Intangible Assets are Key to Shareholder Value
Growing in an Evolutionary Marketplace
by Keith B. Stein

You work hard to increase sales, expand capacity, borrow and leverage, so you can report higher profits every year.  After all, good earnings are the way to affect a stock price that wins investor support.  Stand back.  Take a look.  Youíre probably spending too much time in the business, and not enough on it.  When was the last time you thought about how youíll increase the inherent value of your company?

Stockholder value grows when you focus on intangible assets.  Have you taken steps to maximize your intellectual capital?  Are you constantly utilizing management expertise to look for and quickly act on process improvements?  Have you defined your corporate culture?  If so, what are you doing to support it?  How are you building your brand?  Does your positioning imply who and what you are today?  You have been evolving, but has the perception of your company changed?

Addressing the intangibles is more difficult and sometimes more painful than managing the numbers.   The value of the innovative visionary has never been greater.  How many on your management team would you describe in this fashion?  If you have answered ó not enough ó itís time to make changes.  Too many believers in the if it isnít broken donít fix it theory can drive you into deadly complacency.  In our customer-centric marketplace, you need forward-thinking employees striving to constantly improve the customer experience.  Instant response is becoming an expectation.  You no longer have the luxury of months to make a decision.  If you need to make technology enhancements or implement better processes to better serve your market ó you need to do it now.  Read a job description or two.  Do they in any way hint at the culture you want in your organization? What do you do to ensure that the people youíre hiring throughout the company are culture compatible?  Programs that support the culture are critical.  I am talking about solid, tactical programs that demonstrate you mean what you say in your tagline and your mission statement. 

These intangible assets are key elements of your brand, but your brand is more.  Itís the why and how you do business.  Why do customers do business with you? You have plenty of competitors offering like product, so it isnít the product.   Itís the agreement youíve made with your customer to in some way do it better.  And more than likely the emotional benefits of doing business with you outweigh the feature benefits of your product. 

Communicate to Grow

Effectively communicating your brand is a challenge.  Your messages must be consistent and their look, feel and method of delivery must reflect your culture and positioning.   If  your business is conducive to a fun culture and youíve adopted this environment, your communication style should be fun as should your stationery, logo, etc.  Your offices should reflect this personality.  Itís all part of an integrated branding system.

Communicate continuously.  Keep your customers informed of what youíre doing for them.  Tell them how the new technology youíve implemented is going to help you improve service.  This is the information age ó if your systems can provide information that will be helpful to your customers offer it. Explain why itís being made available ó you value your relationship and want to provide optimum service.

Annual Reports are a great tool, but why not announce milestones on a continuous basis.  Draw attention to company current events on your web site.

Inform customers and investors of the philanthropic causes you support and explain why.  You should select make-sense causes from the perspective that they correspond to the business you are in and/or the brand you are building.

Build relationships with face-to-face meetings with analysts and with print and electronic reporters and editors.  Make them aware of how youíre managing your tangible and intangible assets to grow shareholder value.

Let employees know how they impact earnings.  Show them how increased productivity in each area will impact the bottom-line.  Communicate goals and objectives and what meeting them will mean to the organization and to them.  Invite them to participate in the causes you elect to support. 

Survey your customers and employees periodically.  Use their feedback.  These are the people who will give you some of your best ideas.  Act quickly on good ideas, whenever possible.  Donít lose sight of the more complex suggestions with merit.  It may be something your competitor is working on now!

Your Company is as Good as the People Who Work for it

Put processes in place that ensure the people you hire will flourish in your environment.  Donít buy into status quo.  Make certain that your team understands that you buy into the everything can be improved theory.   Customers are going to patronize the companies that satisfy their emotional needs as well as their product/service needs. 

Assess your talent and make certain you have what you need to take you places.  You cannot afford to avoid a need for new blood.  Visit outsourcing opportunities.  The insight of an outsider can be invaluable.

Image is Important

Understand what your audiencesí perception of your company is.  Conduct research that also tells you how they perceive your competition.  Do they know what makes you different?   If you find that they donít know what youíre about, rectify the situation.  Develop and implement a strong, integrated strategy to establish your brand and create awareness.

Summary

Focusing on the numbers is crucial, but to not also consider your intangible assets critical to shareholder value is a costly mistake.  Make the tough decisions wisely and timely, furthering necessary changes.  Get help with your branding strategy and make certain that you take an integrated approach to realize brand presence in the way you conduct business.


Keith B. Stein is Chairman and CEO of National Auto Finance Company, Inc. (NAFI), a publicly-held non-prime auto finance company headquartered in Jacksonville, Florida. Mr. Steinís unique 15-year background as a corporate finance lawyer, investment advisor and business change agent has given him unparalleled experience and expertise with everything from raising capital through IPOs and asset-backed securitizations to financial and management restructurings and implementing advanced technology.  At NAFI, Mr. Stein has proven himself in a substantial way by dramatically turning around an organization devastated by changing market conditions, ineffective management, unaddressed technology issues and a lack of investor confidence. He may be reached via e-mail at kbstein@yahoo.com.

Many more articles in Creative Leadership in The CEO Refresher Archives

   


Copyright 2000 by Keith B. Stein. All rights reserved.

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