Last week, we discussed the importance of the history of competitive advantage. This week, Paul Latham will explain why you need to advise your clients to understand the significance of “intangibles.”
Intangibles represent 80% of average business value in the 21st century.
There are 3 types of business intangibles:
- “Gases” – when the intangible idea is just in your head.
- “Fluids” – when the business uses intangibles to solve individual problems – “one at a time”. “Fluids” are great for creating revenue but not good for building long-term capital value.
- “Solids” – when business intangibles “become more tangible” and “repeatable”– e.g. a strong brand or replicable process embedded in the business fabric. “Solid intangibles” create long-term capital value for the business owner.
How can you solidify intangibles so you can build long-term capital value? Find out in Part 2 of the History of Competitive Advantage.