Established model
The four S’s of intangible investment
Jonathan Haskel & Stian Westlake · 2017
Intangible assets scale, are sunk, spill over and combine — and each of those changes how they should be managed.
Its place in the frameworkBusiness Core›Business Assets
What it does
Scalability means one piece of software or one brand can serve any number of customers; sunkenness means it is hard to sell if things go wrong; spillovers mean competitors can benefit from it; synergies mean it becomes far more valuable in combination with other intangibles. Together they explain why intangible-heavy businesses tend towards winners who take most and losers left with assets nobody will buy.
- Reach for it when
- When deciding whether to invest in something that cannot be sold on, and when a competitor seems to be profiting from work you paid for.
- Where it stops
- It is an economist’s account of the whole economy. It gives a firm useful questions but no method for weighing one intangible investment against another.
Jonathan Haskel & Stian Westlake, Capitalism without Capital: The Rise of the Intangible Economy, Princeton University Press, 2017.
Why it sits at Business Assets
What the organisation owns and can put to work — premises, equipment, technology, intellectual property, capital. The things that remain when the people go home.
A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:
- Asset registerStandard asset management practice; the register is the control that makes utilisation and lifecycle work possible.
- Intellectual propertyIP management practice, and the accounting distinction between recognised intangibles and internally generated ones that never appear on the balance sheet.
- UtilisationAsset utilisation measurement, including overall equipment effectiveness where production assets are involved.
- LifecycleTotal cost of ownership and lifecycle costing, which consistently show purchase price to be a minority of the total.
What it touches elsewhere
Nothing in a business is decided on its own. A conclusion reached with this model at Business Assets lands in these other cores, whether or not anyone follows it there.
- TechnologyOwned systems are listed here as assets; how the technology estate is designed, sourced, secured and maintained is covered there.
- Business CoreAssets are what core competencies are often built on, and what finance has to fund.
- Data CoreData is an asset, and one of the few that appreciates with use.
- Time CoreReplacement cycles and maintenance windows are timing decisions.
- Goal CoreA goal requiring capacity the asset base cannot provide is a capital decision in disguise.
Filed at the same place
These answer questions that arise at Business Assets too. Where they disagree with this one, the disagreement is the useful part.
- Intangible assetsMuch of what a modern company owns does not appear on its balance sheet, and it behaves differently from what does.
Elsewhere in Business Core
- Tuckman’s stages of group development
- Belbin Team Roles
- Herzberg’s two-factor theory
- Jobs to be done
- The Kano model
- The value proposition canvas
- The business model canvas
- The Van Westendorp price sensitivity meter
- Value-based pricing
- Core competence
- VRIO
- The resource-based view
- The theory of constraints
- Lean thinking
- Co-opetition and the value net
- Transaction cost economics
- Stakeholder theory
- The power–interest grid
- DuPont analysis
- Break-even and cost–volume–profit analysis
- Unit economics
- The Kraljic Matrix
- The bullwhip effect
- The SCOR Model
- On-time in-full
- Overall equipment effectiveness
- Value stream mapping
- The three lines model
- ISO 31000 risk management
- Maslow’s hierarchy of needs
- Kotter’s eight-step change model
- Situational leadership
- The Lean Startup
- Design thinking
- Porter’s value chain
- The McKinsey 7S framework
- Six Sigma and DMAIC
- Stage-gate
- Beyond budgeting
- Dynamic capabilities
- Net present value and discounted cash flow
- The Modigliani–Miller theorem
- The pecking order theory
- COSO Internal Control — Integrated Framework
- ISO 37301 compliance management systems
- COSO Enterprise Risk Management
- Agency theory
- Mintzberg’s organisational configurations
- The Star Model
- Lewin’s change model
- The ADKAR model
- Effectuation
- Open innovation
- The technology acceptance model
- The NIST Cybersecurity Framework
- The TOGAF Standard
- Wardley mapping
- Failure mode and effects analysis
These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.
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