The three intellectual assets that drive value

Technology, brands and operational excellence: Juergen Graner at Globalator identifies the three intellectual assets that ultimately drive business value

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Juergen Graner

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In most strategic transactions, the ultimate drivers of value are intellectual assets, which see the best returns when intellectual property is in the hands of the right team. The following three intellectual assets are the ultimate value generators in business practice: technology, brands and operational excellence. Technology and team know-how Technology companies in particular rely on generating and owning IP rights. A lot of money is directed towards the creation and protection of patents, trade secrets and related rights, which provide the foundation for a technology intellectual asset. However, unless an organization is able to create an environment where its engineers and scientists can flourish and are motivated to continuously invent and create, as well as improve, the underlying technology will either not reach its full potential or eventually become obsolete. Technology IP only becomes an intellectual asset if combined with team know-how. Once the complexity of a transaction with an external partner is added, the challenge to manage ongoing innovation projects usually increases exponentially. Brands and customer mindshare The brand is almost always an important factor in any type of company. Most decision-makers understand that in order for a brand to be strong, it needs not only to be promoted, but also to be protected through a trade mark in the jurisdictions where business is conducted. Similar to technology IP, the brand IP needs to be combined with the human factor in order to become a brand intellectual asset. Different from technology though, the human factor is not within the control of the company. A brand is basically the ownership of customer mindshare, which is a manifestation within the customer’s mind, created through their own experience with associated products and/or services, combined with information absorbed from others and from perceived marketing messages. A brand intellectual asset is fragile since it takes a long time to build, but, especially in today’s interconnected world, it can easily be damaged. In an acquisition situation, for example, the association of the brand of the source company with the brand of the target company after a transaction needs to be managed proactively, since there is an important impact on both brand intellectual assets. Operational excellence and implementation skills One of the most undervalued intellectual assets for transaction value generation is operational excellence. A business has operational excellence if it is able to do something better and/or more efficiently than others on a continuous basis, with the ability to adjust to a changing environment. This could be related to any part of the value chain within the organization. Examples include a company that may have the best way to manufacture certain products, the best way to  develop new products or the best way to provide certain services to their customers. The ability to possess operational excellence in a company as an intellectual asset is strongly linked to its employees and the culture that has been created internally. Many businesses write down the ways operational processes are conducted in manuals and standard operating procedures to create systems that form the IP base. However, the real value of these systems actually comes from the implementation skills embedded in the team. Generally, these team skills are not only dependent on individual team members, but are even more dependent on the culture of the organization. They are difficult to transfer and need to be managed diligently after a transaction has been completed, since they may be lost if certain key employees leave or become demotivated. • Juergen Graner is founder and chief executive of Globalator, a specialist in creating value through strategic transactions. The full version of his article on transactions powered by intellectual assets appears in ‘Winning with IP: Managing high-growth intellectual property’, Novaro Publishing, January 2021. See details here.