1. Muscle power (human or animal);
2. Tangible stuff (raw material, inventory, tools, etc.);
3. Information (intellectual property, or IP).
Historically, the strongest cavemen, the biggest horses, the fastest ships, the largest factories, all had an advantage over lesser competitors. We’ve all seen this: “Largest inventory in the region.”
But here’s the interesting part: As the marketplace has evolved, the order of importance and the value of assets has inverted. Studies show increasing emphasis is being placed on IP and the ability to leverage it with less emphasis on leveraging tangible assets.
And what about muscles? Increasingly in the global marketplace, human brawn is number four on a list of three.
The good news is small businesses are joining this global trend of leveraging IP more and tangible assets less. They’re increasingly using technology in exciting new ways, doing more virtual business and are as likely to develop a strategy for doing business across an ocean today as they did across town 20 years ago.
Regarding how essential IP is to a small business’s 21st century competitiveness, more and more small businesses get it. The bad news is there still are far too many who don’t. As an example, incredibly, almost half of small businesses still don’t even have a website.
To see if you “get it,” consider these four questions:
1. If I gave you for free (a) a truckload of inventory or (b) a special technology that would help you serve customers better, which would you choose?
2. Do you spend more time (a) thinking about products and services or (b) finding technology to more effectively serve new customer expectations?
3. Do your employees (a) use the same technology in the direct performance of their jobs today that they did 5 years ago or (b) different technology (not just new machines)?
4. If you purchased another business, which would be more valuable to you: (a) the inventory and equipment, or (b) the digital records of their customers: names; contact info, including email; what they buy; when they want it; why they buy it; and how they use it?
If you chose (a) for any of these questions, it’s likely your business’s performance is on a declining trajectory. But if you chose the (b) options, congratulations, you get it about IP.
Write this on a rock … In the 21st century, leverage intellectual property more and tangible assets less.