Valuing Intangibles - Why It Matters

It is commonly believed that in 1975, Steven Sasson, an engineer at Kodak, invented the world’s first digital camera. The prototype captured, digitised, and stored images electronically using a digital memory card. It was a groundbreaking invention, yet it was not commercially produced at the time. Kodak patented the technology (Patent number US4131919A), despite there being no apparent market for it at the time.

In 2012, the company was facing significant changes in the photography market and was forced to file for bankruptcy. During a restructuring exercise, Kodak sold a portfolio of over 1,100 digital imaging patents for $525 million and emerged from bankruptcy in 2013 with a focus on commercial print and advanced materials & chemicals.

Kodak’s journey reminds us, from an IP standpoint, that protecting and valuing your intellectual property—your intangible assets—is important; it can be the difference between success and failure.

And this is nothing new. Long before “IP” was a fashionable term, value mattered. Medieval artisans used makers’ marks to show origin and quality. Renaissance inventors secured patents to profit from their creations. Writers fought for control of their manuscripts to protect their rights, knowing that ownership and value were inseparable. Today, it is just called Intellectual Property—evidence that intangible assets have always been essential to success.

But how do you value intangibles? The methodologies are familiar—income, market, cost—but they are only the surface. They give numbers but not meaning. To understand value, you have to look beneath the calculation and ask harder questions like: why do customers come to you in the first place, and why do they stay?

For some businesses, it is the trademark—a symbol that, over time, has come to embody trust, it is the reputation of a name: credibility that stretches far beyond the confines of a balance sheet, opening doors in new markets or securing partnerships others cannot. In technology-driven sectors, it may be a patent portfolio that creates tangible commercial value, from attracting investors and securing partnerships to opening up new revenue streams through licensing and sales.

Designs, too, can be a decisive factor: the shape, look, or feel of a product that differentiates it in a crowded market drives customer choice, creating value that may not be obvious at first glance. Then there are the more elusive intangibles: know-how embedded in teams and processes; confidential information, data that competitors would pay to access, and these are other examples.

Some of these assets are visible and can be documented, while others are less obvious, existing only in the habits of a workforce or the loyalty of a client base. Some are durable and others can be fragile. Yet together, they form the mosaic of value that every business relies upon, whether or not it is acknowledged.

A spreadsheet can model projected returns, but it cannot explain why those returns are possible—or what might cause them to disappear. True valuation means tracing the link between intangible assets and human behaviour: how customers make choices, how competitors position themselves, and how markets evolve. That is where the real story of value emerges.