Unlocking and Harnessing Intangible Assets

September 9, 2021

The Value of Intangible Assets

Perhaps the most exciting aspect of this entirely new economic system is the wealth of positivity it creates within markets. There’s now incredible incentives for all players within the ecosystem to conduct themselves in a positive manner. Adding to this is the ability for previously unseen elements of business to come to light known as intangible assets.

Currently, intangible assets such as patents, brand equity, legal agreements and technologies have been given an estimated value based on what they may provide to a business. A patent for manufacturing for instance may be given an evaluation of several million dollars as it allows operational efficiency that no other company could match. It’s then reflected in the business’s balance sheet.

However, intangible assets reflect the ongoing market or transactional effect of a business. They’re not static to just one single point in time. Thanks to blockchain’s ability to more closely monitor revenue fluctuations relative to specific points in time, intangible assets can now be more accurately associated to a brand’s overall asset valuation.

For example, a patent created for manufacturing efficiency would be set to be implemented on a certain date. By measuring positive transactions pre-implementation provides a baseline indication of efficiency. Post implementation this same metric would be run on the blockchain yielding the value’s percentage based impact to revenue.

Given its impact directly on revenues, the primary asset would increase accordingly. However, sometimes when an intangible event such as a design rebrand goes live, revenue may stay the same or go down. This intangible event would then be a zero yield producing event.

This is all calculated via a time series analysis, though. A design rebrand may start at one specific point but not be fully complete for months. Revenue transactions would ultimately be the driver of all metrics but it would not be until the end of a project that revenue percentages would be calculated.

This falls in line with current software development trends such as the agile methodology and product mindset development. As you can’t accurately predict what a given event will do to a company’s bottom line, you must try and make guesses ongoing within the marketplace. By spending time planning instead of taking specific actions towards realizing positive revenue generation, you continue to produce zero value from other intangibles such as employee education and upskilling.

Compared to the legacy, big bang, approach of software development organizations may have sunk millions of dollars into initiatives and when they would go live, produce zero intangible sums of money. This is why there will now be even more focus on organizations aligning themselves with small teams that, together, can make quicker stabs at increasing intangible asset value.

Sharing Intangibles & The Knowledge Based Workers

This also further incentivizes the sharing of technologies and patents on the open market. For example, a patent sitting around doing nothing is valueless to the marketplace and business. One would argue that by withholding a patent so that another cannot use it has value but, again, because it’s not in the market, would not impact any revenue or a brand’s asset. The value only becomes tangible when revenue is moving through it.

Thanks to business now being about continual yield, businesses can more accurately license their IP for others to use. In the case of a patent, a company would sell it within the form of its own asset much like how a tangible asset would show on a balance sheet. The asset’s value, though, would be zero at the start. However, it would fluctuate its value based upon the timing selection of the brand’s usage of the intangible asset relative to revenue.

This would effectively duplicate the value of a brand’s primary asset as revenue would now be captured across two places. This would be by design, though, as the transactional feed supplying the revenue for the patent asset would now have its own market maker via the transactions from its time series. Revenue would still be logged without penalty for the company using the patent but now the company who “sold” the patent would now be receiving all yield from the asset’s market maker. By logging the asset in two places highlights both the value of using the intangible asset in addition to its realized impact to the business. If the patent were to be removed it would therefore decrease revenues but also their intangible holdings.

This would be a huge boon for the management consulting space or the market for knowledge based services. As either a single person or entity would represent themselves as an intangible asset at the beginning of a contract, they would then value themselves for their impact on a company’s overall revenue balance. As revenues would increase, so would the percentage of that company’s profit percentage relative to the intangible event (service start). The amounts of transactions then occurring under their services would then be yielding their own interest pay out for the service provider which incentivizes their continued work on finding more revenue generating transactions.

So then as long as a company holds the intangible asset value, they would also reflect the entirety of the intangible asset within themselves. They may subside intangible event timing triggers which would stop the yield within the intangible asset but the market could still see the value of holding the intangible asset. This would encourage brand’s to “keep the intangibles” within their operations even if an intangible is not yielding at that specific moment.

Looking at either management consulting firms or high profile engineering talent, by recognizing their past results now directly impacts the brand hiring them’s image (intangible asset).

Putting Metrics & Cost Behind the Intangibles

As intangibles would now have the ability to add astronomical value to companies by simply holding them, the intangible asset value holding would not affect a brand’s capital to debt ratio and likewise its yield. However, by using market filters platforms would be able to show exactly how and what kind of intangibles a company would be holding. In the case of knowledge workers or executives, a firm could still have a low capital asset value but a very large intangible asset holding. This would now be a market indicator that positive yields are more likely to happen given the talent associated with a given brand.

For example, a star engineer in the computer chip industry may have a high intangible asset value thanks to their previous revenue generating transactions at a previous company. By joining a startup, the startup’s intangible asset value would be an aggregate that includes the previous work. As the company starts tracking their intangible events for the asset, the intangible asset’s own market maker’s yield would multiply by a factor of its accumulated previous work giving weight and likewise a measurement for their previously acquired knowledge.

As intangible events increase, its given assets value there would then be a ratio for all assets relative to all other intangibles. Higher weighted intangibles therefore stay weighted against all others with intangible event indicators affecting changes in ratios within a primary asset’s holding. As the intangible asset’s transactions are logged within the primary brand’s revenue stream, the brand’s ownership of the yield would then have the ability to distribute revenue accordingly.

This is where brand’s would now have all the data and ability needed for more equitably distributing pay across employees. As they would have the ratio of revenue generated by employee (intangible) they would then place that as a daily cost back to the business which, again, would hit the primary asset’s ledger as an operating expense. This would likewise increase fees all relative to intangible value.

As fees primarily tie back a given asset’s total yield it, again, becomes vital that it remains low enough to still attract investors. By using a set ratio of say, 60% operating fees would then give brand’s the ability to divvy out operating expenses as needed. Although intangible ratios could be applied, this gives brand’s the ability to still control their ongoing costs.

Looking at a topic such as ridiculously high CEO to worker pay, this would now be apparent in the form of intangible ratios. Even if a CEO’s intangible event selector would always be tied to all brand’s transactional events, its overall ratio would still move up and down with the entire company. Whereas, say, a product designer may have less transactional event volume, their transactional values relative aggregate would be a higher ratio as it would only account for, presumably, more frequent positive upticks in revenue generation.

As negative yields are impossible intangible values could never go down. They, instead, would only produce spread. Again, as a CEO all transactions would be hitting their total. This includes negative transactions such as costs of raw materials. Because this was not a positive transaction it would not add yield to their own asset but it would add to the overall pool of transactional counts against them. To have a positive ratio they would need not only more positive transactions but also a reduced amount of negative, non yielding transactions.

This is why going into leadership positions will involve a balancing act. To incentivize aiding ratios for all, leaders will look for those sharing overlaps of intangible events as all overlap adds to ratios. However, not every employee will share the same overlap. A leader making a critical decision would therefore have all intangible events after said event add to their total but those below them, not having their intangible events tied to the decision, not have their ratios be affected. This is how a leader’s ratio would always be able to be separated from their team’s, they’d have ownership of even the negative transacting events.

There is still upside for being a leader or someone looking to lead with non-yielding transactions, though. As their ratio may dip relative to others, they’d still have a higher overall asset amount thanks to former work. By the time that they receive a positive transaction, it’s yield would still be greater than someone with lower transactions (experience). This would mean that their intangible ratio would be able to more quickly make up for times of down transactions and, again, giving weight towards the experience they’d be gaining even in down turns.