to sell to the SME's management. Not an easy task to be sure, but perhaps the only way we'll be able to place sufficient emphasis on IC to ensure it gets the same amount of management attention as normal operational activities.
What do others think?
Geoff Turner
-
Permalink Reply by Michael D. Moberly on
-
Geoff Turner said:Mike,
An interesting issue and one on which I agree with you wholeheartedly. My perception is that the majority of SME managements are not well versed in intangible assets and IC in particular. At the same time, trying to educate them with a universal approach is not likely to work either because each SME is different in every conceivable way.
How should we go forward then? We need to draw on their experiences as you identified. This will give us a bank of situations around which we are able to develop relevant value propositions. Then we need to pick from the box those that are relevant to any particular organisation, put the jigsaw together and create a consolidated value proposition to sell to the SME's management. Not an easy task to be sure, but perhaps the only way we'll be able to place sufficient emphasis on IC to ensure it gets the same amount of management attention as normal operational activities.
What do others think?
Geoff Turner
-
Permalink Reply by Michael D. Moberly on
-
For Geoff Turner and Mike Healy:
First, many thanks for your obviously experienced perspectives on this topic. The three of us seem to be in general agreement and its application to SME management teams and boards.
And yes, most, if not all SME's have their own nuances with respect to the development and use of intangibles, and the role those intangibles play in - contribute to the SME.
Still being an 'educator' at heart, I have devoted an extraordinary amount of time, as you, in developing and 'tweaking' materials/documents, etc., designed to introduce and elevate management team and board operational familiarity/awareness of intangible assets which I have respectfully categorized audiences as either, (1.) I get it and want to learn more, (2.) facial expressions that indicate my company seems to be performing quite well thankyou without knowing much about intangible assets, and/or (3.) eyes glaze over, I just don't get it.
Thanks again for your comments.
Most respectfully,
Mike Moberly
-
Permalink Reply by Abhijit Talukdar on -
Mike,
While presenting the value of intangibles to any audience (SME, investor, accountant, management, etc..) I have found two things very useful:
1. I start with the balance sheet and point to the assets that are published there - the physical assets (Net Block) and the financial assets (Cash reserves). I ask the audience what would be the typical return from these assets if they were not used for the business at hand, but just as pure income generating assets. The answer always is a resounding 'not much' (which is self explanatory since if it was otherwise, the business would have shut down and the promoters would just enjoy the returns from these assets). At this point, I have the rapt attention of my audience.
2. Next, I proceed to ask the corollary - if value is not being generated from the assets on the balance sheet who exactly is generating value then? The answer is half obvious, but I structure it with my intangible pitch which goes down very easily at this point.
The larger point I am trying to make is that while conveying the value proposition of intangibles to anyone, we have to relate it to the company's financials. Then and only then will it go down well. The unfortunate part is that our IC community has not yet evolved to the point where we all agree on the approach and algorithms for valuing intangibles. That being said, I do not think it matters so much. As long as we use any valuation approach that is convincing to the target audience, that I believe that is good enough for presenting our case.
-
Permalink Reply by Michael D. Moberly on
-
Abhijit Talukdar said:Mike,
While presenting the value of intangibles to any audience (SME, investor, accountant, management, etc..) I have found two things very useful:
1. I start with the balance sheet and point to the assets that are published there - the physical assets (Net Block) and the financial assets (Cash reserves). I ask the audience what would be the typical return from these assets if they were not used for the business at hand, but just as pure income generating assets. The answer always is a resounding 'not much' (which is self explanatory since if it was otherwise, the business would have shut down and the promoters would just enjoy the returns from these assets). At this point, I have the rapt attention of my audience.
2. Next, I proceed to ask the corollary - if value is not being generated from the assets on the balance sheet who exactly is generating value then? The answer is half obvious, but I structure it with my intangible pitch which goes down very easily at this point.
The larger point I am trying to make is that while conveying the value proposition of intangibles to anyone, we have to relate it to the company's financials. Then and only then will it go down well. The unfortunate part is that our IC community has not yet evolved to the point where we all agree on the approach and algorithms for valuing intangibles. That being said, I do not think it matters so much. As long as we use any valuation approach that is convincing to the target audience, that I believe that is good enough for presenting our case.
-
Permalink Reply by Michael D. Moberly on
-
Michael D. Moberly said:Abhijit Talukdar said:Mike,
While presenting the value of intangibles to any audience (SME, investor, accountant, management, etc..) I have found two things very useful:
1. I start with the balance sheet and point to the assets that are published there - the physical assets (Net Block) and the financial assets (Cash reserves). I ask the audience what would be the typical return from these assets if they were not used for the business at hand, but just as pure income generating assets. The answer always is a resounding 'not much' (which is self explanatory since if it was otherwise, the business would have shut down and the promoters would just enjoy the returns from these assets). At this point, I have the rapt attention of my audience.
2. Next, I proceed to ask the corollary - if value is not being generated from the assets on the balance sheet who exactly is generating value then? The answer is half obvious, but I structure it with my intangible pitch which goes down very easily at this point.
The larger point I am trying to make is that while conveying the value proposition of intangibles to anyone, we have to relate it to the company's financials. Then and only then will it go down well. The unfortunate part is that our IC community has not yet evolved to the point where we all agree on the approach and algorithms for valuing intangibles. That being said, I do not think it matters so much. As long as we use any valuation approach that is convincing to the target audience, that I believe that is good enough for presenting our case.
-
Permalink Reply by Michael D. Moberly on
-
Mr. Talukdar:
Thanks for your experienced perspectives and insights. I routinely engage SME management teams and boards about their intangible assets, initially, as it often happens, to elevate their operational awareness and familiarity about value and utilization. While I agree wholeheartedly with your views, a very typical and generally immediate reaction to a discussion and/or presentation I initiate about intangibles is 'what's the value proposition'? In other words, how can my company generate value, revenue, etc., from better management and utilization of its intangibles?
As you noted, linking any discussion about intangibles to a company's 'financials' is both important and necessary. But, also as you noted, and again we are in agreement, the necessity 'to expand and elevate management team and board familiarity with intangibles'. An example may be a meeting I recently attended in which a very successful business owner/founder described 'how his company became so successful' which he conveyed in 17 minutes. Throughout his speech, each factor that he attributed to his company's success, I noted were various forms/types of intangible assets. However, not once during this individual's speech were the words 'intangible assets' used. In addition, this (his) company is extremely dependant on its reputation as a key, if not exclusive, determinant in being selected by other firms to perform specific types of manufacturing services.
Thank you for you insights and perspective.
Most respectfully,
Mike Moberly
© 2012 Created by Mary Adams.
