Before we proceed to valuation of Special Forces missions and commonality of an ODA to a startup team, we should first proceed with a couple definitions. In business and finance an intangible asset is “…[a]n asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today’s marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset.” As to valuation of intangibles, “[i]n order to have value, intangible assets should generate some measurable amount of economic benefit to the owner, such as incremental revenues or earnings (pricing, volume, and better delivery, among others), cost savings (process economies and marketing cost savings), and increased market share or visibility.”
And while there are any number of methods for computing intangible asset valuation, the three most prevalent are Market – market(s) created and market share made possible, Income – pricing advantages or additional revenue streams made possible through and Cost – the straight book value of the expenditures related to creation of an asset or asset class. The take away from this is and the definitions is that, just as with Special Forces operations, intangible assets are quite often the single largest asset a company possesses, comprising the majority of a company’s asset value and providing for a multiplication effect to book value of physical plant, equipment and inventories.
Translation from the intangible assets of business to those of Special Forces is not much of a leap, nor is it often argued with much vigor that the definitions are much different one from the other. In fact business often borrows best practices from the military as does the military from the business world with respect to intangible asset identification, generation and improvement.
Where the argument ensue is in the valuation of these intangibles. Where business must by necessity value everything, including intangibles, in dollars, the military values only expenditures in dollars. Further arguments point to Income as an inappropriate valuation methodology for ODA missions, without substantial reinterpretation. Despite these arguments, both Market and Cost based valuation are directly appropriate valuation methodologies. In fact the military has a long history of Cost – book based valuation and a nascent understanding of Market – positioning, alliances, preparedness and prestige.
Leading from this, given intangible asset definitions are for the most part translatable and two of the valuation methodologies are appropriate for business and the military, the question becomes one of what this has to do with an ODA. More directly, for the purposes of this conversation, how does an ODA operate like a startup team. Exactly as a startup team, an ODA, provided only with minimal resources, market intelligence, a mission and timeframe, must devise and execute a sophisticated strategy to convert the inherent Risk and Uncertainty of the marketplace to tangible, and far more so, intangible assets, greatly improving the depth of the asset base and valuation of the assets within a portfolio.
E.M. Burlingame: Founder Emerio Group and the Honos Foundation
• Father • Entrepreneur • Investor • Green Beret •
E.M. Burlingame is passionate about leveraging diverse experience and skills developed during 30 years in technology, entrepreneurship, startup investing and Special Operations to develop the next generation of startup leaders globally.
This article first appeared in The Havok Journal on 10 August, 2015.