Intangible asset risk

by Louise Priddle, Consultant Corporate Communication

Published on
October 8, 2018

In a knowledge-based economy, assets such as reputation, brand and intellectual property (IP) are integral to any company’s success and, with achieving good results in mind, require strategic management. These assets, however, are complex and can gain and lose value quickly.

Recently, Rowland has noticed an increase in businesses both large and small recognising their intangible assets are often more valuable than their physical assets.

Protecting and managing brand and reputation is critical and is often the difference between success or failure. These elements are key components of intangible value, which can be up to 80 per cent of an organisation’s overall value[1].

  • Invisible assets

A significant obstacle, when addressing intangible risk with directors and boards, is the lack of visibility of intangible assets. A board may be aware of the strength of its company’s brand and reputation but can lack insight into the importance and significance of its corporate positioning.

Reputation is a key aspect of sustainable competitive advantage – making organisations more resilient, especially when responding to future market changes.

  • Complexity of assets

There is also the complexity of the intangible asset. Brand IP comprises copyright, trademarks and design. An illustration of brand value is in the case study of comparison between Pepsi Max and Diet Coke. A study found that when consumers blindly tasted the products, 51 per cent preferred Pepsi Max, however when the products were named, 65 per cent preferred Diet Coke. This illustrates the importance of consumer attitudes, consumer behaviour and brand attitudes. A consumer may not be aware of their brand attitudes because the behaviour is inherent. The strength of a brand or reputation ultimately contributes to  tangible, quite often financial, outcomes[2].

  • Exploiting intangible assets

Rowland is increasingly emphasising to clients the value in maximising the potential of intangible assets.

The recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has put the spotlight on the inherent risk for brands and the subsequent potential reputational damage when service does not match the promise. The same principle applies to other sectors facing media and public scrutiny, including an upcoming focus on aged care.

When there are high-profile case studies of misconduct, however, there can also be opportunity for smaller, less well-known brands to leverage the negativity associated with bigger and more prominent organisations to their advantage. This strategy — if implemented well, in a timely way, with the right messages for the right stakeholders — can lead to increased value of their own intangible assets.

[1] Forbes

[1] De Chernatony and Knox

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