At the stroke of midnight on January 1 of this year, a significant event quietly transpired in the crazy and wonderful world of intellectual property.

Disney's "Steamboat Willie," featuring the first iteration of the iconic character Mickey Mouse, entered the public domain. That this actually happened surprised many who believed the all-powerful, mega-corp Disney would somehow prevent its precious IP from leaking into the global commons. Surely, went the consensus logic, since Disney literally re-wrote the rules for copyright extensions, it must be able to act just as strongly today?

This belief Disney has an outweighed influence on copyright law is widespread. All the “smart and cool” people believe it. But unfortunately for them, it’s a myth. One that has certainly helped paint Disney as a ruthless behemoth that shouldn’t be messed with, but it is a myth nonetheless.

Subscribe now

Let's unravel this myth and explore the real story behind copyright extensions, focusing on the broader implications for intangible assets and the legal landscape of copyright.

Big, Bad Disney vs the People?

Basically, the myth holds that Disney, through immense lobbying power and financial influence, single-handedly secured extensions to keep its character Mickey Mouse from entering the public domain. The story about big, bad Disney is persistent, partly because it reinforces the popular notion of a powerful corporation bending the law to its will. It suggests that Disney alone shaped the destiny of copyright law to protect its most valuable intangible asset.

While it’s accurate to say that Disney did lobby for copyright term extensions, the truth is more complex and involves a coalition of various stakeholders in the creative industries.

The journey of copyright term extensions began in the 19^th century. The first major extension occurred in 1831, largely influenced by Noah Webster, who successfully lobbied for an extension to secure the financial future of his spelling book. Through sheer force of character (and good timing) Webster managed to wrestle an extension of the copyright term from 14 to 28 years with an optional 14-year renewal.

In 1909, another extension took place, this time increasing the renewal term to a maximum of 56 years. Mark Twain (real name Samuel Clemens) was a vocal advocate for copyright reform and he played a significant role in the public discourse surrounding this extension, likely because he was an established author at this point.

The Copyright Act of 1976 was another significant change. It extended the term to the life of the author plus 50 years. This change was advocated by many different types of authors, composers and publishers. It was at this point that Disney began to show interest in term extensions, but it wasn’t showing too much enthusiasm for copyright term extensions just yet.

The most significant extension came with the Sonny Bono Copyright Term Extension Act (CTEA) of 1998, often dubbed the "Mickey Mouse Protection Act." This act extended copyright terms by 20 years, making it life plus 70 years for individual authors and 95 years for corporate works.

As you can see, the time window for copyright was creeping up for more than 100 years, with dozens of parties involved at various times and for different reasons. These groups included not just Disney but also the Motion Picture Association of America (MPAA), the American Society of Composers, Authors and Publishers (ASCAP) and other major players in the creative industries. Far from being about patch protection, the goal for most of these entities in extending copyright was to harmonise US copyright law with the Europe, which was widely seen as being more progressive in this branch of legislation.

The myth about Disney selfishly changing copyright rules was bolstered by media portrayals and public perception, but it overlooks that the CTEA had widespread support at the time. The CTEA faced legal challenges, most notably in the case of Eldred v. Ashcroft, where opponents argued that the extension violated the "limited Times" clause of the US Constitution. However, the Supreme Court upheld the CTEA, stating that Congress had the authority to extend copyright terms.

This is an important point. Despite what many people think, it isn’t easy to bend the Supreme Court to the will of a corporation. The Supreme Court exists to interpret the Constitution to respond to a changing society and the impact of new technologies. The Court needs to hear a good case for change, it doesn’t just alter the legal bedrock of the US on a whim.

Protecting your intangibles

Understanding the history of copyright term extensions – especially in the US – is crucial for business professionals dealing with intangible assets. Copyrights, trademarks and patents form the backbone of many companies' value, particularly in the creative and tech industries.

For businesses, the key takeaway is that while the corporate world is dog-eat-dog, there are crucial moments when it may be smarter to play as a team. The copyright landscape is constantly evolving. In the age of artificial intelligence (AI), copyright is front of mind for most companies in the creative industries. Sometimes it’s better to cooperate so that everyone can get back to competing.

The history of copyright term extensions highlights the need for businesses to stay informed about emerging or possible changes in copyright law that could impact their assets. Being proactive in anticipating these changes can go a long way in helping businesses plan their IP strategies effectively.

For companies with significant IP investments, the economic stakes are high. Copyrights generate revenue through licensing, sales, and other forms of exploitation. Effective lobbying helps protect these assets from erosion by securing robust legal protections against unauthorised use and infringement.

Setting the Disney myth aside, lobbying isn’t a dirty word. Businesses are perfectly rational to influence legislation. By participating in industry groups, businesses can help shape policies that protect their interests. Lobbying for better copyright protections provides every company with a competitive edge and helps to enhance their reputation, translating into better partnerships and increased market share. What’s not to like?

And if businesses can be guaranteed a protection for their innovation, are they more likely or less likely to invest in more ideas and research? The evidence is fairly conclusive that it boosts R&D, rather than diminishes it.

In the end, the entry of the Mickey Mouse character "Steamboat Willie" into the public domain marked a significant moment in copyright history, not because Disney failed to extend its protection one last time, but because it highlighted the balance between private interests and public good in copyright.

It showed that nothing is forever and no company is omnipotent. Of course businesses like Disney should have first dibs on any innovation they produce. But at some point, innovation belongs to everyone.

After all, the public has an enormous influence on whether a character like Mickey Mouse becomes popular in the first place. Surely we should be compensated for this invisible labour as well.

All we ask is to be allowed to use Mickey Mouse for our memes without fearing a copyright strike. Is that too much to ask?

Let’s be honest, pop music tends to be so formulaic that it could have been generated by artificial intelligence (AI).

Indeed, most people don’t realise that nearly every hit song from the last 20 years was written in whole or part by the same guy named Max Martin – and that 90-99% of songs all use some variant of a four-chord arrangement. If music was produced in a factory, it probably wouldn’t sound too different from the top 10 radio hits playing right now.

That music can, in fact, be mass-produced, scuttles the idea that there's something unique about art and media. Art is always based on templates. Hollywood and Japanese Manga/Anime studios even have templates on what needs to be in a work before it can be accepted – because often, that template works. And the thing about templates is that they are easy for computers to copy.

So, you can understand why the music labels Sony Music, Universal Music Group and Warner Bros Records might be getting nervous. Max Martin and the multi-billion-dollar industry he represents could easily disappear if fans of the Backstreet Boys can generate a fresh song that sounds exactly like them at the click of a button.

As you might expect, music labels should be thinking about legal action. And they are.

Last month, the three labels accused AI companies Suno and Udio of committing mass copyright infringement by using protected recordings to train their music-generating AI systems.

According to the federal lawsuits, the two AI companies copied the music without permission to teach their systems to create music that will "directly compete with, cheapen, and ultimately drown out" human artists' work.

This lawsuit is just one of the dozens of legal actions being prepared or already in motion by businesses trying desperately to slow down what they all see coming from AI: huge disruption to their valuable intangible assets.

Not all businesses are worried. Some are salivating that AI will soon give them the perfect excuse to get rid of their employees once. But we’ll get to that shortly.

Wait, aren’t humans doing the same thing?

First, it’s worth asking if this music-generating AI is doing anything wrong. After all, as we pointed out in the opening, music is already being mass-produced.

Humans regularly create music that infringes on copyright mainly because there are so few ways to make new forms of music. How is that practically different to what AI is doing?

It’s also hard to say that AI “learns” music too much differently to humans. When songwriters, composers and musicians train their skills by hearing existing (often copyrighted) music, they are not infringing. The infringement would arise if, through their education, they produce music that is similar enough to be a derivative work (or a straight copy). But that’s not what most artists do.

So, why is training AI on legally-purchased copyrighted works a copyright violation? It looks and feels exactly the same to how a human learns.

Copyright suits only make sense if an AI spits out a direct copy of a song, or at least a tune that sounds like it was heavily derived from an existing work. If a person asks an AI to create a song that sounds just like "Stairway to Heaven" and it does, that person will be in hot water with Led Zeppelin – but the outcome would be the same if I asked a person to do the same thing. That’s why we already have copyright law.

It seems fine for a content creator to say a song of chord progression is theirs. What’s not okay is for an artist to say they also own the "shadow zones" (1-sigma standard deviation) close to their music. No one should be able to copyright the colour magenta or the number 7. That is why copyright laws exist – for the expression of a concept, not the concept itself.

We've been down this path many times. The tricky threshold of originality for intangible assets has dogged us for decades. You can do something similar, but not identical. There is no single way to determine if one inspiration is a knock-off of another. Judges can make these decisions, but even then, different judges will return different verdicts for different cases.

If the courts decide that, in this case, it is illegal to use copyrighted works to "train" AI, why would it not also be a copyright violation to "train" a human musician in the same way? Training is simply gleaning information from a pre-existing work. Information and knowledge are never protected by copyright. It’s hard to see any good reason why copyright law should be further deformed to cover training. If the record labels can show infringing output, that’s a good basis for legal action. But surely not the training element.

Obviously, storing music in a representational form rather than a literal form is already legal. Our brains do it all the time. It’s even legal to write down the sheet music to a song if you have perfect pitch.

Output is dicier. If you tell an AI to "output these lyrics {my heart will go on} in the style of Celine Dion," and it does, then technically it's not playing back a recording of Celine Dion’s copyrighted song. It's just re-synthesising it from basic principles coupled with the ability to be a nearly perfect digital imitator of Celine Dion’s voice and music.

You can also teach music students from sheet music if you have purchased this music from a licensed distributor. You can, by ear, figure out a song and write it down for yourself, so long as you don’t then make copies for distribution. You can also be "inspired by" a song and write a new song in the same vein, even though you run the risk of a jury deciding the song sounds a little too much like the existing tune.

None of this is new except that today all of this can be done “on a computer."

Music is the tip of the AI iceberg

The problem with AI is not really a legal question, it's an economic one.

Copyright law was initially created to protect artists from being exploited. It was always possible for a human artist to learn from the works of thousands of others and replicate their styles and genres on demand. But it was not commercially viable to do that for cents per song. You would have to pay a competent musician thousands of dollars per song if you wanted quality music.

But Average Joe demanding hundreds of songs on demand for personal consumption – not to be played over the airwaves – was not a risk that copyright holders ever considered. Now, AI can produce such output for almost free. Humans have no hope of competing at that price.

The thing is, this isn't a problem for the creative industry alone.

AI is presently being trained on the written word, images, and music because this is where the plentiful data is. But the goal is not simply to create a machine for producing words, music and art. There's too much money flowing into AI for that to be the goal. The strategy is clearly to reach the holy grail of eliminating employees. Tomorrow the artists, the day after, the rest of us.

AI text, imagery and music is the tip of a very ugly iceberg. Media is just the training wheels for a much larger introduction of AI that will impact everyone. After all, any large amount of data can theoretically produce a computer model capable of mimicking a human output. Every corporation is trying to gather that data to optimise and reduce headcount until there is only a single manager for every department telling an AI how to do the job that today is performed by a hundred people.

Customer service, tech support, any form of public-facing finance...the whole chain of purchase to pay...everything will be replaced with an AI model.

Which ought to be fine, right? Letting the machines do all the drudge work? Well, how do you price something that can be done for almost free? That’s a good question if you’re interested in the value of intangible assets.

It’s an interesting question to ask which of the Top 10 music today will be relevant in five, 10 or even 30 years. But an even better question would be: who will this music be relevant to?

As this back-of-the-envelope study found, fewer than ten of the current 60+ artists on the charts at any single point will still be famous in a decade. Those aren’t good odds if you are an aspiring guitar player looking to be the next famous rock star. Add another ten years into the window for staying famous and almost no music band makes it over the event horizon.

It’s always been this way. Becoming famous is a bit like throwing an apple seed through the eye of a needle from three basketball courts away. There are thousands of artists competing for only a handful of “fame” positions in the public consciousness. Their work has a very small chance of being picked up by a record label or corporation and thrust into the limelight. Even if it is, the chance of their music becoming popular isn’t always guaranteed either – despite millions invested in advertising by the record company. If – and it’s a big ‘if’ – an artist does get famous, it’s unlikely that they will get repeat success across multiple years. Life is tough for artists.

But when it pays off, it can pay off in huge ways.

For example, Sony is in the process of finalising a negotiation to acquire the rights to the music band Queen’s entire catalogue for $US1.27 billion. Sony joined the negotiation about buying Queen’s intangible assets in February and a deal was finally struck when a rival mystery bidder reportedly stopped at $US900 million.

Sony is expected to buy everything associated with Queen, except for the revenue it generates in the future from live performances since two of the founding members, Brian May and Roger Taylor, are still touring the world along with their new lead singer, Adam Lambert. Everything Queen has ever built will now belong to Sony, including its master recordings, publishing rights, name, image and likeness rights.

However, the deal has some complicated layers. Disney presently owns Queen’s recorded music rights in both the US and Canada and has been paying royalties directly to Brian May and Roger Taylor. Because of the new deal, those payments will now be redirected to Sony instead. Universal also has a distribution agreement with Queen which extends through to the end of 2027, after which distribution rights outside the US and Canada will revert to Sony.

For the band, this is a fairytale ending. The ageing rockers likely never imagined they’d see such success when jamming in the studio back in the 1970s. Queen is now one of those lucky bands whose music has survived the test of time and escaped the gravity of fickle fame to boost into the (metaphorical) stars forever.

I want it all

Perhaps some people at Sony genuinely appreciate Queen’s music. But if Sony simply cared about the songs, it could have just bought the catalogue. Instead, the record label insisted on buying the full set of intangible assets – especially the brand and image rights. Why?

The reason is that the real worth of Queen is not (just) its music, but what that music represents to the LGBTQ demographic. There is a lot of money to be made by attaching Queen’s brand to products targeted to this market, and now Sony has full rights to do so.

In case you’ve been living under a rock for the last 20 years, the LGBTQ community has pretty much adopted Queen as its unofficial symbolic anthem. Freddie Mercury himself was a homosexual, which did a lot to reinforce the connection between the band and this community. Queen wasn’t marketed as a “gay band” by its original record label EMI. But over time, the LGBTQ community found much affinity with the band’s songs and the association has stuck.

This connection is nothing to be sniffed at. According to the US National LGBT Chamber of Commerce (NGLCC), there are an estimated 1.4 million LGBTQ business owners in the US. These businesses contribute $US1.7 trillion to the US economy annually, while the community as a whole spends more than $US917 billion every year on goods and services.

Considering the total population of LGBTQ people in the US hovers near 7% on any given year, and the size of the US economy is $US28.7 trillion, that means this tiny chunk of the American population is responsible for 11% of the US economy. If one music band can connect with 11% of the economy, that would be a pretty good investment by Sony.

When music becomes a brand

Does a deal like this mean that the intangible assets of other bands aren’t as valuable as Queen’s? The unfortunate answer is yes. Some music really is worth more – from a commercial point of view.

The commercial overlay is important because it’s hard to put a price tag on a subjective art. Only when a band transcends its art and becomes a brand, when it turns into a symbol, can its value can be quantified by corporations. The key to the value of any band is asking: who will its music be relevant to?

In other words, there is a $US1.7 billion difference between saying “This music is popular” and “This music is popular among LGBTQ people.” The first sentence is vague (popular to whom?) while the second sentence is specific, and specific means money.

LGBTQ is a definable demographic that can be tracked with data, connected to trends, introduced to new trends and all the rest of the thousands of metrics in marketing. A definable demographic is valuable because it can be shown to exist on paper (and on the shelves). When a corporation has a clear way to get its goods or services in front of such a demographic, it will spend a decent amount of money to secure that advantage. Sony judged such an opportunity to be worth about $US1.7 billion.

Queen – like Michael Jackson or David Bowie in years before – transcended the music and became a brand to a specific demographic, which turned their music into an intangible asset.

For the bunch of 16-year-olds jamming in their garage, starting on the long road to success, it may be too “adult” for them to sit down and think about which demographic they should write music for. But they would be wise to learn from the example of Queen that businesses may be happy to buy their catalogue years after its peak fame, potentially for billions of dollars, so long as it has a brand that can be monetised.

After all, most popular music is already heavily formulaic, and a decent amount isn’t even written by the artists who perform the songs on stage. So, if an artist manages to get famous knowing that their star will burn brightly for a fleeting moment, why not play the long game by writing songs for a specific demographic? You never know, it might attract a billion-dollar investment in 10 years.

We’ve heard of worse career advice for struggling artists.

How do you value something that can’t be seen? What sort of metrics can be used to gauge things that often don’t even appear within any financial reports?

These are the kinds of questions that plague anyone tasked with the daunting job of valuing a company’s intangible assets. Those assets exist – the company wouldn’t be operating if they were an illusion – but the trick is not just in locating them, it’s in finding ways to value them that don’t end up sounding like, well, an illusion.

One of the first firms to have a crack at estimating the value of intangible assets en masse was the Chicago-based Ocean Tomo merchant bank. Its research showed the incredible flip of company value between 1975 to 2020 in favour of intangibles and away from tangible assets.

As Ocean Tomo pointed out, in 1975 more than 90% of the average company’s value was in tangible assets – things like factories, land, property, ships or rail. As the world entered the so-called “Information Era,” it was intangible assets (like data, content, software, patents, etc) that suddenly became much more valuable. By 2020, 90% of the average company value was intangible.

You can read Ocean Tomo’s report here.

The method Ocean Tomo uses to measure this is to look at market value. The method has many angles of attack, depending on the type of asset being valued.

For example, a Comparable Company Analysis (CCA) and Comparable Transaction Analysis (CTA) involve comparing financial metrics to those of similar companies or recent transactions, since they reasonably assume similar businesses should have similar valuations. Discounted Cash Flow (DCF) analysis estimates the present value of a company's expected future cash flows, incorporating forecasts, discount rates, and present value calculations.

Subscribe now

Earnings multiples, such as the price-to-earnings (P/E) ratio, assess a company's value relative to its earnings, providing insights into investor expectations. Asset-based valuation considers the market value of a company's assets, useful for businesses with significant tangible assets. Finally, book value, derived from a company's balance sheet, represents the difference between total assets and liabilities. They’re full of boring mathematics, but each of these approaches works pretty well.

Valuation is part science and part art. This is because economic conditions, industry trends and investor sentiment tend to influence market valuations. None of these are perfectly knowable with data and experiments, which is why valuation can sound like an art. Ocean Tomo chooses to use the market value valuation technique, but this can leave a lot of value undisclosed, especially for intangibles.

Another way to perform the tough job of intangible asset valuation might be to follow the path of Deloitte who this month launched a report using an enterprise valuation (EV) method instead. You can read this new report here.

Deloitte is relatively new to the intangible asset valuation game. As one of the largest analyst firms on the planet (part of the Big Four), of course, Deloitte was already dealing with intangibles. But clearly, it sees the importance that intangibles now play in boosting company value.

Deloitte’s marketing collateral doesn’t go into great detail about how its team will go about valuing a client’s intangible assets, but its decision to use an EV valuation method instead of market value is intriguing because it’s not the first consulting firm to do this.

And Deloitte was not the first to do this. The specialist firm EverEdge Global also saw a problem in strictly looking at the market value of a company to judge the worth of its intangibles and undertook its own research into the value of intangible assets as a proportion of enterprise value back in 2021. It researched the S&P 500, ASX 200, NZX All Index and FTSE ST All Share indices. You can read EverEdge’s report here.

Specialising in intangible assets since well before it became vogue, EverEdge has plenty of experience in applying different types of valuation methods to identify the worth of tangible and intangible assets held by an organisation.

That both EverEdge and Deloitte decided independently to use enterprise value valuation is an important factor. Especially because it lets us see if this method has consistent results over time, and if those results reflect observable reality.

Before we tackle that question, however, here’s a quick run-down on how an EV valuation works.

EV valuations are meant to provide a full picture of a company's worth by considering not only the market value of its outstanding shares (market capitalisation) but also its debt, minority interests and preferred equity. By including debt in the valuation, EV offers more nuance about a company's financial health. Such valuations are useful when comparing companies in the same industry.

In other words, EV is often a better choice for valuation purposes because it has a more comprehensive understanding of what a business really is.

So, what can we learn from the results of the Deloitte and EverEdge reports? How do they reveal the way the world’s intangible asset landscape may be changing?

Back in 2020 (which EverEdge used as its data set), EverEdge assessed the ratio of intangible to tangible assets in six different sectors in the ASX. A lot of these sectors are analogous in each report since Deloitte also looked at the ASX.

Here’s the breakdown from EverEdge:

·         TMT – 77%

·         Healthcare – 93%

·         Consumer Goods – 76%

·         Industrials – 81%

The Deloitte report shows some movement in the analogous categories. For example:

·         TMT – 83%

·         Healthcare – 86%

·         Consumer Goods – 75%

·         Industrials – 79%

Given that Deloitte and EverEdge were presumably using the same or similar EV valuation methods to attain their results, along with the same companies on the ASX, the ratio movements over the last three years are curious.

In the first instance, we have TMT (technology, media, telecom) making a giant jump in its net intangible value, rising 6% overall during this period. That makes sense given the increased digitisation of all businesses operating in this sector, a trend which will likely continue for the foreseeable future. It’s probably a bit unfair to lump so many different industries under the same category as “TMT,” but these are the stats we were given.

On the other hand, the ratio of intangible to tangible assets in the healthcare sector surprisingly dropped 7% across the three years. At a first approximation, it’s unclear why this would be the case given that healthcare is surely subject to many of the same digitisation forces as the TMT sector. In non-pandemic times, the bulk of medicine can likely be delivered telephonically, with more options moving online for patients all the time.

But stepping back a bit, the Covid-19 pandemic may have forced healthcare companies to invest more heavily in tangible assets to cope with the surge in medical emergencies. If that’s true, then barring another random outbreak of a major disease, the healthcare sector should return to a wider trend of digitisation soon.

Both the categories of Consumer Goods and Industrials stayed relatively stable during this period, dropping by only 1% and by 2%, respectively. This could reflect a ceiling for intangibles in these sectors, whereby most of the low-hanging fruit of digitisation has already been plucked. Perhaps there isn’t much more value that can shift from tangible to intangible. It will be interesting to see if the ratio hovers near the same rate or if it logs more significant jumps as people figure out ways to add more intangible value to these sectors.

Unfortunately, the two reports aren’t directly analogous. Nevertheless, they do offer a high-level view of how intangible assets are taking over the business world.

If you have a secret, it’s usually a good idea to keep it to yourself, right? But what about the old saying: “You can’t sell a secret”? Aren’t these two positions juxtaposed?

In some ways, sure. But there’s a world of difference between selling a secret (which involves the art of advertising) and trying to prevent other people from knowing your secret.

Owning a piece of information that no one else can access is a great strategy for business success. Obviously, that information should be superior to anything out there (it’s useless to have a secret no one else wants). But even the best data will have zero value if it isn’t deployed to the right places. It’s a bit like having money that refuses to be spent correctly.

But the idea of “confidential information” sounds very hand-wavey at this point. What does it actually mean? And when does a secret become an intangible asset?

Let’s go through a few of the more prominent examples of confidential information to better understand this important intangible asset class.

Trade secrets

What comes to mind when you think of trade secrets? Probably Coca-Cola, right?

We’ve already written a few times on this site about the legendary story of Coke’s secret recipe supposedly hidden away in a vault in Atlanta. But as we uncovered in those articles, there’s not much substance behind the myth.

Nevertheless, Coca-Cola does have a unique recipe for its beverage that other companies have struggled to mimic. People can recognise the taste (although not consistently in blind tests) as different from the more than 20 competitors. No other beverage rival has access to Coke’s trade secret. They can probably guess the ingredients, but no one knows for sure. And that’s enough of what the cool kids call a “moat” to give Coke a distinct market advantage.

Another example of a trade secret that no one can access, but some can probably guess, is Google’s 25-year-old search algorithm. This complex set of mathematical equations helps Google determine which web pages are displayed for whatever crazy query you type into its search field. Protecting this algorithm is not just a priority; it's necessary for maintaining Google’s competitive edge.

The exact details of the algorithm are a closely guarded trade secret. Just like the rumours about Coca-Cola’s formula, only a select group of engineers at Google can access the complete algorithm at a time, and even these special people may not know all its intricacies. The overall Google system is likely too large and complex for a single person to wrap their heads around anyway.

Another reason no one can steal the algorithm is that Google continually updates it, often multiple times a day, to improve the quality of search results and enhance user experience. Google employs artificial intelligence (AI) so that the algorithm learns over time.

Google's precious algorithm has made its search engine the most widely used globally, capturing over 90% of the search market share in some regions. This dominance translates into enormous advertising revenue and giant pools of user data. People trust Google to deliver accurate and relevant information, which keeps them coming back.

For those reasons, it makes perfect sense why the company would protect its secret algorithm.

Market knowledge

Market data involves a lot of factors. It likely includes customer lists, survey results, market research, customer feedback and many other crucial data points.

A well-organised and comprehensive customer list is a valuable intangible asset. It provides a window into who the customers are, usually including their contact information, purchase history and preferences. A company that maintains an up-to-date customer list can connect the dots to find higher-quality sources or more appropriate retail outlets that make more sense for the whole supply chain.

To see why a company wouldn’t want its customer list (or a supplier list) to be leaked to a rival, it’s helpful to think of this problem as though you are a spy.

The basic task of corporate espionage is to collect information that your rivals hope to keep secret. One of the most valuable pieces of information a spy can steal is the list of things that a rival doesn’t know about you. Their “to-do” list, if you will.  By comparing this list with your current balance sheet of assets, it is possible to hide big things in plain sight.

In this way, a comprehensive customer list immediately becomes a target list for a rival company since it reveals all the connections they would like to make, along with the already existing connections. Should a rival gain access to that customer list, they will be able to create a decent picture of a company’s future strategy. Then the rival can funnel resources in precisely the right areas to outbid, outcompete and outrun the targeted company.

Corporate espionage is a great tool if you can get it right.

Patents and innovation

Who knows what will be in the next iPhone? Aside from a few rumours leading up to every launch, Apple covers its innovations under a wide umbrella of rights protections, patents and other legal barbed wire.

A few years ago, a company called PowerbyProxi developed an intuitive new technology that allowed batteries in pretty much any digital device to be charged without the need for a power cable. The technology was robust and it worked well, so Apple became interested and eventually bought the company for a hefty sum in 2017.

At the time, everyone thought Apple would roll out the PowerbyProxi technology in its next iPhone models. But the next generation iPhone was eventually released without any near-field charging capabilities. Then another generation came out, but still the iPhone required a charging cable.

By the time of the third iPhone release after the purchase of PowerbyProxi, it became clear that Apple wasn’t going to use the technology in its products. After pressure from journalists, Apple eventually confirmed it had permanently shelved the near-field charging system for undisclosed reasons.

For the founders of PowerbyProxi, the sale to Apple was highly lucrative (scuttlebutt suggests the company was sold for about $US270 million). But they were no doubt quietly saddened that the technology would never see the light of day and languish in an Apple R&D office potentially forever.

For Apple, the purchase of the small company made a lot of sense at the time. It’s impossible to know if Apple ever intended to use the technology, but that didn’t really matter for the giant conglomerate. It always had a use for PowerbyProxi, nevertheless.

Apple knew the existence of PowerbyProxi was a risk if it stayed out in the wild. The confidential information of exactly how the start-up’s technology worked would provide a huge boost for any rival smartphone manufacturer, should they get their hands on it first. That was a serious risk for Apple.

Apple’s strategy was to either invent cutting-edge technology or at the very minimum buy and hold onto it so that no one else could use the idea. At the time, Apple was rich enough to buy the company and then mothball the technology (in 2017, Apple had about $US74 billion cash on hand).

This is an important example of the value of confidential information. If your company is building an amazing new technology that could disrupt an entire market, there’s a good chance that one of the major players in that market may be interested in purchasing it. They’ll want to keep the secret just as much as you do, but they’ll have to pay to do so.

Have you heard of the coffee shops Brew Haven and Aroma Oasis?

A few years ago, they were locked in fierce competition. Both shops offered excellent brews, cosy ambience for customers waiting in line and delightful pastries to accompany the warm beverages. Yet, Brew Haven seemed to have an edge that kept customers returning.

One day, the owner of Aroma Oasis decided to uncover the secret behind Brew Haven's consistent success. She talked to customers, suppliers and even friended the baristas on Facebook to strike up a conversation. She discovered that Brew Haven had secured a rare "Sustainable Sip" certification, highlighting its commitment to eco-friendly practices and ethical sourcing. This certification not only resonated with consumers but also granted Brew Haven a key competitive advantage.

Intrigued and determined to level the playing field, Aroma Oasis pursued its own certifications. Its operations were revamped to align more with the requirements for sustainable sourcing, it worked hard to reduce waste and also set up initiatives to promote more community engagement. About 12 months later, Aroma Oasis could proudly display its newly acquired "Sustainable Sip" certification as well.

The effect was remarkable, and customers flocked to the shop. The approval turned out to be an invaluable intangible asset and Aroma Oasis wished it had secured it a lot earlier. That would have saved a lot of money and heartache!

Subscribe now

Where competition is fierce, certifications often provide a unique advantage that sets a company apart. They can attract more customers, build credibility and just like the aroma of a freshly brewed cup of coffee, approvals stamp an unforgettable impression in the minds of the public.

Approvals as Economic Moat

It’s a bit of a jargon term, but an “economic moat” generally refers to a sustainable competitive advantage that lets a company outperform its rivals. Credibility is a protective moat, for example, fending off challenges from competitors that might give off a cowboy vibe. Never a good thing in business…

Approvals or certifications are a decent example of an economic moat because they signify adherence to high standards and bestow a unique advantage to fortify a company's position.

Imagine a company that produces organic foods and secures the coveted "Certified Organic" label from a reputable regulatory body. This certification tells customers about a company's commitment to producing foods that meet stringent standards. When consumers see this certification while browsing in the shopping centre, they are more likely to choose the certified company over alternatives, bolstering its competitive advantage.

It's not easy for a company to produce “Certified Organic” products. It takes time and money to plant and harvest the right kinds of organic fruiting plants. In this sense, approvals and certifications can raise barriers to entry for new competitors, preserving the certified company's market-leading position.

Approvals are also a sign of competence and business maturity since navigating complex regulations is a skill in itself. Companies with key approvals demonstrate mastery over those regulatory frameworks. This understanding becomes a moat when regulatory agencies view these companies as more reliable, leading to smoother approvals when it comes time to introduce new products.

Trust and Confidence

Elon Musk's trailblazing enterprise, Tesla, changed the automotive landscape forever through high-performance electric vehicles. Key to Tesla's extraordinary triumph was its resolute commitment to innovation and sustainability, fortified by indispensable certifications and approvals.

Tesla's electric vehicles boast prestigious certifications, including ISO 9001 (Quality Management), ISO 14001 (Environmental Management) and ISO 26262 (Functional Safety). The role of these certifications in building consumer trust and confidence cannot be overstated. If customers have concerns about safety, quality and environmental impact, Tesla's ISO certifications are a beacon of assurance. These certifications serve as tangible evidence of Tesla's unwavering adherence to rigorous quality control protocols, robust environmental practices and stringent safety measures.

And because Tesla has secured these ISO certifications, the company is also entitled to government incentives, rebates and tax breaks due to their certified eco-friendly attributes. These subsidies not only make the cars more affordable but also foster environmentally conscious decision-making since losing those certifications would result in an appreciative rise in the per-unit cost of the cars.

Certifications wield influence beyond consumer trust; they can also help investors sleep better at night.

Tesla's basket of approvals is irrefutable evidence of the company's dedication to excellence. This commitment is exactly what investors want to see, especially when the business world puts such a high premium on the principles of sustainability and ethical responsibility. As Tesla's reputation for “green” innovation flourishes, more investors who share these values are attracted to supporting the company, fuelling its expansion and amplifying its growth trajectory.

Certifications also serve as a lighthouse for partnerships with suppliers, collaborators and industry peers that echo Tesla’s commitment to excellence represented by these certifications.

The Intangible Power of Approvals

Pharmaceutical companies are a great example of why approvals and certifications can be the bedrock of a business. Without certain approvals for its products, there is simply no way for these companies to release anything no matter how much money they have spent on R&D.

The industry plays a vital role in global healthcare by researching, developing and producing medications that improve and save lives. However, the journey from discovery to delivering a drug involves stringent regulations. Approvals not only ensure patient safety but also boost the value of the companies (since the regulators agree the medicine works).

Approvals by regulatory agencies, such as the US Food and Drug Administration (FDA) or the European Medicines Agency (EMA), are crucial to ensure that the medications reaching patients are safe, effective and of high quality. These rigorous approval processes involve exhaustive preclinical and clinical trials, scrutinising a drug's potential risks and benefits.

Pharmaceutical approvals also verify a drug's efficacy (its ability to deliver the intended therapeutic benefits). Rigorous clinical trials evaluate a drug's performance against specific endpoints, such as symptom reduction, disease progression prevention or even (sometimes) cure.

Without approvals and certifications, the world would be full of snake oil. Of course, having approvals and regulations doesn’t eliminate snake oil products, but imagine how much worse the situation would be without the tick of approval from agencies that (usually) know what they’re doing?

“At most organisations, the bottleneck is at the top of the bottle.” – Peter Drucker

Once upon a time, in a bustling little town, there was a company called BrightTech Solutions which wanted to be known for its brilliant ideas but never got many big wins.

At the helm of BrightTech was Mr Khaki Blueshirt, a well-meaning but cautious manager who believed in sticking to what worked and avoiding anything that felt a little too risky.

One day, a young engineer named Lily burst into the office with an idea to revolutionise the way people communicate. Her device could fit in the palm of your hand and let you talk to anyone, anywhere, just like magic. She called it the "myChat." Lily explained to Mr Khaki Blueshirt how myChat could help people share their thoughts, ideas and even their daily adventures with others.

Mr Khaki Blueshirt, although impressed by Lily's enthusiasm, hesitated. He worried about the risks. What if it doesn't work as intended? And what about the costs? The company would need to invest a lot of resources into the project.

As time passed with no movement from the management on the myChat, Lily's excitement turned into frustration. She knew that taking risks was part of the game, but every time she had an idea, it was met with apprehension.

Meanwhile, a different company saw potential in Lily's idea. The fearless manager of GlobeTech Innovations, Mr Jeans T-shirt, recognised the groundbreaking nature of the myChat device and gave his team of passionate engineers the freedom to explore Lily's concept wherever it might lead. A year later, GlobeTech had a prototype ready, which it proudly released to the market. It was an immediate hit.

Subscribe now

As you’ve probably already guessed, Mr Jeans T-shirt is a cartoonish version of Apple and its former chief executive Steve Jobs. Obviously, the myChat device is the iPhone.

Apple isn’t a perfect company. But the iPhone was an enormous success largely because Jobs had a vision and the management drive to build it. The iPhone was effective in a way that Apple's design philosophy had not been able to replicate in the PC market. The iPhone continues to dominate both market and mind share. Apple has been the top smartphone innovator for more than a decade with no real second place.

And that's the problem.

By any objective measure, Microsoft, Motorola, Rim, Palm, HTC, Huawei, Google, etc. have failed in the smartphone industry. The Android system is an also-ran. Sure, Samsung gained a lot of market share in the US, but only because Verizon had the best telecommunications network and Apple didn’t offer a CDMA phone for many years. But what about the rest of the world? The iPhone still controls these markets so many years after the first edition was released.

The problem with those other smartphone companies is this: How hard is it to simply copy the iPhone? I mean that literally.

It would be a great internal R&D project for Samsung to see if its engineers can duplicate the iPhone, its responsiveness, its power consumption and all of its little technical details. Don’t try to change the iPhone interface, just copy it pixel for pixel.

The point would be to see if Samsung’s engineering teams can do it. I bet they can't. Even with the answer right in front of them, with full knowledge of which features to leave in and which to leave out, I bet none of those companies could duplicate the iPhone version 1.

If they could, they will immediately discover the clever things Apple did to get the iPhone to work the way it does. After they reverse engineer the iPhone, the engineers could tweak things to differentiate their product from Apple's, like creating a browser with plugins or a media player that plays media.

The reason the other smartphone companies don't experiment in this way is not because they lack the skills. Those technology companies are full of smart people. The problem is management.

Every one of those companies is staffed by Mr Khaki Blueshirt at all levels of management. It doesn’t matter how many intangible assets a company has, if Khaki Blueshirt is managing the delivery of those assets and micro-managing the engineers, then the company has no chance of beating an innovative design shop like Apple. As the management consultant Peter Drucker said, the bottleneck is always at the top of the bottle.

Mr Khaki Blueshirt is focused on his career and his job. He has learned that it is better for his own internal career advancement to create a different smartphone product that in no way threatens the iPhone.

(In fact, someone should check Apple’s share register because the inferior quality of rival smartphones certainly looks like the Mr Blueshirts have stock in Apple. That’s the only explanation for the constant stream of non-threatening and unsexy smartphones they keep producing.)

Even though Mr Blueshirt graduated from engineering school 25 years ago, and has been a manager for most of the time since, he still likes to tell people that at heart he's an engineer. He's not a designer. But that’s just an excuse he uses to cover up for his real goals. Mr Blueshirt’s goal is to build an internal company fiefdom, so he plays not to lose. He plays it safe.

That's why these managers all wear khakis and a blue shirt – no one gets fired for wearing those clothes to work. It's a safe uniform. Jeans and a t-shirt? Most companies don't allow jeans at work, which means those companies would never have allowed Steve Jobs to work there and be himself. And that should tell you something about why Apple never really had any competition.

Of course, this isn’t to say that clothes are a deciding factor in innovation. Far from it. But clothes are an outward representation of inner thoughts and feelings. Rigidity and discipline have their place in every company, but nothing is for free. The cost of these good traits can be an equivalent loss of imaginative thought. And the kinds of people who prefer to play it safe will naturally flow into companies that are more risk-averse.

A Goldilocks Zone exists here: not too hot, not too cold. In this sense, too much freedom of thought can lead to chasing ghosts and procrastination. On the other hand, worshipping innovation can be just as destructive for companies.

Nevertheless, intangible assets may turn into liabilities if mid-level managers (or even CEOs) don’t have the courage to leverage them correctly. Managers must find that sweet spot, the Goldilocks Zone, of not too much rigidity and not too much blue-sky thinking (and maybe change the colour of their shirts?)

Whatever his faults, former Apple CEO Steve Jobs figured out a way to occupy this Goldilocks Zone and he created one of the world’s most profitable and innovative companies. There’s a lesson in there.

At the time of writing, American investor Warren Buffett is worth about $US117.5 billion, which makes him the country’s most successful investor of all time. And he learned everything he knows from a man called Benjamin Graham.

Buffett read Graham’s book “The Intelligent Investor” while studying under the famous economist at Columbia Business School. Buffett said the book changed his life so radically that he named his first son (Howard Graham Buffett) after the influential professor.

In a short obituary after Graham’s death in 1976, Buffett highlighted three key life lessons from the economist:

1)     Do something foolish: “Investors need an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period — or even to look foolish — is also essential”;

2)     Do something creative: “A remarkable aspect of Ben’s dominance of his professional field was that he achieved it without the narrowness of mental activity that concentrates all efforts on a single end”;

3)     Do something generous: “Walter Lippmann spoke of men who plant trees that other men will sit under. Ben Graham was such a man.”

But the biggest lesson Buffett learned was the importance of finding the difference between the current (market) price of a company and its intrinsic value. Graham’s core philosophy involved acting on that gap with a proportionate investment in the required direction.

One way of thinking about the intrinsic value of a company is the sum of its tangible and intangible assets. Most retail investors can easily see a company’s tangible assets – things like cash holdings, property, machinery, etc. – but they often struggle to correctly value its intangible assets. It takes focus, research and perpendicular reasoning to spot intangible assets.

Buffett is famous for strictly investing in companies that he fully understands. Even when presented with a great opportunity, if he isn’t sure about the fundamentals of the company, then he will hold off. One of Buffett’s strategies is always to locate, codify and leverage a firm’s intangible assets – particularly the pieces that few others know to look for. That’s the real gap between current and intrinsic value, as outlined by Benjamin Graham all those years ago.

Subscribe now

Graham wasn’t the only one Buffett listened to. Indeed, Buffett once said, “Boy, if I had listened only to Ben, would I ever be a lot poorer.” But Graham was certainly an influential figure in the career of America’s most successful investor.

So, who was Benjamin Graham and did he say anything insightful about intangible assets that might be useful to us today?

The father of value investing

Often called the “Father of Value Investing,” Graham (originally Grossbaum) was born on 8 May, 1894, in London. His family emigrated to the US before his first birthday, settling in New York City.

In the hustle and bustle of the Big Apple, Graham didn’t really fit in due to his family's modest financial circumstances. These humble beginnings incentivised him to discover how to never be in poverty again which likely played a role in shaping his lifelong interest in investment. Later in his life, Graham experienced the horrific market downturn of 1929, which reinforced his desire to achieve a safer position of family wealth.

Graham's parents placed a high value on education at which he excelled. He eventually attended Columbia University, where, like Buffett years later, he studied under distinguished economists like James Angell and John Bates Clark.

Following his graduation, Graham pursued postgraduate studies at the New York Stock Exchange (NYSE) Institute where he developed a keen interest in risk management and the preservation of capital which would later manifest in his groundbreaking concept of value investing and looking at a company’s intangible assets.

In his seminal co-authored work "Security Analysis," first published in 1934, Graham suggested that markets are too often driven by emotions and short-term fluctuations, leading to mispricing of assets. By closely analysing a company's basic structure and buying stocks trading below their intrinsic value, investors could capitalise on the market's irrational behaviour.

Focus on the tangible

Like most investors in the 20^th century, Graham primarily focused on analysing tangible assets. After all, he came of age at a time when well over 80% of the average company value was in physical assets, particularly machinery and factories.

However, that doesn’t mean he disregarded intangible assets. Quite the contrary. Here’s Graham in his book Security Analysis:

"It may be pointed out that under modern conditions the so-called "intangibles" e.g. goodwill or even a highly efficient organisation, are every whit as real from a dollars-and-cents standpoint as are buildings and machinery. Earnings based on these intangibles may be even less vulnerable to competition than those which require only a cash investment in productive facilities…”

Here Graham recognised that certain intangibles, such as brand, patents and “goodwill” (a catch-all term that really doesn’t help with understanding the nitty-gritty of intangible assets), could contribute to a company's overall value.

Yet Graham is also advising caution when incorporating intangibles into valuations, pointing out that their value must be linked back to something material and tangible, like cashflow:

“Such intangibles may have a very large value indeed, but it is the income account and not the balance sheet that offers the clue to this value. In other words, it is the earnings power of these intangibles, rather than their balance sheet valuation, that really counts.”

These statements are neither dismissive nor encouraging for intangible assets. Instead, they are great examples of the kind of investor Graham was – cautious and focussed.

Because of Graham’s rough experience of the 1929 economic crash, he had scars that never fully healed which created an investment model best summed up by Buffett as: never lose money. To Graham, thinking about anything that didn’t appear on the balance sheet was imprudent at best and dangerous at worst. It’s an interesting sentiment.

Nevertheless, his demand that intangible assets be linked directly with earnings potential remains great advice today. Highlighting intangible asset value is pointless unless its value can be precisely articulated. It’s a bit like a machine sitting idle in the yard: the asset quickly becomes a liability if it isn’t being used.

An intangible world

But the business world has evolved considerably since Graham’s day, and intangible assets are now often 100% of the gap between current price and intrinsic value.

As the physical 20^th century merged into the largely non-physical Information Age, intangible assets came to dominate the business landscape. The financial sector has slowly recognised the importance of intangibles and now regularly incorporates them into their valuation and investment decisions.

If Graham were alive for this revolution, I like to think he would have reacted to the importance of intangible assets is a similar way to his protégé Warren Buffett.

But, to do that, Graham would probably need his own “Charlie Munger” (who is Buffett’s 2IC). Buffett said Munger was key to expanding his aperture to understand the changing business world.

“Charlie shoved me in the direction of not just buying bargains, as Ben Graham had taught me. This was the real impact he had on me. It took a powerful force to move me on from Graham’s limiting view. It was the power of Charlie’s mind. He expanded my horizons.

“My guess is the last big time to do it Ben’s way was in ’73 or ’74 when you could have done it quite easily,” Buffett said.

What’s funny and ironic is that in evolving Graham’s philosophy, Buffett is pointing to a timeless fundamental of investing: Past performance is no guarantee of future results. If you don’t evolve with the times, you will be left behind.

But the larger lesson is that this doesn’t mean you throw the baby out with the bathwater. Graham’s philosophy about caution when including intangibles in valuations continues to inform Buffett’s investment approach, but Buffett has found it highly lucrative to add to Graham’s theories, especially about intangibles, and through this process become the best investor in American history.

I’m sure Graham would be proud of his protégé.

In 1989, a young English computer scientist named Tim Berners-Lee was working at CERN (the European Organisation for Nuclear Research) in Switzerland.

Every time new data was generated, Berners-Lee knew it would take an excruciatingly long time for it to reach its destination - even if that location was just down the hall. He grew frustrated at the inefficient tools for collaborating across different computer systems. Rather than throwing up his hands in despair, he put his thinking cap on.

The thinking cap worked. Berners-Lee came up with a "hypertext" system that would allow documents to be linked together, letting people navigate between related pieces of information seamlessly. On March 12, 1989, he submitted a proposal for the idea titled "Information Management: A Proposal" to his boss at CERN, which outlined the concept of what would later become known as the internet.

By 1990, Berners-Lee developed the first web browser called "WorldWideWeb" (later renamed "Nexus") and the first web server software. The technology was clunky, but it worked. His colleagues were using it often and uncovering bugs which were in turn ironed out. On 6 August, 1991, Berners-Lee shared the World Wide Web with the world, allowing people outside CERN to create websites for the first time.

Within a few years, the number of websites exploded as the internet evolved from a niche tool used by researchers into a global platform. Early adopters like Yahoo, Google, Amazon and eBay seized the opportunity to create entirely new services such as e-commerce, online search and social networking. The internet has since reshaped entire industries and revolutionised how we communicate and live.

Subscribe now

As an idea, the internet wasn’t a guaranteed success. Sure, it seemed obvious in hindsight, but that’s true for any invention. A conference of factors needed to be in place for the internet to succeed. Subtracting just one of those variables could have led to CERN shelving the invention for another day. If that had happened, Berners-Lee’s idea would still have been an intangible asset, but a non-performing one – otherwise known as a liability.

Yet the idea was successful – enormously so. Although it’s a bit hard to quantify, it is possible to put a price tag on Berners-Lee’s invention. Bear in mind that the internet is in the “commons” – free to use – making it difficult to value at all. Nevertheless, people have tried to put a price on the internet.

For example, a handful of economists in 2017 calculated by looking at consumer surplus value (the difference between a person’s willingness to pay for something and the price they actually pay for it) that the internet may be worth $US8 trillion a year to the GDP – and that’s just in the US.

If that figure is correct, it would make the idea of the internet the most valuable invention of all time. Pretty impressive idea for a frustrated guy in the 1980s.

The world’s biggest invention shop

Think about it this way. The idea for the internet at one point existed only in a man’s head. After Berners-Lee made it real, that idea is now worth $US8 trillion.

There’s a lot of value in coming up with good ideas.

Some companies understand that ideas are important, but none more so than IBM (International Business Machines Corp.) IBM has been a trailblazer in technology for over a century. As of September 2021, IBM has filed over 100,000 patents, making it one of the top patent holders globally because it knows new ideas is the only way to survive.

From its earliest days, the company recognised the value of ideas as an intangible asset. IBM’s innovative spirit led to inventions like mainframe computers, magnetic storage, computer processors and others. These breakthroughs were achieved by nurturing a leadership philosophy that embraced open innovation with external partners and encouraging IBM staff to always be thinking of better ways.

IBM's dominance of innovation saw it capture a staggering 60-70% share of the global business computer market. However, it wasn’t all smooth running. While its market control waned over the years, IBM’s commitment to innovation has retained its position as the world’s biggest invention shop.

IBM takes ideas from genesis to commercialisation. In contrast, some companies do nothing but gather other people’s ideas – and then sit on them.

How valuable are your ideas?

I’m talking about patent squatters. No one likes these people. While they are an expected outcome of a patent system, that doesn’t make them any less hateable.

A notorious patent squatter is Intellectual Ventures (IV), based in Bellevue, Washington. Founded in 2000 by former Microsoft chief technology officer Nathan Myhrvold, the company's primary business model is acquiring patents and then licensing or enforcing them against other companies. It squats on tens of thousands of patents across various technology sectors.

Patent squatting, also known as patent assertion or patent trolling, is when a firm acquires a patent with no intention of developing products but rather to assert them against other companies for financial gain. Patent squatters often rely on the threat of litigation to extract licensing fees or settlements from other companies, even if the patents are not being used. Especially if they aren’t being used. You can see why no one likes them.

The way Intellectual Ventures operates has sparked plenty of debates about how patent trolls hurt innovation. Some argue they stifle innovation by creating legal uncertainty which saps resources that would otherwise go to R&D. On the other hand, patent squatters say they provide a way for inventors to monetise their inventions and unlock the value of their patents.

Many countries are reforming their laws to rein in patent trolls. Several countries, including the US, have already introduced reforms to strike a balance between protecting legitimate IP rights and preventing abusive patent litigation practices.

Here’s the thing, though: by some estimates, Intellectual Ventures turns over about $US290 million annually. That’s a lot of money. If a company can generate that much cash from sitting on people’s ideas and starting legal fights with real, productive businesses, then that proves how invention and innovation are amazingly valuable intangible assets.

If your company hasn’t come up with new ideas – or tweaks on existing ideas – then perhaps it’s about time to parcel some budget for R&D. You never know who might come up with an idea like the internet that could change the world.

Most of the theories about why Elon Musk rebranded Twitter to “X” appear to be just sour grapes from people who already don’t like him. The rebranding won’t work, they hope.

I say “hope” because the history of success with rebranding projects is a mixed bag, at best. For some companies, rebranding is doomed to failure from the start. But for others, consumers eventually get used to the new brand surprisingly quickly.

No one likes to change. In fact, we’ll do anything to avoid experiencing it. The average person’s brain will unconsciously think it is under attack when it encounters a change (which explains some of the negative reactions to Musk’s rebranding). Yet the best marketers understand a deep human truth: people can get used to anything if you give them time.

Despite a rebranded company’s rhetoric about strategy, marketing and “new direction,” the truth is that the public will eventually acclimatise to any rebrand. Just keep doing what you do and, eventually, most people will forget the brand was ever any different.

Subscribe now

The lesson of Musk’s Twitter rebrand is simple: it can’t be lipstick on a pig. The product or service should remain high quality, available, authentic and – above all – needed. If it can achieve this consistency, then it really doesn’t matter what the brand looks like.

The only question Musk should be asking is: Does Twitter still do what it says on the box? If the answer is yes – that Twitter is still the indispensable social network of choice for current affairs – then people can be expected to use the service no matter how many letters are in its logo.

When is it a good idea to rebrand?

As outlined in IA.com’s glossary article on brand, the concept of brand is a bit like a company’s reputation:

“A reputation, like a brand, is carefully built over years through the thousands of interactions a company has with its customers, both directly and indirectly. For this reason, a brand image can collapse in much the same way as a compromised personal reputation – and sometimes for the same reasons.”

In this way, just as it would be a bad idea for a person to arbitrarily change their name to get rid of a bad reputation, a company better have a decent reason for starting a rebranding project. It’s not only about erasing the past. It must be attached to an exciting vision of the future.

For this reason, every rebranding strategy falls broadly into one of two main boxes. Either the company has a need to change its brand, or it has spotted an opportunity that requires a rebrand.

Examples of a need for a rebrand might be after a merger. In such a situation, the strategic direction of each company must be aligned, which means both must compromise in some way since there won’t be room for both logos on the letterhead. Many mergers are akin to a whale swallowing a minnow, so in those situations, there’s no real need to rebrand. But if the merger was sufficiently large, the resulting entity will need to rebrand to avoid confusing the public.

On the other hand, when a business strategy no longer makes sense given a changing trend, a rebrand may be necessary to take advantage of the opportunity. In this case, Elon Musk has publicly announced a multi-year vision to use the Twitter service as the basis for an “everything app.” However, to pursue this vision, Twitter’s structure will need to radically change, perhaps multiple times over the next few years.

A rebrand is needed to leverage the opportunity.

What is that opportunity? The internet is converging. Many apps, software and platforms are accreting into one, convenient location as content essentially becomes interchangeable. It would be strange for Twitter to suddenly get involved with banking or ride-sharing. Yet simply from a practical standpoint, Musk understands that it’s silly for people to be forced to use dozens of loosely connected apps to perform daily tasks like reading the news, banking, talking with friends, etc.

Musk knows someone will eventually do this, so why not him? Twitter was a great starting point for creating an “everything app,” but it needed to be larger to leverage the opportunity. Why not bring hundreds of services onto one platform?

Only a rebranded Twitter could do anything it wanted – be whatever it needed to be. This idea was outlined in the press release for the rebranding:

“X is the future state of unlimited interactivity — centered in audio, video, messaging, payments/banking — creating a global marketplace for ideas, goods, services, and opportunities. Powered by AI, X will connect us all in ways we're just beginning to imagine.”

In other words, the rebrand of Twitter has created a special kind of intangible asset for Musk: space to play.

With X, anything that leads towards an “everything app” is relevant. Musk now has a green field of opportunities. Perhaps a previous idea from the team didn’t quite fit on a micro-blogging platform like Twitter. Yet with a platform like X, if the idea promises to make people’s lives easier, why not give it a try?

Twitter was one thing. X could be anything. That’s the power of rebranding.

Rebranding done right

While there’s never a perfect analogue to something like this (all companies are different), there are plenty of lessons in the history of rebranding.

One of the better examples was McDonald’s. In 2005, the fast-food chain’s leadership realised the company's image no longer resonated with a growing segment of health-conscious customers. To address this demand, McDonald's introduced salads, fruit options and higher-quality ingredients alongside a general reduction in trans fats, sodium and added sugars in all its products.

I don’t know if many people remember, but McDonald’s used to be marketed primarily as a fast-food restaurant for families. Since the leadership knew a more mature audience would generate greater profits, the company began to market to adults and young professionals by emphasising quality ingredients and sustainable sourcing.

This was a dangerous move since Happy Meals – its core product for families and children – made up 40% of McDonald’s profits at the time.

Part of its rebrand included the introduction of the McCafé range which positioned the company as a more sophisticated brand and allowed it to compete more effectively with coffeehouse chains. McDonald's also created a more contemporary atmosphere in its restaurants, complete with comfortable seating, free Wi-Fi and digital menu boards.

The business flourished. Once the rebrand was complete, it experienced eleven consecutive quarters of growth and its best-ever year of sales growth in 2008. By responding to changing market demands for healthier options and appealing to a more mature audience, McDonald's revitalised its image.

X marks the spot?

In terms of rebranding, the X experiment seems to be going quite well.

A week after Twitter rebranded, the numbers show the social network has gained ground. According to Reuters, the platform added 1.6 million new users since the rebranding, reaching a new high of 540 million active accounts (and that’s after the company purged tens of millions of “bot” accounts earlier in the year). By comparison, Twitter had 229 million active accounts in May 2022, according to company SEC filings.

Looking at the wider internet ecosystem, aside from a few also-rans in the micro-blogging environment, X, for all intents and purposes, still has a monopoly on this specific social media format. And you know what they say about monopolies: it’s always a good investment.

It may still be too early to tell, but X could be following the rebranding path of McDonald’s by maturing its brand to capture a larger trend opportunity. People laughed at McDonald’s for its rebranding. I recall questioning the wisdom of a fast-food chain suddenly offering salads. Surely that wouldn’t work. It didn’t make any sense. But aside from a dip in sales between 2014-2019 leading up to Covid, McDonald’s is still performing rather well.

I also hear plenty of giggles about Musk’s rebranding project. Some of the concern is warranted, sure. However, the jokes about how users will be “excreting” rather than “retweeting” seem to be sour grapes. After all, “retweeting” wasn’t a word until Twitter came into existence in 2006. It’s always funny to see people defend words that they were trained into using by a private company.

But this just reinforces the point of this article. Consumers can get used to anything if you give them enough time.

If you keep offering the same, decent service or product, always tweaking the edges to improve it, then it’s almost guaranteed that one day, maybe even next year, “excreting” might enter common parlance (although I’m sure 500 million active users will invent something a little sexier).

That’s the reality of the rebranding process. So long as it leads to something better, consumers won’t mind what logo is on the tin. If Musk can make a superior product – perhaps even his promised “everything app” that people will use – then the new brand “X” will be an excellent fit since its functionality and usefulness will compel people to use it.

But if his critics are right, then Musk couldn’t have picked a better symbol for the demise of a great company. After all, an 'x' is something we've all been conditioned to click to close…

Just putting that out there.

The core definition of an asset – tangible or intangible – is if you have control over it.

Property can be an asset if you have a deed. Data can be an asset if your company has collected it using its own systems. But what about people? Can they be assets?

The short answer is, no. After all, slavery is outlawed. I don’t know about where you live, but I couldn’t tell you where my nearest open-air slave market is. People can be employed by a company, but that company can’t legally own its employees. No matter how loyal they might be, there is always a risk of an employee walking out.

The expertise and skills of an employee are intangible assets for a company. But the person themselves cannot be an asset. Next to skill and competence, the most important intangible asset a person can bring to a company is their relationships with fellow professionals and strategically-placed peers across the sector (or even between sectors).

Subscribe now

Relationships age like wine, not like bread. The higher a person progresses in their career, the more people they connect with along the way and the more useful those relationships become. Networking is useless for a person fresh out of college because, well, they have no experience. But it’s always a good idea to start building a network early in one’s career. It’s an investment because you never know when a connection relationship may come in handy.

The popular TV show Suits was full of great examples of how relationships save businesses from sticky situations or help get deals across the line. While sometimes the writers relied too much on “favours” to advance the wider story, the concept of “banking” goodwill to “cash it in” at a future date is a well-known practice in the legal industry – and in many other sectors.

The ability to pick up the phone and talk directly to a key person in a complex supply chain or the exact decision-maker at a partner company can be just as valuable as owning a high-rise building.

Sometimes, people with great relationships are hired precisely because of those relationships. Their skills are important to get the job done, but not nearly as important as the access they can create.

Toyota - champion of relationships

As mentioned, the value of relationships comes from the trust, cooperation and mutual benefit they develop over time.

Strong supplier relationships (and with consumers, don’t forget the consumers) are essential to succeed in today's globalised world. A lot of companies even choose to say their suppliers are part of a “family” to emphasise how important those relationships are.

For example, Toyota, a leading carmaker, recognised early in its existence that turning its supplier base into a “family” was crucial for its growth and innovation. So, it began a journey to build deep relationships with its suppliers that were based on trust, respect and shared values. Toyota understood that nurturing its relationships would be a win-win situation.

As the years passed, Toyota developed a "kaizen" culture of continuous improvement in which suppliers were encouraged to offer their ideas and expertise at any time. In this way, Toyota's suppliers became more than just providers of parts; they were valued collaborators.

With trust at the core, Toyota's suppliers felt free to take business risks and invest in R&D to find creative solutions to challenges and design high-quality components. Soon enough, Toyota's vehicles became well-regarded for reliability, safety and efficiency – a testament to the dedication of the entire supply chain.

Its robust relationships were even more valuable in times of crisis. When natural disasters or recessions disrupted supply chains, Toyota's network banded together to support each other which ensured a quicker rebound for Toyota and minimised production disruptions.

Toyota’s relationships also offered a competitive advantage in cost management. Since it was creating a mutually beneficial relationship, the suppliers were invested in Toyota's success and found innovative ways to share costs because they knew making things cheaper would help everyone in the group. This synergy ultimately translated to making Toyota vehicles more affordable, which improved the brand further.

In a real way, Toyota’s car business is just a nice epiphenomenon of its real business: building trust with its suppliers. That’s what it does best. Through thick and thin, Toyota and its suppliers stand united, driven by a shared commitment to quality cars that are cheap to run and maintain.

Don’t bet the house on a relationship

However, like all assets, a relationship isn’t foolproof. Just because you may be friends with a well-placed contact doesn’t guarantee this will translate into success. Anything could happen, you never know.

The founder of NZX-listed company BurgerFuel (it makes burgers, obviously) developed a close friendship with the founder of sandwich brand Subway. The two companies were wildly different in terms of size and revenue, but the leaders had a great relationship and wanted to work closer together.

After a series of conversations, plans were set in motion in 2012 to have BurgerFuel outlets attached or connected to 1000 Subway outlets across major US cities. It was going to be a huge win for the small New Zealand-based company that until then only had an international foothold in Australia and a handful of Middle Eastern countries.

Everything was ready to go and then tragedy struck. In 2014, soon after the plans were announced Fred DeLuca, the Subway founder, was diagnosed with cancer and immediately admitted to hospital. He soon after died at the tender age of 67. The tragedy was completely out of the blue for everyone, including the BurgerFuel founder.

After the funeral, Subway’s new CEO decided to reassess the company’s strategic direction and ultimately decided against progressing with the BurgerFuel deal.

A year and some depressing legal reversals later and the partnership was over. The relationship almost made BurgerFuel an international heavyweight with a serious presence in the world’s biggest fast-food market. But now that opportunity was lying scuttled on the bottom of the ocean.

It was a lesson in the vicissitudes of relationships. They can be everything or nothing, always in the hands of the Fates.

It was also a reminder that relationships are just like every other asset: they are never a guaranteed win. So, while it’s wise to plan to leverage a good relationship, it is dangerous to bet everything on a single connection – even if it looks secure at the time.

“You can’t sell a secret” is an axiom in business.

This one phrase spawned an entire industry called “marketing” that has upended the world for good and ill. Today, a company’s marketing strategy can be the difference between failure and success. You can have the best product in the world, but if it doesn’t sell then what’s it’s a wasted investment.

What do you want to make famous? Ads are the only way to achieve this.

The power of advertising is that if a business gets the ad right, by attaching it to a “human truth,” it really doesn’t matter what the product is. People will buy it regardless. In fact, advertising done right means the product is irrelevant. Let me explain why a “human truth” should be your new best friend.

A good ad sells much more than the product. When you see an ad for a new car with a beautiful woman, you’ve already been sold on something which has nothing to do with the car. You’ve just said a beautiful woman was driving the vehicle. Therefore, the concept being sold by the ad was not the car, but was instead: “this is what a beautiful woman looks like.”

Do you see? If you thought she was beautiful, then the product is irrelevant. You will desire to buy it because there’s just something about that beautiful woman...

Subscribe now

That’s why advertising is a strange kind of intangible asset, but it is an intangible asset. More precisely, it is the hidden mathematics of business. It’s true that an advertising campaign can’t be listed on a company’s asset register, but its brand can be. And the formula behind a brand is created by the marketing team.

Let’s dig into this fascinating world of advertising.

Who knows about ads anymore?

Despite the importance of advertising in achieving business success, the topic is poorly understood even by people who have been in the corporate world for decades.

For example, why is a beautiful woman driving that car so effective? Is it because “sex sells”? Sure, that’s the shorthand.

But on a more basic level, it’s a human truth that people are wired to desire sex, or at least wired to appear to the opposite sex as someone who is desirable. In fact, it’s a fun little challenge to think of an action you could take during the day that ISN’T predicated on your innate desire for sex. Go ahead, try it.

If you’re being honest, you’ll struggle to find even one perfectly neutral activity. As famous psychologists have pointed out, everything we do is either travelling towards sex or is a result of having sex recently – which means we are once more travelling towards more sex.

Sex sells, so it makes sense that sex would appear in pretty much every piece of advertising. Even the most sterile job listing has the implicit promise of sex somewhere in its many layers (after all, why else would you be looking for a “better” job? To impress your dog?). Yet many people misunderstand how "sex sells" in advertising.

You can't just put the word SEX on a poster or put some phallic-shaped object in a random image and expect the audience to view the associated product within a sexual context. You could print the word SEX in large, clear type on a billboard and it still wouldn't work to invoke sex.

Advertising uses sex on a symbolic level to connect a product to an unattainable sex object, like that woman in the car ad. The woman is beautiful, but you can never get her. She is driving the car, which then becomes a desirable object simply because the desirable female sex object is sitting in the front seat. But in contrast to her, the car is attainable, for the low-low price of $190,000.

In this way, the object of desire that your sex drive (no pun intended) aims to conjure shifts from the woman to the car which becomes a sex object in her place. Simultaneously, within the image of the ad, the woman's gaze is fixed on the car, so it is represented as an object of desire for her, giving you, the consumer, a sense that because she desires it, your possession of it will attract her to you. Yup, the brain is a funny place.

And don’t try to claim you’re immune. I'm convinced that the forces of marketing and advertising are so effective and have been so thoroughly perfected, that it is almost impossible for anyone to resist. For any person, there is some product out there that these advertising tricks will work on. For you, it's sneakers. For someone else is T-shirts. For a third person, it’s those car ads.

Of course, there is no reason to sell a car by showing a beautiful woman driving it, that set-up makes no logical sense. It tells you nothing about the car or why it is better than other cars. It only works because you, the viewer, have a sex drive. Because sex sells, the product is irrelevant.

Siri, what is ‘lack’?

However, this effect doesn't last.

You don't look at that car ad and then forever think that if you buy that car you also get sex with the beautiful girl. At best, the ad leaves the lingering sense deep in your mind that this car feels/looks/is sexier than the other cars. That impression is what sticks.

Furthermore, you start to see some types of women as “beautiful” when they match the imagery of that woman chosen in the car ad. Yes, there are actual, real people out there who choose a specific kind of model to appear in their ads. Nothing is left to chance because of how much money goes into creating ads. This means any model appearing in an ad is someone else’s perception of “beautiful.” You might think you know what “beautiful” is, but it is frustratingly difficult to know where your organic desires start and the personal desires of some mid-level executive at a Madison Avenue ad company stop.

But as mentioned above, humans operate in two existences: you are either having sex right now or moving towards having sex in the future. There is no permanent middle ground. The only permanent feeling in a person’s life is something called “lack,” which is coloured by the illusory promise of “satisfaction.”

So, the entire point of an ad is to create a feeling of “lack.” Said differently, a good ad conjures an artificial distance between you and your future satisfaction. It then convinces you that if you buy this product – whatever it is – then you will no longer feel “lack.” It’s very effective.

However, the unspoken reality of advertising is that everyone in Madison Avenue knows that satisfaction is impossible because desire is inexhaustible, which is another human truth.

We can always be encouraged to feel more “lack” and then be presented with another object that comes with a tantalising promise of bridging that gap so that we can enter the utopia of satisfaction. The trick in advertising is that the definition of utopia is both a perfect world and a place that cannot exist. Utopia is a mirage, always receding into the distance, never quite attainable. Even if you do buy the car and “get the girl,” there will always be another “lack” waiting for you on the next billboard.

And that, ladies and gentlemen, is the sweet spot of advertising.

All that matters is that the car sells. To a company, nothing matters except profits. Whether the advertising campaign to achieve this is sexist or offensive does not concern the company as long as that perception does not negatively affect sales. It’s a simple mathematics. If sales are negatively affected, then the sexism in the ad would be bad. But if sales are positive, then sexism is good.

It's all a matter of perception. This perception will translate into sales because another great human truth is that people hate to be excluded. People will eat the most disgusting food – and pay a premium for the privilege – provided they think it is exclusive. They will even convince themselves that the “food” takes good because it is expensive and exclusive.

The influence of advertising

Notice in the above example I never mentioned the make or model of the car. That was deliberate. Once again, it doesn’t matter what the product is. If the advertising works, then the product will sell because the whole point of consumerism is not that a person buys a product. It's that they buy into the product's narrative as constructed by its advertising.

A woman who buys that car to judge for herself if it really is “made for men” is not really judging anything, because the notion that a car is more or less masculine is nonsensical. She isn't countering the “sexist” ad campaign. She's using the car to prove to herself and others that she is the kind of person who stands up to sexism.

The product is the means to an end that exists only in her head and the heads of others that share her cultural framing. The product is a fetish object, imbued with special powers to help us interrelate to others who are programmed the same as we are.

Few people are willing to confront the system of advertising because they like how it works for them in other areas. So, it's easy to mock a message that says, "This car is masculine," but to mock the systems that produce this message means also rejecting the message that "Using a Mac makes me seem more creative" or "These narrow glasses make me cool and trendy."

These are all equally nonsense positions. The products are simply the object on which we project our own fantasies. The car ad isn't about men or women. It's a media fiction that people accept even though they have no basis for it in reality. And I must remind the reader that the fantasies we have – your desire to be cool or intellectual or whatever – were quite likely created by the advertising itself.

It's just a car. Do you like how it drives? If yes, then buy. If not, then don't. When you apply any more thought to the purchasing decision than that, you lose. Ads are full of illusions designed to convince you that the act of buying is something other than giving a company your money, which is a physical manifestation of your time. Money literally represents the time that you worked in the past, or if on credit, the time you will have to work in the future to pay the debt.

After all, the art of business is convincing other people to take the money that’s in their pocket and put it in your pocket. Now can you see why good advertising can be a company’s greatest intangible asset?

Takeaway: Plant variety rights are like copyright for living organisms. They can be expensive to create but can generate outsized returns if well-protected.

Once upon a time, in a small farming town in the middle of Whoknowswhereistan, there was a passionate plant breeder named Emily. Emily dedicated her life to improving plant varieties that could survive a forecasted plague.

While wandering through a crop field recently killed by the new disease, Emily discovered a survivor that seemed to have a remarkable genetic trait that made the plant highly resistant. Recognising the immense potential, she began a process of crossbreeding this type with an existing variety that was known to have a larger yield of fruit.

After a few years of careful selection, Emily successfully bred a new plant variety that had great taste and could also grow in more diverse soil mixtures. Her breakthrough soon gained the attention of keen farmers who wanted to protect their crops from the disease and, of course, make more money.

Emily, realising the value of her creation, decided to protect her new genetic creation by applying for plant variety rights. Once granted, she became the sole owner of this unique variety, allowing her to deploy legal force to control its production, distribution and commercialisation.

Subscribe now

As word spread about Emily's remarkable plant variety, demand soared. Farmers from across the world sought her seeds, even though they were priced at a premium. Emily then established licensing agreements with a handful of important seed companies, allowing them to produce and sell the seeds under strict quality control measures. As a result, Emily's variety gained a reputation for exceptional performance and became a significant source of revenue for her.

The licensing agreements and royalties generated from seed sales also allowed her to invest in further research and development, expanding her breeding programme and introducing a whole range of plant varieties to address other agricultural challenges.

What is a plant variety patent?

Think of plant variety rights as copyrights for plants.

These protections safeguard the unique characteristics and qualities of specific plant varieties, granting exclusive rights to the breeder or company. These rights ensure that all the hard work, time and investment put into developing new plant varieties are protected and rewarded.

Very simply, patents are intellectual property rights granted by public authorities for human inventions. Patents are a type of market intervention and were initially intended back in the early Industrial Era to trigger more investment in R&D.

Patents on life differ from patents on machines or chemicals, however, as the monopolies can and do extend to the offspring of the plant varieties. Over time, patents for plants have become powerful legal tools used by companies like Monsanto to dominate seed markets by restricting their competitors’ access.

Patenting life forms has been highly contested pretty much from the first case in the US in 1980 when a patent was granted for an oil-eating bacterium.

Critics argue that life forms cannot and should not be regarded as human inventions that can be owned or controlled. Conversely, proponents point out that any DNA strand which can be sufficiently manipulated by humans is no longer "natural" and falls into the box called "things that can be patented."

Plant variety rights patents are generally divided into two categories:

1. Process patents relating to an inventive process such as the modification techniques for new GMOs. Anyone who wants to use the patented process must have the consent of the titleholder, paying license fees and usually also royalties; and

2. Product patents relating to an invented product, such as how Emily altered the DNA sequences of her plant variety to create stronger disease resistance.

Traditionally, intellectual property rights are granted by governments through "plant variety protection" or "plant breeders’ rights" based on national laws. Plant variety protection (PVP) rules, like patents, largely prevent farmers from saving any of their own seeds without paying royalties to seed companies.

While regulations regarding GMOs vary from country to country, there are only 13 crops with GM varieties commercially available around the world. These include:

• Alfalfa

• Apple

• Canola

• Corn (Maize)

• Cotton

• Eggplant

• Papaya

• Pineapple

• Potato

• Soybeans

• Squash

• Sugar Beets

• Sugarcane

The Monsanto example

Emily doesn’t exist, but her success story demonstrates how a newly-created plant variety, with its unique genetic traits and intellectual property rights, can become a valuable intangible asset for the owner.

But while Emily is a fictional character, there are plenty of companies that play around with the building blocks of life (DNA) to create new forms of plants and animals all the time. Some, like Monsanto (now owned by Bayer) make billions of dollars from this process every year.

Monsanto has been at the forefront of genetically modified organisms (GMOs) and is perhaps best known for its weed killer product, Roundup, along with its production of GMO crops.

After the merger in 2018, Bayer/Monsanto now own about 77% of all seed corn, 69% of all seed traits and 58-97% of the markets in cotton, soybeans and canola. Monsanto is also the assignee of over 4000 granted and unexpired US patents while Bayer is listed as the assignee of over 6000 granted and unexpired US patents.

The company may even employ someone called “Emily” as well, but that’s unconfirmed.

One of these GMOs, a herbicide-resistant corn, was developed by Monsanto researchers through the identification of a specific gene that resisted glyphosate, the active ingredient in Monsanto's herbicide, Roundup. This modification means farmers can use harsher measures to control weeds without fearing too much damage to the corn.

To protect this new corn variety, Monsanto sought patent protection in the same way that Emily did. It filed patent applications with the appropriate intellectual property offices (mostly in the US), providing detailed descriptions of the modified corn's genetic makeup, traits and how it was created. The patent applications included claims defining the scope of the protection sought.

How plant variety rights become intangible assets

The three primary categories of genome-editing tools are zinc-finger nucleases (ZFNs), transcription activator-like effector nucleases (TALENs) and the CRISPR/Cas system (Clustered Regularly Interspaced Short Palindromic Repeats).

Over the past 10 years, improved versions of these “genetic scissors” have been introduced by many researchers. In a 2022 report, the World Intellectual Property Office (WIPO) Patentscope, which covers 103 patent jurisdictions, identified 20,081 patents that reference the “Crispr-Cas9 plant.”

A report by AgbioInvestor found that the cost of discovery, development and authorisation of a new plant genetic trait has declined from $US136 million in the 2008–2012 period to about $US115 million today, while the time required to complete the process increased from 13.1 years to 16.5 years. At the crop level, time to market varied from 11.6 years to 24.0 years.

So yes, GMOs are very expensive to create.

Regulatory hurdles are another factor in the development of new plant and genetic varieties. Companies must navigate complex and ever-changing regulatory frameworks, particularly in the areas of genetic engineering and biotechnology. These regulations can vary by country or region and failure to comply with them can result in significant legal and financial consequences.

In short, agricultural companies would find immense value in protecting their plant variety rights and turning them into game-changing intangible assets.

By obtaining plant variety rights, a company can prevent others from selling or reproducing its unique variety without permission. By developing varieties that offer desirable characteristics, companies can differentiate themselves from their competitors and attract customers who value these traits.

This can lead to increased sales and greater profitability in markets with a high demand for specific traits such as disease resistance or drought tolerance (thanks Emily!).

Genetic innovations, protected by patents and other intellectual property rights, can be enormously valuable assets for a company. They open doors to collaborations, licensing agreements and the potential to sell seeds or technology to farmers around the world.

Intuitively, we all understand that products and services have some value. After all, a homeowner must pay a plumber to fix their pipes, they won’t just turn up for free.

But what about intangible assets that are neither products nor services? Is something only valuable if a customer wants to buy it?

Consider a note written by an executive at Coca-Cola to another executive referring to a new Coke flavour that hasn’t yet appeared on shelves. Could the information – the intangible asset – contained on that sheet of paper be worth millions of dollars?

In the spring of 2006, one woman bet her career, reputation and future on exactly this assumption.

Subscribe now

It was Monday, 12 June at 7:30 PM. Long after her colleagues had left for the evening, Joya Williams finally stood up from her desk and grabbed her bag to leave. But instead of heading out the door, she walked over to a handful of important-looking filing cabinets and began thumbing through the documents contained inside.

Williams’ day job was as an administrative assistant for a marketing director at Coca-Cola, so handling such documents was hardly outside her normal parameters. Except this time her goal wasn’t to “administer” the documents. Instead, she removed a few folders and placed them inside her bag. She also stuffed a specific container of liquid in the bag with the papers. Williams then departed Coca-Cola’s headquarters and drove home with the precious cargo.

Are Trade Secrets Valuable?

At this point in the story, how much do you think her bag was worth?

If a bank robber stops to count the stolen cash in a safe, he will immediately know how much the loot is worth. And while an art thief may have some trouble deciphering the value of a famous painting, he can assume that rich people will pay top dollar no matter what.

But the value of a stolen sample of soda and a few files is entirely unknowable until a buyer is in the room. It could be worth millions, or nothing at all.

To Pepsi, a can of classic Coke is worthless since Pepsi has plenty of soda already. But a small container of an unreleased Coca-Cola prototype might be gold dust to Pepsi.

Pepsi could test that sample to discover what’s in it. It could improve the formula and be the first to market with a superior drink. Pepsi could even prepare attack advertising in advance of the release of Coke’s new product to kill the rival’s momentum before it gets rolling. Practically speaking, the benefits of seeing a rival’s trade secrets are limitless.

Let’s take a brief pause to define what trade secrets are.

Trade secrets are pieces of proprietary information owned by a company that hold crucial significance for the organisation but do not meet the specific criteria for patent protection. These might include recipes, business processes, specialised formulas or any number of other types of information.

Protecting these intangible assets requires a strategic approach. The key is to maintain strict confidentiality and ensure every employee, from top to bottom, signs a Non-Disclosure Agreement (NDA) to shield against any unauthorised disclosure. In certain jurisdictions, a breach of an NDA is a criminal offence, reinforcing the gravity of maintaining utmost secrecy.

But back to the heist story.

Williams had access to executive-level materials as well. These contained detailed information about suppliers, strategies, hidden bottlenecks and consumer data. It's difficult to overstate the value of such material for Pepsi. Coke gathers data and washes it through analysis to optimise its systems.

Coke knows which shelves in shopping centres are best to book, how to get in front of a target demographic, which areas of a city it should focus on, when to release new advertising campaigns to achieve the greatest impact, how to break into a new market, what associations people make with drinking Coke and thousands of other little insights.

Arguably this data would be more valuable to a rival like Pepsi than Coke’s recipe. And Williams was gathering more of it every day.

Williams broadly understood the value of her stolen material to Pepsi but didn’t know the exact worth or how to facilitate selling it. So, she recruited a friend who could help fill those gaps: Edmund Duhaney, recently released from prison for drug trafficking. Duhaney then recruited one of his prison buddies, Ibrahim Dimson, who’d done time for bank fraud and embezzlement.

According to court testimony, the three met for the first time at Williams’ apartment on 4 April of the same year. Williams prefaced her devious plan for corporate espionage by saying, “This happens all the time in corporate America” before mentioning that “Pepsi would be interested in this type of information.” Everyone knew just how much those two companies hated each other. So surely Pepsi would pay top dollar for the stolen info?

The following month, they were ready to put the plan into motion. Using an official Coca-Cola letterhead (why?), Ibrahim penned a note to Pepsi headquarters under the fake name “Dirk.” The message began in earnest: “Dear Pepsi, I have information that's all Classified and extremely confidential that only a handful of the top execs at my company have seen,” he wrote.

At this point, the three still had no idea what Pepsi might pay for the information, so they asked for a measly $75,000 which, I suppose, was a large amount for a few ex-felons and a lowly corporate secretary.

How (Not) To Perform Price Discovery

Determining the value of intangible assets is difficult for the experts, let alone a few poorly-prepared sandlot criminals. Williams, Dimson and Duhaney had limited options available, aside from trial-and-error, to gauge just how much money they could get from Pepsi.

Following a ham-fisted negotiation between the criminals and Pepsi, on 16 June two men – “Dirk” (Ibrahim) and a man presumably from Pepsi called “Jerry” – travelled separately to a clandestine meeting at Hartsfield-Jackson International in Atlanta, the world’s busiest airport.

Ibrahim arrived clutching a brown Armani Exchange bag. Inside the bag was a manila envelope containing a clutch of documents labelled “highly confidential,” along with the sample of the unreleased soda developed by Coca-Cola.

The other secret squirrel attendee, “Jerry” from Pepsi, must’ve stuck out like a sore thumb in the airport crowd. He walked past the commuters with a yellow Girl Scout cookie box, packed with $30,000 (40% of the agreed-upon sum, with the rest to be exchanged after Pepsi could confirm the sample was legitimate).

Dirk and Jerry exchanged their bags and went on their way.

It turned out the secrets were valuable after all! And this was just the beginning. Williams had since stolen more product samples, memos and even a presentation meant for the International Olympic Committee.

Over the next several months, Jerry from Pepsi would meet with Dirk, pay some money and get Coke’s trade secrets. In June, Jerry agreed to pay $1.5 million for the balance of the stolen material. That’s million! With an “M”! The criminal trio were riding high – until it all went wrong.

What Are Trade Secrets Worth

It turned out the three ne’er-do-wells were talking with Special Agent Gerald “Gerry” Reichard of the FBI all along. Back when Ibrahim sent the first letter claiming to be a Coke employee, Pepsi had sent the note straight over to Coca-Cola with a warning that there was clearly a mole in the company leaking trade secrets for money. Coke immediately contacted the FBI.

Little did the criminal trio know, all the money they were getting was from the Feds. Oh, and Coke also installed cameras by Williams’ office to monitor everything she did while she was in the building. The FBI would eventually have plenty of videos depicting each time she snuck those confidential documents into her bag. The case was pretty much open and shut.

All three were charged with conspiracy to commit theft of trade secrets, which are federal offences. Ibrahim Dimson pleaded guilty and received five years. Edmund Duhaney entered into a plea agreement to testify against Williams in exchange for just two years behind bars. And Williams was sentenced to eight years in prison.

When the accomplices appealed these sentences, the Eleventh Circuit jury “attached great weight to one factor: the seriousness of the offence.” The case summary went on:

In describing why it found the offence to be so serious, the court discussed the harm that Coca-Cola could have suffered if Williams and her co-conspirators had succeeded in selling its trade secrets to a rival, and the danger to the US economy these crimes pose.

Everybody seemed to agree with the severity of the punishment. As the market becomes more global, US Attorney David Nahmias wrote of the case, “the need to protect intellectual property becomes even more vital to protecting American companies and our economic growth.”

In response to the incident, Coca-Cola strengthened its security protocols and took steps to enhance the protection of its trade secrets. Overall, the case served as a great example of the legal consequences and potential damage that can arise from the theft of valuable proprietary information.

Valuable Trade Secrets

Coca-Cola already went to enormous lengths to protect its intangible assets, so it certainly thought they were valuable. As noted in Atlanta Magazine:

Like everyone hired at Coke, Williams went through a tough screening process – including a physical exam – and experienced tight security as part of her day-to-day routine at a company that takes its safekeeping seriously. Most visitors are required to park several blocks away and ride a shuttle to the building. Surveillance cameras are stationed in the public parts of the headquarters[.]

Clearly, Coke’s internal communications, data and IP could be worth something to rivals. But when that information literally landed on the front doorstep at Pepsi’s HQ, it seems the only thing Pepsi figured was worth more than the secrets was avoiding the lawsuits and PR blowback that would result from being involved in corporate espionage.

On the other hand, maybe Coke’s secrets were never all that valuable to Pepsi.

When you consider that Pepsi's very existence is almost entirely defined by its rivalry with Coke, this would make sense. As mentioned above, Pepsi spends billions every year marketing not just its own soft drink, but also the fact that it is different from Coke. The thieves didn’t really think through if Pepsi could even use its rival’s secrets.

So, what was the value of Coke’s secrets?

Only one person in this story assigned an actual cost to the stolen goods.

Judge J. Owen Forrester gave no quarter to Williams’ tearful begging at her Federal District Court hearing. Sentencing guidelines suggested somewhere between five and six years would be an appropriate punishment for the crimes, but he took a different view.

“The guidelines as they are written don’t begin to approach the seriousness of this case. This is the kind of offence that cannot be tolerated in our society,” Judge Forrester told the court.

So, that’s your answer. For Joya Williams, those intangible assets were worth eight years in prison. Not exactly a good ROI…

Takeaway: Content isn't king, it's the kingdom. It refers to any valuable information that can be used to engage and inform audiences.

Let's say you're interested in learning how to play a musical instrument. While flicking through a few websites, you stumble on a well-crafted video tutorial that explains everything from the best way to hold the instrument to presenting the easy first steps for playing your first melody. To you, that video is gold dust. It’s like the video itself possesses a special power to teach you something new.

Good content is like a secret treasure that empowers you to succeed in whatever you put your mind to. It can enhance your creativity with inspiring stories, breathtaking visuals or thought-provoking ideas. Content can also be a powerful tool for connecting with others.

Subscribe now

Just as sharing stories around a campfire brings people together, sharing valuable content can create communities and foster meaningful relationships.

Content Is A Treasure Map

High-quality content, like a treasure map, guides and captivates audiences. It acts as a pathway to engage, inform and entertain, leaving a lasting impression on anyone who interacts with it.

Content comes in all sorts of types, forms and iterations. We asked ChatGPT for a list of what constitutes “content,” and it bashed out the following set:

Articles, blog posts, books, essays, poetry, scripts, newsletters, social media posts, website copy, images, photographs, infographics, illustrations, charts, graphs, memes, visual designs, films, TV shows, documentaries, advertisements, vlogs, tutorials, animations, video clips, podcasts, music tracks, sound effects, audiobooks, interviews, radio shows, voice recordings, quizzes, surveys, games, interactive websites, augmented reality (AR), virtual reality (VR) and immersive experiences.

[deep breath]

Content can also include social media posts, updates, stories, live streams, memes, videos and images shared on platforms. And don't forget PowerPoint presentations, keynote presentations, slide decks, multimedia presentations, online courses, tutorials, webinars, e-books, whitepapers, educational videos, learning materials, advertisements, promotional campaigns, brochures, flyers, catalogues, product descriptions sales materials, reviews, testimonials, comments and community-generated content.

As you can see, content is everywhere, in everything and it is simultaneously tangible and intangible. For this reason, content can be extremely valuable for organisations and must be managed and protected properly. Unfortunately, companies often take content for granted and only realise its true worth when they no longer have it.

Content has a unique characteristic compared to physical assets: it can depreciate over time if not maintained but is not diminished through use. Content can be reused multiple times without loss – and can even be used by multiple people concurrently. This trait of non-consumability makes the marginal cost of using content remarkably low and often creates a winner-take-all dynamic.

For instance, building a state-of-the-art factory for $1 billion will surely be a substantial investment for any company, and once it reaches full capacity there is plenty of room for less efficient plants to enter the market and undercut that investment. On the other hand, if a company creates a suite of high-quality content it can monopolise an entire market without any capacity limitations at all.

Content is a clear example of the wildly different constraints faced by companies operating in the realm of intangible assets compared to those which are top-heavy with tangible assets. The rapid rise of a dozen or so trillion-dollar digital companies over the past 15 years with nothing else besides content is sufficient proof that content is, quite literally, king.

Content As A Path To A Better Brand

A key reason why content is valuable is that it can be the backbone of a company's brand.

To learn more about brand, you can read this article. But the short explanation is that brand is an intangible asset that represents a company's identity, values and products. Content can be used to paint a positive brand image and help customers connect with a company on an emotional level to entice them into paying a premium for products or services. The vehicle for this connection is advertising.

A well-crafted ad campaign can increase customer awareness of a product by creating a strong emotional tie to a brand. “Emotionally invested” humans are far more likely to be loyal to whatever entity (person or company) is generating the desired emotion. They are also likely to recommend the brand to others, boosting the reach of the campaign far beyond the initial investment.

Coca-Cola, the global beverage giant, has mastered the art of using content to promote its brand and mould a strong connection with consumers. Over the years, the company has created many emotionally gripping ads, some of which managed to escape the four walls of Coke’s headquarters to become part of popular culture.

Coca-Cola’s ads often mix the drink with images of fashionable ideas and values. The timeless "Hilltop" commercial, for example, featured people from diverse backgrounds singing "I'd Like to Teach the World to Sing." Coke’s strategy was to link its beverage to the values of unity, harmony and happiness while tapping into universal human experiences like friendship, love and nostalgia. Content was the foundation of this campaign’s success.

Coca-Cola also understands the power of user-generated content as a means of promoting its brand. Through campaigns like "Share a Coke," whereby its bottles were personalised with names, Coca-Cola fostered a sense of ownership among consumers. It also encouraged people to create their own content and share those experiences on social media.

The genius of this ad campaign was that it convinced consumers to essentially do Coke’s marketing job on behalf of the company – all for free (well, aside from the “payment” of social media clout, which some people would consider to be valuable). They say the best marketing is when your customers do it for you, so the “Share a Coke” campaign by Coke probably had a fantastic ROI.

Is Content An Expense Or An Asset?

When it comes to accounting, the International Financial Reporting Standards (IFRS) defines an asset as a resource controlled by a company because of past events, from which future economic benefits are expected.

So, under this description, is content "controlled by the enterprise as a result of past events"? The answer is yes, because content is either created in-house or produced under contract and is therefore owned by the company that created it (or commissioned it). The act of content creation is the “past event” and the control stems from that direct ownership.

But what about "future economic benefits"? The key here is the word "future" which refers to the timespan over which content holds value. Some content, like the ad campaigns for Coca-Cola, could have a short lifespan and therefore limited value. In that case, the content is likely to be classified as an expense since it only incurs costs for the company during the sales generation process.

However, other types of content can be valuable in the long run. Considering content as an asset goes beyond semantics and accounting principles. It has significant implications for content creation and management. Developing content is not always just an expense. It regularly creates valuable assets that enhance a business's worth. Recognising this can help justify investments in content, particularly during cost-cutting phases and tight economic conditions.

Take, for example, a go-to whitepaper created by a cybersecurity firm on the basics of practising good digital hygiene for employees. This kind of content would carry lasting relevance and might stay online indefinitely with only minor updates. If it gains popularity, generates web traffic and builds trust for the brand that wrote it, that whitepaper could become an asset that provides ongoing economic benefits for the cyber firm. In this case, the content would be considered an asset rather than an expense.

And although unlike physical assets like petrol, content cannot be "used up," it can be repurposed, repackaged, published in multiple media formats, or combined with other content, continually delivering value. But this means content requires upkeep, such as updates or additions. Neglecting maintenance reduces its value, resulting in depreciation, just like with physical assets.

A good example here is the streaming service Netflix. Netflix invests heavily in producing and acquiring a wide range of content, including movies, TV shows and documentaries. Its strategy focuses on providing original programming, such as the series "Stranger Things" or "The Crown," which sets them apart from competitors. This exclusivity drives subscriber growth and enhances customer loyalty. Netflix also uses algorithms to put the most relevant shows in front of viewers.

But if Netflix were to take its foot off the gas for a few months and cease producing fresh content, its users could get bored with the stagnant library and cancel their subscriptions. Even with this hypothetical “with-or-without” test, it’s easy to see that content is perhaps the most valuable intangible asset for Netflix.

Why Value Content Assets?

Not all content is equally valuable. As an intangible asset, content is not valued in the same way as physical assets and so may not appear on the balance sheet. Yet this doesn't mean its value cannot be determined or that it’s pointless to expend any effort to assess its worth.

Very simply, if the value derived from content surpasses the cost of its creation, then it can be considered value-adding. If it fails to cover its own costs, it would be value-negative.

To gain a clearer picture of your content assets, an audit can be conducted, and the results placed in a content asset register. This process would involve examining each piece of content and recording data such as title, subject, author, creation date, last modification date, versions or editions produced, extent (word count, pages, etc.), places of use or publication, filename or storage location and the responsible person.

At a wider angle, several methods are commonly used to value content assets, each with its own merits and suitability depending on the context. Here are a few:

1. Market-Based Approach: This method assesses the value of content assets based on comparable transactions or market data. Companies look at similar content deals, acquisitions or licensing agreements to gauge the market value and come to a valuation;

2. Income-Based Approach: This focuses on the potential income or cash flow generated by content. It involves estimating future revenue streams, considering factors such as audience size, advertising revenue, subscriptions or sales. Discounted cash flow (DCF) analysis is often used as part of the evaluation;

3. Cost-Based Approach: This method estimates the value of content assets based on the cost incurred to make them. It considers factors such as production costs, R&D expenses and IP investments. While this approach provides a baseline value, it may not capture the true market worth of the content.

By Nathaniel Nelson

[Recap: Urban legend has it that Coke’s recipe was a deep secret only four people in the world knew, and they couldn’t travel on the same aircraft. But it turns out this story is nonsense. And yet in its own way, it has also become one of Coca-Cola’s most valuable intangible assets. Part 2 finishes the story.]

That three-meter-thick vault door in downtown Atlanta is always wedged open, like a metaphor for the casual comfort Coca-Cola has with everyone knowing its “secret” formula.

It’s no big mystery that the vault is a museum for tourists. The recipe is highly valuable as a marketing stunt. Humans love a bit of mystery, and playing on intrigue is a clever way to boost any brand. Coke knows exactly what it’s doing.

Indeed, when the buyer of Coke Ernest Woodruff moved the lone print copy of the recipe to a bank vault in 1925, his motive was not security. According to Snopes, Woodruff “revelled in the secrecy of the formula, knowing that making a big to-do would convince the media — and thus the general public — that they were getting something really special when they bought a Coke.”

His secondary motive for the intrigue, according to the author Mark Pendergrast, was “to keep people from knowing how cheap the ingredients were and how large the profits.” In other words, the whole thing was textbook early-20^th-century corporate shenanigans.

Subscribe now

There is no special slip of paper inside the tin can in Atlanta. The value is all on the outside – written on the hearts and minds of adults and, especially, children to build positive associations with the Coca-Cola brand.

Getting You To Drink Coke

Nevertheless, as with most intangible assets, the sum of Coke is greater than its parts.

Coke spends billions of dollars each year marketing its drinks. That sort of money implies drinking Coke isn’t a “natural” activity for humans in the way drinking, say, a glass of water might be. People need to be persuaded that Coke is worth drinking and that it has a tasty flavour. Advertising has been critical to Coke’s wild success over the last century to the point where most people now see drinking Coke as fairly normal (which is bizarre, when you think about it).

Creating that sentiment among consumers is a very expensive, ongoing, never-ending project for Coke. In fact, given the amount of money it spends each year, you could say that Coke is actually a marketing company that just happens to sell a beverage on the side. That’s how important advertising is for the business.

Why is all this skullduggery and intrigue to boost advertising penetration so important for Coke? Think about it this way: if you could go back in time 1000 years and offer a Coke to a Viking marauder, do you think he would enjoy drinking it?

“Enjoy” is the key word here.

That Viking would probably think you are nuts for offering such a ghastly, black, bubbling drink to them. If you think the Viking would “enjoy” the glass of Coke, you are essentially saying Coke is wasting billions of dollars in advertising spending each year, which is simply absurd. Clearly, it isn’t wasting money – those funds are integral to Coke’s success precisely because no one would rationally drink it on their own without some serious persuasion.

In other words, marketing is an intangible asset for Coke.

Coke’s Suite of Intangible Assets

Coke has a whole suite of intangible assets that make the company a global powerhouse. While the beverage itself is essentially 99% water and sugar, the absolute value of that sugar and water is probably a tiny fraction of the value of the rest of Coke’s enterprise.

For example, Coke boasts decades of industry know-how in manufacturing and distributing hundreds of millions of litres of its syrup to the world each year. Few other companies have the factories, the suppliers, the raw materials and the operating talent to replicate this.

It also has key approvals and certifications for producing its syrup that guarantee the final product is safe for consumption. This isn’t a trivial thing. In some places, due to poor city water infrastructure, Coke is often the preferred drink instead of tap water. After all, the locals know Coke is legally required to use clean water and they know it will arrive at the shop in a sealed bottle.

Coke also has deep “preferred-customer” relationships with its thousands of distributors, logistics companies, supermarkets, convenience stores and suppliers. Building trusted relationships takes time and effort. And sometimes these relationships are tied in important ways to specific people employed at Coke who developed those relationships from scratch and have the skills to maintain them.

The design of Coke’s bottles is also another example of the multinational’s intangible assets. Coke bottles might look innocuous, but the design is a result of millions of hours of scientific testing, modelling, ideation and feedback. The bottle designs have changed many times over the years, and for different reasons, but the overarching theme appears to be that a good Coke bottle should make it easy for a person to drink the beverage. Optimising the ergonomics of drinking takes a lot of investment in both money and time.

Coke is also clued up on the importance of Big Data for streamlining operations and maximising profit as any large multinational company. Coke knows which shelves in which shopping centres are the best option to get in front of a target demographic. The data reveals which areas of a city it should focus on, when to release new marketing campaigns, how to break into a new market, what emotional associations people make with Coke and thousands of other little insights. All of these are possible because Coke gathers data, washes the data with robust analysis and understands how to apply it.

Lying as an Asset (LaaA)

While each of these intangible assets is impressive on its own, plenty of other companies have similar assets. What they don’t have, however, is the world’s most valuable lie: the whirlwind misdirection of the “secret” recipe.

Call it LaaA – lying-as-an-asset – when you pitch it at your next marketing meeting.

Once a meme like this burrowed deep into the collective subconscious, it gave Coca-Cola a well-insulated position against any single aspect of brand failure by adding multiple layers of to the product which is otherwise just sugar water in a bottle.

See part 1 here

By Nathaniel Nelson

Legend has it that the only record of Coca-Cola’s recipe is tucked away in a 20-acre complex off Baker Street in the US city of Atlanta.

The formula for the world-famous soft drink is apparently hidden behind a vault door ten feet tall and probably a good two feet thick (at least, that’s what the pictures appear to show – the owners have kept mum about details of the site).

All the nuts, bolts, gears and levers that operate this door create a kaleidoscope of secure metal and concrete. The whole apparatus looks like it weighs more than a typical house. But in case that isn’t enough security, the room also has a guard standing beside it to keep watch for the baddies.

This vault door is merely the start of a passage that, eventually, leads to the actual vault holding Coke’s intangible treasure. This second, deeper vault has even greater security – it’s a hulking monolith tucked in a corner of the same facility under red lighting and behind an extra barricade. Its design is straight from a Hollywood movie set, right down to the biometric scanner that presumably unlocks it (who knew those things were real?)

If you believe the rhetoric from Coca-Cola executives, this Matryoshka-like vault is necessary to protect Coke’s most valuable intangible asset.

How Coke Keeps Its Formula Secret

Secrecy was a key part of Coca-Cola from the beginning.

Its founder, John Pemberton, shared the recipe with only four people before he died in 1888. Asa Candler, the business tycoon who purchased the rights from Pemberton’s estate a year later (for about $US2300, big money for the time), allowed the patent to expire to keep it hidden from the world. He then modified the ingredients – slightly – ensuring that the old formula would be defunct. That meant the new recipe existed only in the minds of Asa Candler and a few select employees.

The legend of secrecy really took off in 1919 when a group of investors acquired the company from Candler. So great was the presumed value of Coke’s intangible asset that, to help secure a loan for the investment group’s proposal, Candler’s son was asked to finally write the formula down on a piece of paper.

That lonely, Holy paper copy remained secret until the group of investors finished repaying their loan – in 1925. According to a district court opinion from 1985, the sealed box in which this formula rested could only be opened “upon a resolution from the Company's Board of Directors.” It remained under lock and key for nearly a century until it was rehomed “in a stealth move” under heavy security to the World of Coca-Cola on Baker Street, on December 4, 2011.

This is all very strange to consider from a practical perspective. After all, to make a bottle of Coca-Cola somebody must know the recipe.

That court opinion cited above alluded to two unidentified employees who knew the famous formula by heart. And according to Mark Pendergrast, author of For God, Country and Coke, “those two people never travelled on the same plane in case it crashes.” Supposedly, each of these mystery people also hand-picked a successor to remember the secret should they die. On the other hand, in Intellectual Property and Open Source, IP lawyer Van Lindberg claims the Coke recipe is known by “more than two people.”

But it’s a bit ridiculous to think that even a handful of people could cover the ground necessary to run all of Coca-Cola’s factories dotted across the world. That’s where the concept of “compartmentalisation” comes in.

Compartmentalisation refers to the practice of dividing a process into parts that are purposefully isolated from each other. The isolation ensures that any information in one compartment will be inaccessible to people working on other sections.

When it comes to Coca-Cola's formula, compartmentalisation reportedly plays a crucial role in safeguarding the recipe's secrecy. To maintain the illusion of secrecy while still producing billions of bottles every day the company has a naming system for its secret ingredients. Boxes shipped from suppliers arrive vaguely labelled as “Merchandise” attached by a number ranging from 1-9. Factory workers know exactly how to mix these ingredients together, but only a small fraction of workers need to know what the ingredients actually are for reasons of safety (they are dealing with chemicals, after all). However, while each supplier knows about their own ingredients, they don’t know any of the others.

This kind of secrecy may sound excessive but consider that nearly two billion servings of Coke are sold every day – 20,000 a second across 200 countries. More countries consume the drink than participate in the United Nations. According to its marketing, “Coca-Cola” is the second‑most widely understood term in the world, after the word “okay.” The company’s revenue of $43 billion in 2022 makes it larger than the country of Paraguay. So, it is perfectly reasonable that Coca-Cola would do whatever it takes to protect the formula.

Yet it’s all a lie. A giant, stinking lie.

The entire premise of the secret – the sacredness of the recipe, the two or three anonymous people who know it, the singular slip of paper tucked inside of a vault, inside of another vault – is smoke and mirrors.

The Recipe for Coke is Worthless

To see through the magician’s illusion, imagine that the recipe for “Classic Coke” was leaked tomorrow. How would the world change?

Maybe you could make the beverage yourself at home. Of course, it would cost a lot more than just buying some at the local shop. After all, Coke has nine secret ingredients, on top of the half dozen listed on the bottle. You won’t find all fifteen at your local store (phosphoric acid? Aisle six). While it would be theoretically possible to make Coke at home if the formula was leaked, it wouldn’t be practical.

But Pepsi could produce the same drink based on the Coke formula. Maybe you would buy a Pepsi-branded version of Coke, but only in stores that don’t stock Coke’s version (good luck with that). Again, it wouldn’t be practical for Pepsi to produce Coke. Pepsi is Pepsi, not Coke. At this point in history, the competition between Coke and Pepsi isn’t about capturing or eliminating the other. They produce two different beverages with two different marketing strategies.

Also, Pepsi knows that starting a new product line requires a major capital investment, including partnerships with suppliers, redesigning or building new factories, dedicating new staff and resources to the project, and so on. Even if the Coke recipe were to land gift-wrapped at Pepsi’s door, the company would still need to bake these capital costs into the price or risk actually losing money on producing the exact same drink with which Coke presently earns a lot of profit. Unless the leaked formula is coupled to the factories, raw ingredients and networks that allow Coca-Cola to operate, there’s no practical way Pepsi can reproduce Coke and still make money.

The entire thought experiment is pointless because neither Pepsi nor anybody else – in the US, at least – could recreate the “Classic Coke” formula, even if they had the instructions.

As noted by the fact-checking website Snopes, “at least one of the ingredients in the recipe would be next to impossible to bring into the US (and most developed nations): “decocainised flavour essence of the coca leaf.”

There’s only one company in America with a special license to process this sensitive narcotic: chemical manufacturer Stepan Co. As it stands, only Stepan's New Jersey plant possesses the necessary permit to import coca leaves and remove the cocaine. Anyone looking to reproduce the drink would have to go through Stepan to get one of the key ingredients for Coke, and Stepan would likely refuse to sell to them. At best, it would trigger a major bidding war that Coca-Cola, with all its riches, would probably win.

Why, then, if it is effectively worthless to anybody else, does Coca-Cola make such a fuss about protecting its recipe?

What’s really going on here?

Part 2 here

Could innovation be supercharged if accounting standards better understood how to value intangible assets? It's a good question.  

Innovation certainly seems to be slowing down. According to the UNESCO Science Report, global R&D expenditure growth slowed from an average of around 4% per year in the early 2000s to 1.7% in 2019.

The World Intellectual Property Organisation (WIPO) also reported that the growth rate of global patent applications slowed to 1.5% in 2019, compared to an average growth rate of 5% per year in the previous decade.

Subscribe now

Many reasons have been proffered for this slowdown in ideas, some more likely than others. But it’s worth considering if the way accountants are stuck using outdated valuation mechanisms means companies often don’t know where their real value is.

Any decent growth strategy would start with “where is the best return on investment?” But if a company doesn’t know that its intangible assets are its most valuable assets, how can it be expected to invest properly?

Changing Marketplace

It wasn’t too long ago that everyone imagined the word “marketplace” as somewhere you go, a physical place on a physical road in the middle of a town.

This marketplace was filled with big stalls where merchants showcased their tangible products. To succeed, companies would strive to out-manufacture their competitors, each vying for the biggest and flashiest shop to attract customers who trundled by.

But aside from a few shopping malls that now mainly serve as watering holes for groups of sulking teenagers, most people now imagine the word “marketplace” as being entirely in the digital realm.

What brought about this transformation?

The Covid-19 pandemic certainly acted as a turbocharger, propelling us into this digital era at an unprecedented speed. But the trend away from brick-and-mortar stores (a bit of jargon from the industry) towards e-commerce as the primary model has been happening for the better part of a decade.

Official statistics show what’s been going on. According to the US Department of Commerce, US e-commerce sales reached $US1.03 trillion in 2022, passing $US1 trillion for the first time ever. E-commerce’s share of total retail growth in 2022 was 23.8% year over year, which was still well below the record-setting share of 84.2% during the Covid-19 pandemic in 2020.

Consider that only a decade ago in 2012, online sales in the US totalled $US231.4 billion. The latest data from the US government also shows that in the last decade, annual US e-commerce sales multiplied by nearly five times, rising at an average annual growth rate of 16.4%.

Here are a few more intriguing stats:

• Sales in online stores will reach 22% of global retail sales by 2023, compared to 14.1% in 2019;

• It is estimated that by 2024, digital wallets will account for over half of total e-commerce payment volumes, with slight declines in credit cards (to 20.8%) and debit cards;

• Amazon coordinated 39.5% of all US retail e-commerce sales in 2022, or nearly $2 in $5 spent online. Altogether, the next 14 biggest digital retailers will make up just 31.0%.

In this new digital landscape, it makes sense that the true gems of economic growth are no longer physical objects but intangible assets. Modern businesses thrive by leveraging intangible assets like intellectual property, cutting-edge software, vast data insights and even the intangible aura of a trusted brand. Intangible assets have become the currency of success in this new digital-first world.

Intangible Innovation

As a result of this changing marketplace, intangible assets have emerged as a key factor in e-commerce innovation as well.

At the heart of innovation lies intellectual property (IP). Through patents, trademarks and copyrights, innovators have nurtured a culture of risk-taking in the digital world, encouraging developers to push the boundaries of what is possible (and to maximise the existing models that were transposed into the online world).

Data, the lifeblood of the digital age, is also unlocking unparalleled insights into consumer behaviour. By deploying deep analytics, e-commerce platforms know more about their customers than their customers know about themselves. This wealth of information enables online businesses to create personalised experiences, tailor-made product recommendations and creepily targeted marketing campaigns.

Software provides the tools and infrastructure for e-commerce companies to optimise supply chains and enhance user experiences in ways never before possible with brick-and-mortar store models.

Finally, the design of e-commerce platforms is an often-overlooked factor in digital innovation, but it plays an indispensable role. After all, aesthetically pleasing and user-centric design makes it easier for users to find what they’re looking for.

Simply put, intangible assets compel e-commerce entrepreneurs to dream big, understand their customers at deeper levels and create experiences that reshape the way we shop.

Today, these assets – anything you can’t drop on your foot – account for about 90% of all company value and drive nearly all earnings and profit growth. Only 40 years ago, intangible assets barely touched 17% of the average company’s value, according to Ocean Tomo research.

It’s hard to name a company that doesn’t carry some digital layer within its operations, so the idea that intangible assets are the biggest part of modern businesses is easy to understand.

Even the smallest SME will have accounting software and customer data. But they will also boast plenty of industry expertise, confidential information, approvals and certifications, innovations (perhaps one or two, maybe more), patents, copyright, trademarks and relationships with suppliers or customers. These are all intangible assets, and it’s hard to say which is more important than the other.

In fact, the very definition of a “pre-revenue” start-up business is that its value is almost entirely intangible. A start-up’s desks, chairs and laptops aren’t worth anywhere near as much relative to the founder’s vision, ideas and perhaps the research that investors chose to support with their hard-earned money.

Language of Business

As logical as this all sounds, businesses still don’t really know how to see – let alone value – their intangible assets.

It strikes me that this oversight is mainly because global accounting standards have no formal way to track, measure or value these assets. Warren Buffet once said that “accounting is the language of business.” But intangible assets are either left off the balance sheet, lost under the amorphous term “goodwill” or if they do make the balance sheet, they are recorded at cost.

Although slow to update (as all bureaucracies and industry bodies tend to be), accounting standards are being updated to consider intangible assets.

For example, the International Accounting Standard (IAS) 38 sets out the criteria for recognising intangible assets separately from other assets and specifies the methods for measuring their carrying amount. Likewise, the International Financial Reporting Standard (IFRS) 3 requires identifiable intangible assets to be recognised separately from goodwill.

A lot of companies simply don’t care what the accounting standards say. They know their data, content, networks and patents are valuable, so their strategy is to seek out consultants or valuers who do understand intangible assets, sometimes bypassing accountants completely. There are plenty of such advisors around, and many are available for astoundingly low fees considering the potential return on investment from their services.

Meanwhile, the inability of accountants to measure or even discuss intangible assets correctly, the discipline of accounting is essentially speaking an outdated language in this modern, digital world. In the process, the true value of businesses is often lost in the cacophony.

To extend Buffett’s analogy further, it’s as though an Ancient Roman citizen were transported to 2023. After he recovers from his shock at things like aluminium drink bottles and movie theatres, the Roman time traveller would probably quickly pick up a decent percentage of modern English words due to their shared Latin roots. But he wouldn’t be conversant, at all. Rome to 2023 New York. That’s how far behind accounting is today.

Obviously, the slowing rate of innovation across sectors and industries isn’t the direct fault of outdated accounting standards. I wouldn’t be so bold to say something like that. But as I pointed out earlier if a company doesn’t know how to value 90% of its assets, how can it be expected to funnel the correct number of resources to the most promising and profitable goals?

Leave a comment

Takeaway: Brand is how customers choose between similar products or services. A strong brand is a valuable intangible asset, while a weak brand can easily scuttle a business.

An alien landing on Earth would be a bit confused about why the average shopping centre has dozens – sometimes hundreds – of what appear to be identical jeans.

What exactly is the difference, it might ask, between a pair of Levi’s jeans and the jeans offered by, say, Diesel or Gap?

And to a first approximation, the Martian is right to question the sanity of these strange humans. The jeans do all look the same no matter who is selling them. But the alien would be missing a crucial layer to navigate the maze of human commerce: brand power.

Subscribe now

Each of those apparel outlets rates higher or lower in the minds of consumers depending on a series of metrics that reflect whatever the individual feels is important to them. This subjective rating (some people like Levi’s jeans, some don’t) allows some apparel manufacturers to price their clothing in a higher retail bracket while others are forever stuck in the doldrums of the bargain bin.

The alien might see that brand is the outward reflection of a company’s reputation. Brand imparts a sense of whether an item (like a pair of jeans) will make a wearer feel “sexy,” “cool” or appear “down-to-earth.” Customers gravitate to certain items if the brand complements the identity they have already chosen for themselves.

The Martian might be a bit cynical and say a brand is little more than a manufactured method used by companies to create an illusion of choice. Yet brand is a highly effective marketing strategy that can make or break a company.

How to think about brand

Brand is the sum of all the signs, signals and perceptions other people have about a company. In that way, brand is a bit like reputation.

A reputation, like a brand, is carefully built over years through the thousands of interactions a company has with its customers, both directly and indirectly. For this reason, a brand image can collapse in much the same way as a compromised personal reputation – and sometimes for the same reasons.

Reputation is a nice analogy for brand. Consider a hypothetical scenario where you're looking to hire a contractor to remodel your home.

You have two options: Contractor A and Contractor B. Both have similar qualifications, experience and pricing. However, you've heard positive things about Contractor A's reputation from friends, neighbours and even online reviews. Contractor A is known for its attention to detail, great work and excellent customer service. On the other hand, you haven't heard much about Contractor B at all.

In such a situation, you'd likely feel much more confident choosing Contractor A due to its established reputation. From everything you’ve seen, the brand has almost become a social shorthand for trust, reliability and quality. That kind of reputation screams “spend your money with this company.”

Even though Contractor B might provide similar services, it doesn’t have a recognisable brand which means you have no way to gain assurance about its capabilities.

Of course, without actually experiencing Contractor A’s services it is impossible to know if it’s better than Contractor B’s. But you need to make a choice at some point and brand is all you really have to go on. It’s not an example of pure rationality (almost nothing human is purely rational), but it’s enough to compel you to pick up the phone and book a session with Contractor A.

Just as a reputable person is more likely to attract opportunities and maintain relationships, a well-established brand can attract customers, drive loyalty and ultimately lead to increased sales and market share.

Why do companies need a strong brand?

Developing a strong brand has a lot of upside.

A study published in the Journal of Marketing found that brand trust positively affects customer loyalty and engagement, leading to increased repurchase intentions and positive word-of-mouth referrals. Patagonia is a great case study for this.

From its humble beginnings in 1973 as a small climbing equipment manufacturer based in sunny California, Patagonia is today a globally recognised brand with a loyal customer base and a hefty market presence.

Part of Patagonia's success was down to its unwavering commitment to its values and purpose. The company became an advocate for environmental sustainability, social responsibility and decent products. This clear brand identity resonated with consumers and allowed Patagonia to stand out in a crowded marketplace.

The company went out of its way to create sustainable practices across its entire supply chain such as using recycled materials in its products to minimise waste and carbon emissions. This programme was more expensive but it attracted a loyal following of environmentally conscious consumers who shared those same values.

Patagonia's commitment to quality and durability further strengthened its brand image. The company embraced a "Buy Less, Choose Well" philosophy to discourage the throwaway culture of consumerism. Unlike its competitors, Patagonia offered a repair programme on all its garments to increase the lifetime of its garments.

Consultants would rubbish this idea. Doesn’t Patagonia know that deteriorating garments lead to repeat sales? Of course Patagonia understood that it was limiting its own profit margin, but its brand image of sustainability was more important long-term for the company, so it chose the more expensive option.

Patagonia generated about $US200 million of revenue in 2022, so it must be doing something right.

In all its marketing, Patagonia adopted a bold and authentic voice to create purpose-driven promotions, such as the "Don't Buy This Jacket" campaign which urged customers to consider the impact of their purchasing decisions. Customers not only continued to buy Patagonia products but also shared their experiences with others, amplifying the company's reach and brand image.

How can companies develop a strong brand?

The computer company Apple is widely considered the blueprint for building a powerful brand.

Apple's brand has become almost a synonym for innovation, elegance and a seamless user experience. It represents more than just a technology company; it has become a symbol of creativity, empowerment and aspiration. Apple's brand power has not only contributed to its financial success but has also created a loyal and passionate customer base that eagerly awaits its next ground-breaking product release.

Companies hoping to build a powerful brand should focus on developing a unique identity that resonates with a target audience and reflects their values and mission.

And since word tends to get around in the age of social media, it’s important for a company to develop a consistent brand experience across all customer touchpoints, including marketing materials, product packaging and customer service interactions.

Story, after all, is king and being in control of your company’s story is a fundamental strategy for any business no matter the size.

What happens when a company doesn't have a strong brand?

United Airlines serves as a real-world case study that demonstrates the consequences of neglecting brand development.

The airline has been regularly criticised for failing to prioritise the passenger experience, leading to several high-profile incidents of poor customer service and mishandled situations. These incidents, widely shared on social media, tarnished the company's reputation (an analogue of brand) and eroded customer trust.

The lack of a strong brand left UA vulnerable to public backlash and the effects of negative media coverage. Other airlines seized the opportunity to attract dissatisfied United Airlines customers, further exacerbating the company's decline.

Rebuilding the brand's reputation required substantial investment in marketing campaigns, customer service training and organisational restructuring.

While creating a brand can be expensive, there are cost-effective strategies that companies can use to develop a strong brand identity. By building a strong brand, companies can establish a unique position in the market, build trust and credibility with customers and command a premium for their products or services.

Leave a comment

[Recap: For a century, Sears built an impressive portfolio of intangible assets. It had key supplier relationships, a great brand, customer data and deep industry expertise. But because Sears didn’t know it had these intangible assets, its leadership made a few crucial decisions that ultimately led to the collapse of the American retailer. Part two of this story digs into those decisions]

Hindsight is 20/20, as they say (whoever “they” is…) but to someone living in 2023, it might seem strange that the largest retailer in the US didn’t understand what the internet was going to be.

The internet seemed to be the perfect amplifier tool for a company like Sears. It was essentially the final piece of the puzzle for everything the retailer had accrued over a century. And yet, the Sears executive team didn’t “get it.”

In quite possibly the greatest example of corporate short-sightedness, Sears decided to close its mail-order system – the most extensive and sophisticated retail operation on the planet – to save on costs. It also spun off the insurance arm Allstate and then dumped both the financial firm Dean Witter and real estate broker Coldwell Banker.

Subscribe now

Two years after the Sears catalogue published its final edition, Amazon.com launched and was soon selling everything that Sears offered in its catalogue – and more.

By the late 1990s, Walmart's strategy of sourcing low-cost imports from China was gnawing a large chunk of Sears’ retail market share. Online banking had also taken off and credit card use surged as mail orders and purchases shifted to the internet.

All the pieces that might have given Sears an advantage in this emerging online-first market environment were now gone. It had sold them off in what the company assumed were astute business decisions. Now it was forced to watch on the sidelines as inferior (at the time) companies raced ahead to fill the gap.

What went wrong?

Let’s break down what happened:

Sears had its own computer network in 1993 and a warm relationship with IBM, so it should have understood the power of the internet. All Sears needed to do was shift its famous catalogue online and promise in-store returns. The Sears catalogue might have become sears.com and owned online retailing from the outset, completely blocking out Amazon’s fledgling business.

The Discover card could have been the credit card of choice for security and protection online. Back in the mid-90s, when many people were hesitant to trust any business transaction online, Sears could have offered a familiar face that might have encouraged more people to use the internet. Dean Witter could have been what Charles Schwab Corp, E-Trade and Ameritrade eventually became.

It might have owned online brokerage and banking. It could have made huge profits in real estate by leveraging its real estate arm (imagine if Amazon sold houses).

By my estimate, Sears would only have needed to invest about $200 million between 1994-1996 to develop and promote retail and financial services online. That might have felt like a large amount at the time, but Sears would be reaping billions in raw profit today.

Unfortunately, Sears blew the chance just to save a few bucks. Instead of developing into a huge American company, it will only be a historical footnote.

It’s not that Sears should have tried to become Amazon in 1993. The point is that Sears didn't try and fail, it killed the catalogue in 1993 just when things were getting interesting. All it had to do was keep the catalogue alive for another two years and somebody at the company would probably have figured it out.

But with the catalogue already gone for two years by 1995, there was no one at the company in the position to think about anything other than brick-and-mortar retail, and no division capable of leveraging any new ideas. Sears didn’t know what to look for because it didn’t know what it had.

Amazon lost money early on because it had to build everything from scratch and promote itself. Think of all the fixed costs for distribution centres, for example. Sears didn't have to do this. It already had everything in 1993. It would have to be changed, sure, but it had already convinced consumers that everything could be bought through a catalogue. Amazon now sells everything, including general merchandise.

Failing to see the inevitable

Maybe it’s the size of a company that makes it myopic? Smaller companies do have a bit more dexterity to pursue opportunities. But even SMEs regularly fail to see the inevitable.

The true culprit for this kind of oversight, according to American businessman Lou Gerstner, is more likely to be the mindset that emerges when companies forget why they were founded in the first place. As mentioned in part one of this story, every business was created to solve a problem.

When Gerstner took over as CEO of IBM in April 1993, the chatter on Wall Street was that the computing company was going out of business and he was sent in to soften the landing. After all, Microsoft had outpaced IBM in software, Dell had destroyed the PC business and both Sun and HP were pushing workstations to replace IBM’s big iron mainframes. The future looked rather grim for IBM as Gerstner sat down in his corner office.

The staff at IBM felt the same way about Gerstner. IBM had a tradition of promoting management talent from within its own sales team so Gerstner was seen as an outsider. What did this tobacco executive know about high-tech? And why should they take him seriously when it appeared his only job was to shepherd the company into the sunset?

But Gerstner’s mental distance from the company helped him notice a few blind spots. One of his first acts as CEO was to gather the top vice presidents of every IBM division into the same room and ask them to write down, in one sentence, what IBM’s business was.

The result? No two VPs gave the same answer. There was no vision, no understanding of the company's business from the very people who had worked with the company and in the technology sector for their entire careers. The responses he received varied widely, with some saying it was selling mainframes and others saying it was selling software or providing services.

Gerstner famously replied that IBM's core business was none of these things, but rather it was "customer relationships." He recognised that IBM's success depended on understanding the needs of its customers. Everything the company did was in service of that goal.

Under Gerstner's leadership, IBM shifted its focus from selling individual products to providing integrated solutions to solve customer problems. This strategy helped turn around the struggling company and led to its resurgence in the 1990s.

Gerstner wasn’t a wizard. He couldn’t make Microsoft or Dell disappear. But he knew that getting positive results from any effective turnaround required showing IBM’s key staff that they no longer shared a common vision about the company’s future.

Starting from first principles

This type of thinking plagued the Sears leadership team as it made the fateful decisions in the 1990s.

For more than a century, Sears’ core business was selling goods to consumers. Not selling them in stores, or out of a catalogue, or even on the side of the road. Its business was selling goods. That’s it.

If Gerstner had asked his question to the management at Sears, the only correct answer would be: “We sell things.” What made Sears a powerhouse was the simple strategy to stock and sell decent quality products at reasonable prices while offering exceptional customer service.

This is what’s known as first principles thinking.

It’s the sort of thinking a founder does when they conceptualise the idea for a new company. They saw a problem in the market and created a product or service to solve that problem. They might already have invented a special tool or special sauce, but solving a market problem is always the driving factor for creating a business.

First principles thinking asks: if we want to solve this problem, how might we achieve that?

This framing is useful because it opens the aperture for ideas and pathways. It doesn’t really matter how a problem is solved, all that matters is the efficiency of doing so. Understanding intangible assets allows people to approach business like an engineer.

For Sears, the market problem it was created to solve – as a business – was that people wanted items to be in their homes and were willing to pay for that to happen. You know, basic commerce.

The obstacle was that, for 99% of Sears’ potential customers, those desired items were stored far away in a manufacturer’s warehouse. Sears’ engineering solution was to collate these items, match them with prices and offer a service to ship the items to the customer.

It was elegant and simple. What did Sears do? Sears sold things.

Over time, Sears forgot its fundamental reason for existing. It began to think that its business was the retail stores. If it had retained its focus on solving the core market problem by always looking for a more efficient process, it would have quickly noticed the power of the internet.

In a way, remembering the problem your company was founded to solve is an important intangible asset in itself. It’s called strategy, and without it, all the other assets might as well be fantasies.

Part 1 here

Leave a comment