Established model

Intangible assets

Baruch Lev · 2001

Also known as Intangibles, Intellectual capital

Much of what a modern company owns does not appear on its balance sheet, and it behaves differently from what does.

Its place in the frameworkBusiness Core›Business Assets

What it does

Lev’s argument is that knowledge, brands, customer relationships, software and organisational practice now account for most of the value of many companies, while accounting treats spending on them as a cost that vanishes in the year it is incurred. The consequence for managing assets is that the most valuable ones are the least measured, and so the easiest to run down without anyone noticing.

Reach for it when: When an asset register lists premises, equipment and cash, and the things customers actually pay for are nowhere on it.
Where it stops: Naming intangibles is easier than valuing them. Most measures remain rough, and a figure that looks precise will be trusted further than it deserves.

Baruch Lev, Intangibles: Management, Measurement, and Reporting, Brookings Institution Press, 2001.

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.

All of Business Assets

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.

The four S’s of intangible investmentIntangible assets scale, are sunk, spill over and combine — and each of those changes how they should be managed.

Elsewhere in Business Core

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.

All 166 models