We had an incredible workshop leader last week with Simon Pearce, the President of Emotif, a brand strategy consulting firm. Simon highlighted something we often forget that within the last 25 years, intellectual capital has emerged as the leading asset class. “Intellectual capital” generally refers to traditional Intellectual Property assets, such as patents, trademarks, and copyrights.
According to Ocean Tomo, the intellectual property merchant bank, “Between 1995 and 2015, the share of intangible asset market value increased from 68% to 84%.” Then, in 2020, Ocean Tomo updated its Intangible Asset Market Value Study to investigate the economic effects of the novel coronavirus. They found that COVID-19 only accelerated the increase in intellectual capital share, with intangible assets now commanding 90% of the S&P 500 market value.
So, what does this mean for CEOs, entrepreneurs, and emerging leaders? It means that the traditional emphasis on tangible assets – buildings, machinery, and inventory – is no longer the primary driver of business value. Instead, the focus has shifted to intangible assets. Your brand, technology, customer relationships, and people are now the primary sources of competitive advantage.
For CEOs, this shift underscores the need to prioritize investment in innovation and R&D. Protecting your intellectual property through patents and trademarks is crucial. Still, it continuously fosters a culture of creativity and forward-thinking within your organization.
Entrepreneurs should note that intellectual capital can be a game-changer when seeking funding. Investors are increasingly looking at your IP portfolio’s strength, brand equity, and technological edge. Demonstrating robust intellectual capital can significantly enhance your valuation and attractiveness to investors.
For emerging leaders, understanding the value of intellectual capital is vital for strategic planning and career growth. Developing expertise in managing and leveraging intangible assets will set you apart. Embrace opportunities to lead initiatives that enhance your company’s intellectual property through innovative projects, brand development, or building strong customer relationships.
The rise of intellectual capital as the leading asset class demands a strategic shift in how businesses are managed and grown. By focusing on innovation, protecting your IP, and nurturing your brand and customer relationships, you can create sustainable value and secure a competitive edge in today’s market.
