Mutually Assured Destruction – Disruption of Intangible Assets, Overlooked Risk
July 21st, 2017. Published under Cyber security, cyber warfare., Organizational resilience and business continuity/conti. No Comments.
Michael D. Moberly July 21, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters’!
Throughout the 1960’s, ala ‘the Cold War’ period, there were consistent references by governments and defense sectors’ regarding a relatively new capability, i.e., MAD (mutually assured destruction). Opposing countries, presumably the United States and the former USSR, now Russia, possessed sufficient triads of nuclear (war) capability, i.e., sea, air, and land based-launched missiles and bombs, a consequence of which, if used, would assure mutual destruction and annihilation of both. Indeed, a perverted approach to deterrence.
A somewhat similar analogy is evident today, but its origins do not lie in the delivery of nuclear weaponry, rather in various anonymity of cyber-attacks, or cyberwarfare, designed to destroy functionality and/or substantially disrupt multiple components of a targeted country’s cyber-based and interconnected infrastructure, hence, a ‘mutually assured disruption’ of a country’s cyber ecosystem.
Cyber warfare (massive cyber-attack) would produce substantial loss of life in-many-different ways, aside from the seismic power of a nuclear warhead blast. In a MAD context, the outcome of a comprehensive cyberwar would likely produce no definitive winner or loser as often portrayed in conventional wars and/or battles. Instead, the outcome would likely be characterized and measured in almost diminutive contexts based on system redundancies and organizational – system resilience.
On the morning of September 11, 2001, I and others presumed the purposeful aircraft strikes in New York and Washington were probably diversionary, to be followed by attacks, cyber, and otherwise, in the U.S. The probable targets would be public – private components of the national infrastructure whose services and functionality are beholden to interwoven IT systems, which, at the time, were incredulously vulnerable.
Not unlike many others who anticipated this ‘follow-up’ potentiality scenario, prompted me to contact colleagues, on the morning of 911, employed in various sectors throughout the U.S., one of which was serving at a top-tier university overseeing their ‘super-computing’ center. My rationale for contacting this individual, lie in the notion that a super-computing center would presumably have the capability to detect, at least the precursors, to impending cyber-attacks which may have already launched and ‘were on their way’. To my less than comforting amazement, this rationale, in this instance, at-this-time, proved much flawed. So, regardless of the degree-level of familiarity and/or expertise with computer security and system breach detection, recognizing and mounting effective defenses against multi-dimensional cyber-attacks were relatively new concepts, largely absent sufficient software-hardware to execute effectively and instantaneously.
The capability to thwart, mitigate, or contain the asymmetric, adverse, and inevitable cascading effects that coordinated cyber-attacks would likely produce, by design, presents obvious challenges and substantial costs insofar as preparing companies and organizations to reasonably keep pace with the infinite, asymmetric, anonymous and ‘stand-off’ methodologies of (cyber) risks and threats which can materialize anytime and anyplace leaving little or no vapor trail to investigate while maximizing disruption and chaos to a company or organization.
There is little doubt today, that management teams, c-suites, and boards, ranging from Fortune ranked firms, SME’s (small, medium enterprises), and RBSU’s (research-based startups) routinely engage in discussions regarding the practicalities and costs of deploying good-better-best cyber risk mitigation (data-information security) products.
As an intangible asset strategist, risk specialist, researcher, author, and trainer, my experience suggests there are, at minimum, two multi-related reasons why these discussions are inevitable and expanding to every business sector…
• it is a universal and irreversible economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today lie in – evolve directly from intangible assets, primarily, intellectual, structural, relationship-social and competitive capital.
• data/information generation, storage, and at will retrieval demands are continually ratcheting up to infinite levels, variously aligned to the rapid recognition and rise of intangible asset intensive and dependent companies.
To be sure, efforts to thwart the actions of the growing global array of ultra-sophisticated economic and competitive advantage adversaries and legacy free players engaged in hacking and/or state sponsored entities capable of delivering highly specific, targeted, or broad-based cyber-attacks are challenges which cannot be dismissed or relegated to the uninitiated or unfamiliar.
I am certainly not suggesting public-private U.S. entities disregard their fiduciary responsibilities or regulatory mandates to safeguard data. Instead, I am suggesting any entities’ mandate to mitigate operational disruptions re-examine same in organizational resilience contexts to ensure they bear capabilities to differentiate proprietary information and data on a continuum. For example, differentiating data-information that encompass these factors as valuable – competitive advantage intangible assets, e.g., their
contributory role, value, and materiality to a particular-project, product, and/or the company’s mission and/or relevance to reputation and brand.
Intangible Assets, Bringing Clarity
July 20th, 2017. Published under Intangible asset focused company culture., Intangible asset strategy, Intangible asset teaching and training.. No Comments.
Michael D. Moberly July 20, 2017 m.moberly@kpstrat.com A business intangible asset blog where attention span really matters!
Clarity of application will facilitate more organizations to engage their intangible assets!
I have encountered numerous circumstances during client engagements or while conducting educational seminars or presentations professional groups wherein practitioners exhibit-express challenges insofar as ‘crossing the chasm’ from the tangible to the intangible. Never-the-less, achieving operational – managerial level familiarity with the intangible asset-side of any business, which variously consists of intellectual, structural, relationship, and competitive-entrepreneurial capital, is, with more frequency, considered a requisite to relevant endorsements.
Yes, the somewhat purist language used to characterize the attributes of intangible assets may be variously elusive to strategic planning, in part because intangibles are too frequently framed in obscure contexts which moderate, if not impede, organization-wide understanding and receptivity. For example, language routinely used to describe IA’s, characterizes them as non-physical ‘things’ of value that have no conventional sense of physicality, no set monetary value, and are not reported on balance sheets or financial statements.
Admittedly, obscure characterizations such as this, while it is technically correct and aligns with conventional accounting and valuation standards, it does little to engender sufficient managerial-operational confidence which can translate as mission resolve to aggressively engage and exploit intangible assets, irrespective of the fact most (intangible assets) originate, develop, and mature internally. This is particularly evident among business leadership and management teams who are inclined to interpret ‘the act of engaging intangible assets’ requires substantial organizational disruption and resources.
I served as a keynote speaker in London (UK) several years ago, for an intangible asset curious audience where I learned the British generally refer to intangible assets as the ‘invisibles’ which perhaps, no-so-coincidentally, may be an apropos designation for the U.S. business community as well.
This intangible asset strategist assumes responsibility to bring operational clarity-familiarity to intangible assets regardless of the venue, circumstance, or type of engagement. That responsibility includes articulating current and relevant rationales and examples, e.g., value propositions, projected returns, measurability of intangible assets’, their contributory role and value, and sources of revenue, etc.
To mitigate – alleviate operational ambiguity about intangible assets…and elevate receptivity to both clients and audiences, this strategist incorporates a ‘roadmap’ methodology to aid users to distinguish…
• what intangible assets are and what they are not.
• the various types, categories, and manifestations of intangible
assets.
• where, how, when, and why IA’s originate, develop, mature.
• the various way intangible assets contribute to company-organization
value as sources of value, revenue, and competitive advantage.
• strategies to assess and exploit intangible assets internally and
externally (commercially) relative to their respective life, value,
functionality, and materiality cycles’.
Still, it’s not infrequent to observe…the experienced and astute business leader – management team member exhibit reluctance-hesitancy to fully engage their company’s intangible assets, especially when ambiguities are present which frequently manifests as risk.
Go fast, go hard, go global…I have enjoyed many opportunities and privileges of initiating and/or becoming involved in conversations which I label as go fast, go hard, go global. Not surprisingly, in most of these conversations, terms associated with competitive advantage, efficiency, innovation, space, and creativity, etc., are routinely uttered. I am respectfully confident these, and other terms are substitutes, equivalents, or perhaps even proxies for intangible asset products and outputs, albeit unrecognized and unattributed at the time.
But, so long as the word ‘intangible’ is not consistently attached to – followed by the word ‘asset’, this (intangible asset) strategist-trainer-researcher-author is obliged to continually examine the manner-in-which he integrates – applies these words during business discourse and in writing.
Still, sometimes, I find astute, experienced, and successful practitioners inclined, at least initially, to minimize, or even dismiss intangible assets’ contributory role and value to their company, and rationalize doing so because intangible assets…
• are seldom, if ever, distinguished or reported on balance sheets or
financial statements, so what’s the return for engaging them?
• through their ‘near term’ lens, intangible assets remain largely
theoretical and therefore not legitimately actionable to company
operating agendas.
Such minimalism, of course, overlooks the economic – competitive reality that most organizations, whether they recognize it or not, routinely create, use, and ‘bank’ substantial amounts of intangible assets which manifest in various form, e.g., intellectual, relationship, structural, cultural, experiential, competitive, entrepreneurial, and reputation capital.
Absent, operational clarity and familiarity with intangible asset originated outputs, a municipal (public) utilities department, for example, may be inclined to characterize the services they deliver merely as quarterly, seasonal, or annual (line item types of) outputs, i.e., the number of streets repaired, sewer systems cleaned, tons of snow removed, etc.
To be sure, political expedience attaches to such recognizable quantifiers. Unfortunately, there is no mention of the intangibles that accompany each output delivered. Instead, when a public street zoned for single family homes, receives a ‘facelift’, i.e., perhaps a tree lined median, re-surfacing, turn lanes, new illumination, sidewalks, etc., these seemingly tangible aspects to the facelift will produce an array of ‘value adds’ which intangible asset savvy home owners favorably affected by the facelift can and should exploit early and immediately to their economic – competitive advantage benefit.
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Intangible Asset Expertise
July 19th, 2017. Published under Design thinking., Fiduciary Responsibility, Intangible asset training for management teams.. No Comments.
Michael D. Moberly July 19, 2017 m.moberly@kpstrat.com A business intangible asset blog where attention span really matters.
Intangible asset expertise allows professional service firms to legitimately guide business leadership to overcome their reluctance to engage their intangible assets.
Reluctance and/or hesitancy to engage a company’s IA’s…is attributed in large part, at least in the U.S, to limited opportunities for business leadership and management teams to acquire operational familiarity (with intangible assets) at strategic-decision making levels. This includes university coursework in which intangible assets, for various reasons, still largely elude many MBA, business, and law school curricula.
Having made numerous presentations to business and law school students and faculty…in various contexts and venues about IA matters, their questions and comments suggests the preparatory familiarity and research regarding intangible assets is often rooted in context related to conventional accounting practices. Treating IA’s solely through the highly structured and rules oriented lens of conventional accounting and valuation, leaves little receptivity or incentive to examine IA’s in practical and contributory role and value contexts, i.e., impetus-momentum necessary to create competitive advantages, new sources of revenue, value, and efficiencies, etc.
It is little wonder then, current generations of entrepreneurs…business strategists and decision makers devote more time, attention, and resources the pursuing IP (intellectual property) side, i.e., patents, trademarks, copyrights, assuming they are the dominant, if not, only strategy for innovation conversion, revenue production, creating leverage, competitive advantage, and business sustainability. Notably absent from this strategy is recognition that all paths leading to intellectual property are paved with contributory and inter-connected intangible assets, i.e., various forms of intellectual, relationship, and competitive capital.
When I conduct seminars-presentations…on the contributory role and value of IA’s, it’s rewarding to introduce practitioners, most of whom are already variously successful, to practical recognition-application side of IA’s, especially those which have been produced by and embedded in a company’s products and/or services, but still may be variously overlooked or familiarity falls short of the assets’ effective-profitable-sustainable exploitation. For these and multiple other reasons, this contributes to consistent interest in and high attendance for my seminars and presentations. Both are supported of course by broadening realization that intangible assets are essential to business competitive positioning, thus important to learn about.
It’s instructive to recognize also, how business leadership and management team reluctance to engage their intangible assets manifests – is conveyed, e.g.,
• skepticism about outcomes and/or returns.
• concern that doing so would be (too) disruptive to a company’s
operating culture and processes
• satisfaction with current (past) practice.
I am not inferring…companies-businesses will never become successful, profitable, or sustainable without first thoroughly and consistently engaging their intangible assets. Experiential observations do indicate however that in numerous instances, if-when a company achieves success financially, or otherwise, such success will likely occur at a slower pace and unnecessarily incur various starts, stops, re-starts, wrong turns, missteps, miscues, and missed opportunities. Some missteps can be clearly and legitimately attributed to…
• operational unfamiliarity how to exploit and safeguard their
intangible assets.
• holding conventional and misleading assumptions about when, where,
and how company value, revenue, and competitive advantage
originate.
To draw a finer point on this issue, my experiences as an intangible asset strategist indicate company leadership who exhibit indifference to their internally developed IA’s, become fertile ground for…
• reputation – brand risks to materialize, and
• employee disenchantment influenced by confusing, redundant, and/or
cross purposed use of intellectual, relationship, structural, and
creative capital, thereby contributing little, if any value, revenue,
competitive advantage, or sustainability to a company.
Intangible Assets and Design Thinking
July 17th, 2017. Published under Analysis and commentary, Design thinking.. No Comments.
Michael D. Moberly July 17, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters.’
Design-thinking is an ideology which emphasizes a practical, user-centric approach to problem resolution which, in turn, can lead to (potential) innovations which differentiate businesses, companies, products, and/or services through competitive advantages produced. In other words, design thinking represents an ideology to problem resolution that is supported by accompanying processes.
There is nothing particularly new about design thinking, in fact, it has been variously practiced for literally, hundreds of years. Design thinking was coined in the 1990’s by David Kelley and Tim Brown of IDEO, along with Roger Martin, and incorporated methods and ideas into a single unified concept.
On the business side, ‘product design’ has often manifested as afterthoughts, i.e., touch ups applied to create distinguishing aesthetic features, components and/or qualities to products as ‘topical design applications’ which not infrequently, fail to meet customers-users-clients’ real needs.
Good design thinkers are inclined to engage – approach their work through creative processes which are user-centric which elevate the probability that solutions (outcomes) will be more effective, in part because meaningful, and memorable intangibles have been inserted. Two early examples of design thinking include…
• Charles and Ray Eames who, in the early 1900’s, practiced “learning by doing” in which they explored a range of needs and constraints before designing the famous Eames chairs.
• 1960’s dressmaker Jean Muir was well known for her “common sense” approach to clothing design, placing as much emphasis on how her clothes felt to wear as they looked to others.
These designers were innovators of their time. Their approaches can be viewed as early examples of design thinking — as they each developed a deep understanding of their users’ lives and unmet needs.
As I have come to understand the evolution of design thinking, the words were coined in the 1990’s by David Kelley and Tim Brown of IDEO, along with Roger Martin, to encapsulate methods and ideas which they had individually and collectively been framing for years until they were unified in a standalone concept.
Today, it’s fair to say, companies which combine forward thinking – looking and user-centricity in the design of their products are clearly receptive to and recognize the relevance and importance of having designers immersed – engaged in each phase of a process. This often manifests as moving designers from the end of a product-development process where their input and contribution is obviously limited, to the beginning of a process, where there are opportunities to shape product development to reflect and accommodate user needs, i.e., incorporating the intangible with the tangible far better than conventional linear and/or milestone-based approaches. Design thinking does not follow a pre-defined series of sequenced and/or orderly steps. Thus, the notion that creative ideas suddenly enter and burst from one’s mind, already fully formed, is seldom the case. What new things one may learn from the iterative steps of design thinking, in my view, are various complimentary and contributory intangible assets.
Tim Brown cites Thomas Edison’s creation of the electric light bulb as a still relevant example of design thinking. As Brown describes it, Edison’s invention of the light bulb, served as one, albeit, relatively small, component of a much larger industry which he (Edison) envisioned. Edison’s genius, Brown says, does not lie merely in inventing a single, relatively discreet ‘parlor trick’ device, i.e., the electric light bulb. Rather his genius evolved from his ability to conceive an eventual fully developed marketplace surrounded by-the-use of the electric light bulb.
Another element of Edison’s genius evolved from his futuristic (horizonal) vision how people would come to want to possess and use the electric light bulb. Brown says the vision Edison espoused, and the approach he applied to achieve that vision, constituted an early example of ‘design thinking’. Edison’s visionary marketplace was a system of electric power, i.e., generation and transmission that would render the ‘light bulb’ useful and relevant on mass scale globally.
Of course, Apple, a contemporary and consistent leader in design thinking, where horizonal and user-centric (product, system, brand, support) functionalities are repeatedly applied (integrated) and effectively exploited to deliver differentiators, market advantages, and historically strong returns, many of which clearly manifest as intangible assets.
It’s not difficult to recognize that design thinking differs substantially from conventional linear and milestone-based business actions. Design thinking is the product of iterative intellectual work, the core of which is a human-centered process of discovery, coupled with prototyping, testing, and refining cycles. In other words, design thinking embodies a system of ‘spaces’ that distinguish various activities that ultimately come to form a ‘continuum of innovation’, i.e., inspiration, ideation, and implementation.
So, however it may be referred, design thinking is a methodology that encompasses a range of activities related to innovation, but with a very specific and important twist; that is, it has a people – user centered (design) focus, influenced, Brown says, by direct observation of what people, presumably prospective users and consumers…
• want and need in their lives, and
• what they like and/or dislike about the way that product is made, packaged, sold, and supported.
A special thanks to Tim Brown’s fine article titled ‘Design Thinking’, Harvard Business Review, June 2008 which Mr. Moberly has adapted for application to his ‘Business IP and Intangible Asset Blog’.
Organizational Resilience, Building It Really Matters!
July 12th, 2017. Published under Intangible asset risk tolerances and thresholds., Organizational resilience and business continuity/conti. No Comments.
Michael D. Moberly Intangible Asset Strategist, Risk Specialist, Trainer, and Author July 12, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters’.
When 80+% of most company’s value, sources of revenue, competitive advantage, and sustainability today lie in – emerge directly from intangible assets…
It’s essential to know a company’s risk threshold – tolerance for every transaction and initiative undertaken, assess and mitigate the risks, and have contingencies in place to achieve rapid and more complete recovery when disruptive risks materialize!
In my judgment, it’s important for business leadership and management teams to acknowledge, that risk (i.e., to a company’s value, sources of revenue, competitive advantage, and sustainability, etc.) is not consistently synonymous with today’s notion of ‘threats’ even though they are routinely expressed as being interchangeable. Business risks are mercurial, that is, they manifest as market change and politically induced instability, supply chain fragility, interconnectivity challenges, problems associated with infrastructure in need of repair and maintenance, changing demographics and behaviors, and, of course, climate.
Ensuring your company is resilient and agile to accommodating – incorporating these and other challenges are key to preparing for risk and uncertainty.
Achieving organizational resilience should not be construed as a necessarily complex or costly undertaking. Companies today are obliged, approaching a fiduciary level responsibility…
• to not only identify potentially (business-wide) disruptive risks.
• but also, mitigate those risks, objectively measured as substantially
elevating probability that the activity, initiative, transaction
being engaged.
• will achieve the desired-projected outcome.
• and, a significant disruption, should it occur, will not cascade to
adversely – irreversibly affect a company’s ability to operate.
Again, the path toward achieving organizational resiliency includes recognizing-distinguishing…
• the various and particular, types and/or sets of risk which may
materialize.
• the various circumstances which cause – contribute to such risks
actually-materializing.
• objectively assess (measure) each relative to the company’s
vulnerability, the probability the risks will materialize, and their
criticality to the business operability should they materialize.
A common challenge company leadership experience in assessing business disruptive risks lies in…
• transcending the subjective (guesses, anecdotes) to the quantifiably
objective.
• effectively integrating the lesser intrusive measures to monitor,
preclude, and mitigate designated risks.
• preparing-allowing a business to effectively and rapidly respond to
and commence recovery from materialized risks, especially those which
can disrupt (adversely affect) a business’s value, revenue producing
capacity, and essential components to its supply chain.
Each organization (private, for profit, public, not-for-profit, startups, etc.) can seldom escape all risk. It’s prudent therefore to consider risk as being…
• ever and asymmetrically present.
• embedded with variables which affect how, when, where, why, and what
type of risk manifests.
In-order-to sustain a desired level of organization-wide (risk) resilience, competitiveness, and performance, organizations are obliged to have systems, practices, and procedures in place to…
• not-so-much manage, rather mitigate – suspend the most significant
risks, e.g.,
o objectively reaching consensus insofar as the level, type, duration
of risk and uncertainty a company can tolerate or is willing to
accept.
o how to (cost, resource) effectively the monitoring and mitigation of
specific risk and uncertainty, and
o recognize when either measurably rises above the tolerable –
acceptable level to warrant additional interventions.
o all-the-while, meeting the organizations’ operational and financial
objectives!
Given the usual resource parameters which most organizations operate, it is increasingly important that companies have (resiliency) options ‘at the ready’. This often translates as having sufficient layers-levels of resilience to monitor, mitigate, and recover from various hazards and risks a sector specific company may prudently assume it will encounter, particularly with respect to its intangible assets, which are invariably in play. Interestingly, national, professional association, and international standards will be playing an ever-increasing role in the management of operational risks organizations face, e.g., ANSI/ASIS American National Standard, Organizational Resilience: Security, Preparedness, and Continuity Management Systems— Requirements with Guidance for Use (ASIS SPC.1-2009).
One strategy for business leadership and management teams to become better acclimated to today’s aggressive and predatorial ‘go fast, go hard, go global’ transaction environment, is to periodically remind themselves that it is an irreversible economic fact, that 80+% of most company’s value, sources of revenue, future wealth creation, and sustainability today lie in – directly emerge from intangible assets. Thus, those engaged in achieving ‘organization-wide resilience’, conceptually and practically, are obligated to factor intangible assets in their resilience planning and practice.
Similarly, it’s important to recognize the principles – foundations of organization resilience are not merely superficially tweaked versions of conventional (business) ‘continuity and contingency planning’. Admittedly, the latter variously remains a common framework that many business leaders and management teams conceptually rely, irrespective of its reactive, and far less proactive inclination. Whereas, organization resilience, in principle and practice, is embedded with a singularly proactive mantra through its execution as an informed ‘management system’.
It’s surely (increasingly) self-evident, that an organizations’ ability to quickly, efficiently, and rapidly adapt to change, whether the change manifests as market forces, environmental factors, or various types-levels of risk, or a host of other potentially disruptive acts – events, that simply being more organizationally resilient is one of those good, better, best options. Of course, and again, the organizationally resilient options any company should undertake, should be durable, monitorable, responsive, and provide for comprehensive and rapid recovery. In other words, organizational resilience should no longer be dismissed nor subordinated to convention, i.e., a tweaked version of continuity – contingency planning.
In today’s predatorial, go fast, go hard, go global business (transaction) environment in which risks are numerous, asymmetric, and ‘coming at your company 24/7’, taking time to objectively examine the benefits of becoming more organizationally resilient in posture and practice can indeed, be a worthy use of time for any business leader, management team, board, and stakeholder.
Safeguarding Intangible Assets, The Eight Rules of Engagement
July 10th, 2017. Published under Enterprise risk management., Intangible asset protection. No Comments.
Michael D. Moberly July 10, 2017 m.moberly@kpstrat.com A business intangible asset blog where attention span really matters!
Thinking differently about why and how companies should safeguard their intangible assets…
1. First-of-all the rules of engagement have changed! The predatorial and legacy free global business intelligence and ‘open source’ data mining operations are often overlooked in IA safeguard – risk mitigation equations. To effectively safeguard proprietary IA’s, i.e., those contributing to company value, competitive advantage, and generating revenue, practices-procedures must reflect these global phenomena relative to their technological sophistication, predatorial elements, and winner-take-all outlook, while exercising caution about which, what, how, and when particular-IA’s enter the public domain.
2. Business’ initiatives, innovation, and transactions undertaken, and their outcomes, are no longer influenced solely by the development of physical-tangible assets, rather by the development, flow, and use of IA’s. Company – business value has literally shifted from collections of physical (tangible) assets to collections of ‘know how’ (IA’s) which are unique commodities for which sustaining control, use, ownership, and consistently monitoring value and mitigating risk are integral to business’ near-long term success, profitability, and sustainability.
3. It’s important to build an intangible asset safeguard – risk mitigation ‘culture’ to fit each business mission rather than try to frame that mission to reflect the safeguard measures may already be in place! An often, misunderstood aspect of the dominance of IA’s to business operability is that computer/IT security equates with IA safeguards and risk mitigation. Computer/IT security is better recognized as complimenting a comprehensive program for safeguarding IA’s in whatever format they exist, and for the duration of their value, competitive advantage, and materiality cycles’.
4. Safeguarding a company’s IA are most effective when practiced proactively and reflect the nanosecond development, flow, and accessibility to knowledge, know-how, and transaction strategy in which IA’s are inevitably in play. Safeguard practices should always be on the front end, to sustain control, use, ownership, and monitor asset value and materiality.
5. Think differently about past practices and conventions! Law associated with intellectual property enforcement, e.g., patents, trademarks, copyrights, trade secrets, etc., are largely reactive, not proactive, and typically apply after, and if, infringement, misappropriation, counterfeiting has occurred and come to the attention of the rightful owner (holder). So, holders of intangible assets and IP are dependent on their ability to be alert to…
• global risks to their business assets.
• recognizing their risk tolerance – threshold for economic –
competitive advantage hemorrhaging.
• their willingness and resources to aggressively pursue wrong doers.
6. Intangible asset safeguards must be flexible and maneuverable! Many information asset safeguard regimes-systems are static and/or one dimensional, e.g., remain constant throughout the life – value – competitive advantage cycle of the safeguarded assets and do not recognize or accommodate fluctuations in the assets contributory role, value, or materiality. Business intangible asset safeguards should be forward looking and possess the capability to monitor and make rapid adjustments to changes in an assets’ value, mission relevance, risk, and vulnerability.
7. Avoid ‘pushing the future off the table’! A forward-looking offense is the best defense for safeguarding businesses intangible assets. Each day companies are presented with urgent, near term challenges that create pressures to push the future off the table. One consequence of which is that disproportionate emphasis may be given to the constant chorus of sources which offer largely speculative, anecdotal, and worst-case scenario snap shots about particular risks and threats. While the potentially devastating consequences of these pronouncements should not be dismissed, neither should they serve as the sole or necessarily dominant rationale for the design and execution of IA safeguards.
8. Safeguarding businesses IA’s should also be about forging relationships with the assets’ originators, developers, users, and owners because, this is where and how to sustain control, use, ownership and value of business intangible assets.
Cost Of Employee Misunderstanding…$37b in Intangible Assets
July 9th, 2017. Published under Communicating Risk, Intangible asset assessments/audits., Intangible asset focused company culture.. No Comments.
Michael D. Moberly July 9. 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters’!
I am reminded of a ‘buy offer’ several years ago when Steve Balmer (Microsoft) expressed interest in purchasing Yahoo! for a reported $43 billion. And, according to multiple respected estimates, perhaps as much as $38 billion of the ($43b) purchase price, had the transaction been executed at the time, would be comprised of Yahoo’s IA’s (intangible assets), primarily in various forms of intellectual, structural, and relationship capital.
The $37b figure should come as no surprise to those even minimally familiar with the irreversible trend (economic fact) that companies are far less reliant on tangible-physical assets and instead, transitioning, at a rapid pace to IA intensity and dependency. The reason lies in the unchallengeable economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for competitiveness, growth, sustainability, and profitability today lie in – evolve directly from IA’s, particularly intellectual, relationship, structural, and competitive capital.
What I am suggesting is this, should the $38b figure noted above be reasonably correct, which I believe it is, it alone should influence c-suites and management teams to review a 2008 IDC ‘white paper’ study (www.congisco.com/downloads/whitepaper/uk_exec_summary.pdf ) commissioned by Cognisco which self-describes as ‘the world’s largest intelligent employee assessment specialist’. The studies’ findings provide evidence that for UK and US employers considered in the study, are losing an estimated $37 billion annually from their EBITDA, due primarily to actions or errors of omission by employees who, for various reasons misunderstand, have misinterpreted, or, were misinformed about company processes, practices, policies, or their job function.
The report, titled ‘Counting the Cost of Employee Misunderstanding’ revealed the scale of the impact, i.e., $37 billion annually, is attributable to employee misunderstanding, which the report defines as… actions taken by employees who have misunderstood or misinterpreted (or were misinformed about or lack confidence in their understanding) of company policies, business processes, job function or a combination of the three.
The study indicates many businesses are generally aware of the costs attributed to (employee) misunderstanding, but, approximately one in three self-report they had taken actions to close the ‘misunderstanding gap’. From this, it’s certainly not a stretch then for company security directors and managers to assume businesses, are quite literally inviting risk through sustained employee misunderstanding.
Particularly noteworthy in the studies’ findings is that approximately two thirds of the ($37b) cost of employee misunderstanding by the 400 reporting companies in the 12 months encompassing the study were attributed to…
• loss of business due to unplanned downtime (32%).
• poor procurement practice (17%).
• costs – settlements incurred from regulatory penalties and tax or
revenue penalties (16%).
• placing a business at risk of injuries to employees and/or the
public, and
• loss of sales and reduced customer satisfaction.
The findings also highlighted that the real cost of employee misunderstanding may be even higher, when costs such as impact on brand, reputation and customer satisfaction (also intangible assets) are accounted for.
Mary Clarke, former CEO at Cognisco, notes rather obviously, if an employee misunderstands or misinterprets actions there will be repercussions from loss of business to impaired brand image. But what is often not measured, is the employee’s confidence to take the appropriate actions which can also have a significant impact.”
Frugal Innovation Is Coming To The U.S. Near You!
July 6th, 2017. Published under Frugal Innovation, Intangible asset training for management teams.. No Comments.
Michael D. Moberly July 6, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters’!
Respectfully, there are perhaps some who remain unfamiliar with frugal innovation as a concept or a practice. Frugal innovation is, in many respects, the personification of utilizing intangible assets in one of their purest forms, i.e., intellectual, structural, and relationship capital.
Innovation is often portrayed through the lens of the west’s conventional entrepreneurial communities within the parameters of university-based research, biotech, incubators, venture capitalist, SBIR’s, intellectual property, phenomenal research, and multi-tasking founders and management team
Of course, some are inclined to characterize frugal innovation in various subordinate contexts as simplified, ‘on the cheap’ business building models unlikely to gain depth of traction in western dominated entrepreneurial sectors where business startup convention is dominant.
Those who hold the view that ‘frugal innovation’ is merely a descriptor for executing entrepreneurism on the cheap may not have taken time to appreciate its core principles, or perhaps are adherents to existing conventions. Similarly, it’s short-sighted to characterize frugal innovation as merely being a business (start-up) model.
Frugal innovation has largely been chronicled as designing and introducing products and/or services into circumstances in which…
• simplification, durability, and sustainability are requisites.
• minimal training and maintenance is required.
• the innovation can become fully functional by using minimal
(primarily existing) resources.
• to minimize, perhaps remedy, a current region-circumstance specific
need rapidly on behalf of the intended beneficiaries.
• the innovation itself is durable to accommodate – withstand
conditions in which it was designed to be applied.
These are certainly not the only tenants – requisites to frugal innovation. However, they do deliver rapid, if not, immediate (often humanitarian) returns, i.e., irrigation, crop – animal sustainability, ease acquisition to, generates-delivers power, promotes producing more stable-sustainable shelter and/or clothing, provides innovative – culture respectful investment capital which has been a history of very limited access to many.
Interestingly, in Schumpeter’s column (in The Economist, March 24, 2012) titled ‘Asian Innovation’ it’s noted that numerous universities are in somewhat of a ‘scramble mode’ to design and integrate courses focusing on frugal innovation. There is no evidence to suggest that ‘scramble mode’ has mitigated. This suggests the fundamentals, i.e., principles and concepts, etc., underlying frugal innovation are variously resonating in the west.
To be sure, frugal innovation represents a principled, but, in some respects, less structured path for developing and commercializing (applying) practical innovations that initially target consumers at the so-called ‘bottom of the pyramid’. Not infrequently, initial frugal innovations can be ratcheted up to attract consumers in successively higher brackets of the global pyramid.
Numerous advocates and practitioners of frugal innovation in the East, as The Economist’ article points out, imagine a time when particular Western products, upon removal of gratuitous frills, will lead to such substantial cost savings that frugal ideas will (eventually) come to dominate the innovation process. While car seat warming western consumers have clearly not arrived at that point, the interest embedded in prospective entrepreneurs to pursue alternative paths and innovations, absent many of the conventional hurdles and/or constraints, particularly those having to do with the need for securing substantial investment, are attracting some well-deserved interest.
Note:
• “Reverse Innovation” a book written by Vijay Govindarajan and Chris Trimble, and “Jugaad Innovation” by Navi Radjou, Jaideep Prabhu and Simone Ahuja are seminal guides to frugal innovation.
• And, as a demonstration that the concept of frugal innovation is not wholly dismissed by the multi-nationals, Mr Govindarajan (Dartmouth’s Tuck Business School) is known to have advised General Electric on frugal innovation and co-authored a very worthy article with its former CEO, Jeffrey Immelt.
Frankly, I do not sense frugal innovation, conceptually or practically, will remain subordinate to business start-up conventions and wholly fade from western business (entrepreneurial) lexicon or practice. Those inclined to believe differently, while respected, are encouraged to re-think their position.
Intangible Asset Risk Mitigation vs. Risk Management
June 30th, 2017. Published under Enterprise risk management., Intangible asset risk tolerances and thresholds.. 2 Comments.
Michael D. Moberly June 30, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters’.
In my judgment, a not insignificant percentage of the business community and service providers, have become piously complacent insofar as assuming the terms risk management and risk mitigation are interchangeable. Through my lens, there are important distinctions with differences!
The terms risk management and/or managing risk, in my view, suggest these are actions taken to manage adverse events – circumstances which likely have already materialized., i.e., sort of managing risk ex post facto. Whereas, risk mitigation, assumes effective action will be taken to abate and minimize the probability that adverse effects of particular-risks known to emerge – coincide with specific actions and/or transactions in which IA’s will be – are in play.
I am suggesting there is a bright line that distinguishes managing adverse events-actions-behaviors which have already occurred vs. having specific policies, processes, and procedures in place to mitigate events-actions-behaviors before and/or at the earliest stage of their materialization. In other words, in advance of adversities manifesting to the level of business destabilization or lethality.
Of course, the strategic underlier to this argument is recognizing that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for future wealth creation and sustainability today lie in intangible, not tangible assets. This translates to rapid growth in the number of companies in every sector now operating with high levels of intangible asset intensity and dependency. Accordingly, far more risk mitigation – management initiatives and services should be focused on intangibles than tangibles.
As most risk mitigation – management professionals recognize all too well, a helpful prelude to executing either is for a relevant – comparable risk to materialize and adversely impact another company (preferably, a competitor) and produces…
• sudden and significant hemorrhaging of value, revenue, brand,
reputation, image, goodwill, and competitive advantages, etc.
• adverse public, political, and/or regulatory spillovers that lead to
long term hemorrhaging of market share, and erosion of customer-
client base, company value, and revenue generation capability.
It’s certainly not uncommon, when a significant business risk does materialize to adversely affect a company’s intangible assets, that previous c-suite unresponsiveness and/or expressions of indifference often give way to receptivity for substantive commitments to mitigate-manage business risk, preferably before they materialize.
Too, my experience notes, management team interest in risk will now likely include sustaining control, use, ownership, and value of the company’s intangible assets which are in the probable risk paths in the future, should they materialize.
Experience has also led me to conclude there are (generally) two key factors that influence how business risks will be received (interpreted, assessed) by c-suites, management teams, and boards and ultimately influence their propensity for action, e.g.,
• if the risks’ adverse outcomes are presented in objective-
quantitative contexts vs. subjective-qualitative contexts?
• if a risk is presented-characterized as being responsive to
prevention, mitigation, or management practices-techniques?
• if the risks, and their potential materialization are characterized
as single occurring, perhaps, one-off events, absent conveying
vulnerability-probability for multiple risks materializing
simultaneously?
• if characterization of the risk includes potential for producing
enterprise-wide cascading affects that significantly elevate both the
cost and challenge to adversely affect business value and sources of
revenue, and stop competitive advantage hemorrhaging?
• if the risk advocate is inclined to over-dramatize vulnerability and
probability that certain risk will materialize, to the exclusion or
minimalization of criticality, i.e., near-long term adverse impacts.
As an intangible asset strategist and risk specialist, I seek consensus on matters of risk and try to avoid circumstances in which there are competing interpretations and assessments of particular- risks in terms of the company’s vulnerability to, the probability of, and a risks’ criticality to the company, should it materialize. An essential requisite to making a business risk presentation is to recognize that while management team and board may not be familiar with the intricacies of current business risks/threats, they typically grasp a ‘big picture’ and may have already framed certain perspectives about how best to address a risk, albeit from a managerial – financial position or an assumption regarding a company’s risk tolerance and/or risk threshold.
Intangible Assets Are Not Merely Theoretical Concepts!
June 29th, 2017. Published under Intangible asset teaching and training., Intangible asset training for management teams.. No Comments.
Michael D. Moberly June 29, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters’!
I routinely have-the-opportunity to talk with a cross-section of business leaders, management team members, and entrepreneurs about the IA’s (intangible assets) embedded in their organization, generally in the form of intellectual, relationship, and structural capital.
Not long ago, I had a particularly notable conversation with a very astute senior executive who intended no disrespect by suggesting, that the development, unraveling, assessment, and exploitation of IA’s is, through her lens, remains largely theoretical and not a practical exercise she could recommend engaging. I translated her remarks thusly; intangible assets lacked sufficient revenue – competitive advantage side (bottom line) application. I obviously disagree!
Unfortunately, there remain too many business leaders and management team members inclined to rudely characterize the development and exploitation of intangible assets as mere theories, best addressed in university lecture halls as uncollaborated and unsubstantiated opinions that will not hold up to the rigors, stresses, and speed required in today’s aggressive and competitive business (transaction) environments.
Having taught in universities for 25+ years, I can say, without hesitation, that a significant percentage of the time when-if I ever uttered the word theory in a classroom, or during a presentation to a professional (practitioner) association, the initial reaction tended to manifest as presumptions, conveyed by audience ‘body language’ that the intangible asset messages the audience was about to be introduced, would have little, if any, relevance to their ‘real business world’.
Not wishing to have my message advocating businesses to exploit their IA’s reduced to the time- honored sport of theory vs. reality, I chose to re-characterize the word ‘theory’ to represent thoughtful and generally well researched attempts to explain a specific phenomenon, in this instance, the contributory role and value of intangible assets. In my business reality, a theory is an expression of a concept or idea that is testable, replicable, and based upon well-grounded hypotheses. In the world of business management, economics, and organizational behavior, it is an irrefutable economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, stability, sustainability, and profitability lie in – evolve directly from intangible assets!
While characterizing theories in this manner has paid noticeable dividends to me as an IA strategist and risk specialists, in terms of audience receptivity, which I still apply today, it is still disappointing and frustrating to witness, otherwise intelligent, experienced, and successful business leaders be dismissive of, or wholly reject this well-established and universal economic fact, especially when, as I have found in numerous instances, those same business management teams are leading, unbeknownst to them, a business that is, by definition, IA intensive and dependent!
In my judgment, what prompted intangible asset ‘think tanks’, i.e., Brookings Institution, Athena Alliance, IC Knowledge Center, the Intangible Asset Finance Society, KPSTRAT, and others to engage business intangibles occurred, in part, by demonstrating their conspicuous role in most all business transactions along with the
• need for effective stewardship, oversight, management, exploitation,
and monetization of the assets.
• forward-looking-thinking role for intangible assets in most every
business initiative, process, and/or transactions.
• unrelenting reality that conventional financial statements and
balance sheets no longer convey an adequate, nor complete picture of
a company’s entire (real) financial health absent fully addressing
the role and contributory value of intangible assets.
The inclusion of a company’s intangible assets in valuation, management, and accounting leads to a far more insightful portrait of any businesses current financial circumstance by comprehensively describing a company’s value, its sources of revenue, its future wealth creation potential, its sustainability, profitability, and overall stability through an IA lens.
Thus, to respectfully appeal to the various business persons who remain reluctant to engage their businesses IA’s or still convey skepticism of the role, value, and influence IA’s play in business, what follows are relevant and practical definitions of intangible assets, i.e., they are…
• unique blends of know how-based assets that variously intersect to support specific (often proprietary) methodologies, processes, best practices, and information sharing infrastructures. Adapted by Michael D. Moberly from the experienced work of Weston Anson, CONSOR
• interwoven – embedded processes, relationships, and operating culture in synchronized to market demands-conditions to differentiate businesses (in their market spaces-sectors) to create-deliver value, generate revenue, and build-sustain competitive advantages. Adapted by Michael D. Moberly from the fine work of Michael Porter, Harvard Business School
• economic benefits anchored in company processes, personnel, efficiencies, and/or programs that set a company apart from its competitors to create new and sustainable sources revenue and value. Michael D. Moberly
• at the center of all business innovation; they come at the beginning as ideas, at the middle as processes, and at the end as commercialization and distribution channels. Adapted by Michael D. Moberly from the many years of excellent work of Dr. Baruch Lev, NYU, Stearns School of Economics
• are generally naturally-organically occurring (not necessarily
purposefully manufactured) elements.
• which become embedded in organizational behavior, practices, and
management.
• frequently are variants of intellectual, structural, and/or
relationship capital.
• where they often await recognition, identification, assessment,
development, and conversion.
• when effectively safeguarded and exploited, there is ample evidence
they can produce – deliver lucrative and competitive outcomes.
