Sony Pictures, Is This The Type of Reputation Risk We Can Now Expect?

December 18th, 2014. Published under Reputation risk.. No Comments.

Michael D. Moberly   December 18, 2014    ‘A blog where attention span really matters’!

I am frustrated about how to describe the adverse events – acts that have been perpetrated against Sony Pictures of late. To be sure, reputation risks materialize daily and will likely remain, in this instance, indeterminately active for months to come insofar as publicly releasing additional documents that produce titillating economic – competitive advantage harm. The bad actors in this instance, presumably North Korean or a confederate, are responsible for perpetrating this calamity are certainly not exhibiting the conventional, ‘smash, grab, and disappear’ MO we have become somewhat accustom.

It’s clear the extent which these events constitute a massive and criticality filled (reputation) risk and irreparable economic – competitive advantage harm at various levels, not just to Sony Pictures, but also to Sony’s personnel and management teams whose private information and communications have been exposed.

But this event has also produced substantial spillover to the film industry in general in terms of exposing the inner workings of various film studios as a whole, i.e., exposing proprietary – competitive advantage (operational) information and communications for anyone so inclined or titillated to read, interpret, and disseminate at will.

Through my lens however, the Sony Pictures’ event has far exceeded the conventional boundaries (of reputation risk) that typically affect one company at a time, to being on par with the sector wide revelations and reputation risks incurred by the financial services sector in 2006 – 2008.

It should now be evident, even for management teams unaccustomed to the operational realities of intangible assets insofar as their contributory value to company reputation, regardless how, why, where, or by whom the risks originate and their adverse affects. There is little question, these companies should be reaching out to genuine reputation risk management specialists, not merely repurposed public relations professionals.

Aside from the long assumed and now widely reported connection of the Sony Pictures’ event to the North Korean government or a surrogate, at least one aspect that distinguishes this from others before it, is it is one of the initial, if not the first large scale attack perpetrated against an enterprise in the ‘creative sector’ which unlike financial services, has some legitimate and perhaps even Constitutional grounds for doing what it did, i.e., produce a comedic motion picture that about one of the most image conscious and sensitive countries in the world with whom an expected and aggressive response exceeds a mere probability to perhaps an inevitability.

Creatively, I suspect Sony Pictures, unlike Robert Oglethorpe photographs in the 1990’s, can expect it’s response to be measured somewhat because, after all, ‘the interview’ was conceived and produced as a comedy and movie goers generally enjoy comedies often irrespective of how their laughter is designed to be achieved.

The Question VC’s Should Stop Asking, Why, and What Questions Should Be Asked!

December 12th, 2014. Published under 'Safeguarding Intangible Assets', Early stage companies., Venture capital.. No Comments.

Michael D. Moberly   December 12, 2014   ‘A blog where attention span really matters’!

Venture forums…

Venture forums are typically fast paced and highly charged events where management teams of intangible asset intensive startups, university-based spinoffs, and early stage companies give impassioned ‘elevator pitches’ to prospective investors.

Most pitches are purposefully limited to 3-5 minutes wherein the spokesperson explains their companies’ mission, the innovation, further research that’s necessary, fiscal projections, business model, why investment is warranted, and how the investment will be used should an investor deem it a worthy risk. Following the ‘pitch’, prospective investors may ask the company questions, one invariably is, ‘what’s your IP position’?

What’s your IP position…

Of the numerous venture forums I have attended the most consistent answer to this albeit over-rated, misunderstood, yet seemingly obligatory question is, a patent…

  • application has been filed (provisional),
  • is pending, or
  • has been issued.

The attention startup company’s attach to achieving IP status for their innovation, coupled with the consistency which prospective investors ask the IP position question, suggest each party believes that conventional IP, patents particularly are influential requisites to securing investment capital. Of course there are other factors considered in ‘invest – don’t invest’ decisions.

Legal symbolism…

True, IP status does provide investors with the necessary legal standing and recourse options should the invested enterprise fail, not meet its projections, or its IP is infringed or challenged within the 3 – 5 year exit strategy plan investors typically demand. And, yes, patents and other forms of intellectual property are obligatory for WTO and TRIPS signatories.

But, the global business transaction environment is becoming increasingly aggressive, predatorial, competitive, and legacy free. That coupled with the persistent challenges and vulnerability to intangible asset (IP) infringement, theft, and/or counterfeiting make a startups’ IP position little more than legal symbolism. Should companies elect to pursue other strategies to safeguard their proprietary – competitive advantage intangible assets, i.e., trade secrecy for example, those legal portals for bringing action against the inevitable infringers, thieves, and counterfeiters in locales where a company’s most valuable assets are in play also carries some ambiguity.

Legal – economic safety nets…

Through my lens, conventional IP has less relevance as a legal – economic safety net than startup management teams should be assume.  Too, the costs associated with mounting an IP infringement – misappropriation suit are significant, if not cost and time prohibitive for resource conscious startups to pursue regardless of case credibility.

It’s prudent for investors and IP holders alike to acknowledge patents and most other forms of IP, no longer serve as…

  • stand alone deterrents, or
  • reliable prognostications of innovation value.

More relevant venture forum questions…

I urge prospective investors – venture capitalists to re-phrase their venture forum questions. For example, rather than merely asking ‘what’s your IP position’ assuming that is an important criterion to ‘invest-don’t invest’ decisions, perhaps a more relevant and telling question would be…has the proprietary know how, i.e., intellectual, structural, and relationship capital that underlie the startups’ innovation and serve as the cornerstone to the IP on which an investment would be premised, been adequately safeguarded from its inception?

Patents start life as trade secrets…

It’s a well acknowledged adage in the information asset protection arena that patents typically start life as trade secrets and proprietary know how.  Therefore, if the know how underlying a prospective investment has been treated in a cavalier manner absent the

  • requisite minimums of trade secrecy or other best information asset protection practices
  • prior to filing a patent application,
  • it’s only prudent for prospective investors to ascertain
  • the status, i.e., fragility, stability, and sustainability of the assets being considered for investment.

Asset vulnerability, probability, criticality, and speed…

Today, the vulnerability, probability, criticality, and speed which know how, i.e., intellectual and structural capital assets particularly, can be compromised, infringed, misappropriated, or stolen are issues that should be fully explored as being integral to any ‘invest – don’t invest’ decision.

Follow-up questions…

Before making an investment in intangible asset rich and dependant startup companies, it’s important to direct probing follow-up questions to company management teams. Doing so will allow prospective investors to more objectively assess whether control, use, ownership, and value of the underlying intangible assets are…

  • sustainable relative to an intended exit strategy, and
  • reflective of the assets’ functionality and value cycle.

Today, with increasing certainty, ineffectively safeguarded intangible assets (IP) will quickly hemorrhage in value, competitive advantage, and elevate investor’s vulnerability to costly, time consuming, and momentum stifling challenges and exit strategy headaches!

As always, reader comments are respected and welcome.

Managerial Arrogance = Intangible Asset – Relationship Capital Negative!

December 9th, 2014. Published under Measuring Performance. No Comments.

Michael D. Moberly   December 9, 2014   ‘A blog where attention span really matters’!

Some of you may hold a similar view. In circumstances in which I find myself dealing with arrogance, either managerially or through a larger business culture, in most instances I find it unnecessary and equating with an intangible asset (relationship capital) negative, irrespective of whom, where, how, when, or why it manifests.

Expressions of conceit, egotism, self-importance, and condescension are some of the more common descriptors of arrogance, while they may relevant to military aviators engaged in training at the ‘top gun’ school at Miramar Naval Air Station, I find few other circumstances in which brandishing managerial arrogance can be useful. Admittedly, there is a distinction between expressions of arrogance and an experientially earned sense of total self confidence as portrayed in the film ‘Lone Survivor’

Too, I find, such expressions are frequently attached to an unreceptive and quickly dismissive (shoot from the hip) demeanor inclined to trivialize other, especially new voices, which articulate clearly plausible alternatives to the one’s they hold, assuming ‘the way it’s always been done’ has elevated to a managerial right which only they can amend. In other words, ‘if it ain’t broke, why try to fix it’? Everything seems to be functioning well as is.

In environments where managerial arrogance is dominant, it is challenging to develop favorable intangible assets with strong contributory value, e.g., reputation, brand, image, and goodwill. Most respectfully, should there be doubters to this premise, it’s important to recognize this globally universal economic – competitive advantage fact; 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, competitive advantage, profitability, and sustainability today lie in – emerge directly from intangible assets! It does not quite rise to the level of ‘rocket science’ to suggest when a company either projects or dismisses any intangible asset which conflicts with or ‘cancels out’ even a portion of that 80+%, receptivity to change is warranted because a dominant projection of arrogance will weaken and/or undermine the contributory value of other intangible assets, particularly intellectual, structural, and relationship capital as well as stakeholder and consumer perspectives.

A company’s culture and employee demeanor, whether dominated by arrogance or humility and respect, are never-the-less, intangible assets, broadly defined as…

  • the economic benefits anchored – embedded in companies’ distinctive and often times proprietary know how, i.e., intellectual capital, along with similar processes, procedures, and practices, i.e., structural capital, which, when used effectively, can set a company apart from its competitors by creating various efficiencies and other circumstances that enhance internal and external relationships and communication, i.e., relationship capital.. (Michael D. Moberly)

It is true, intangible assets are seldom, if ever, reported on (company) financial statements or balance sheets insofar as acknowledging their contributions to business operation success or measuring their contributory value and the economic – competitive advantages they produce.

So, whether managerial arrogance is exhibited as demeanor that emerges from individuals or collectively materializes as part of a company’s culture, one seldom has to look far to find evidence of its adverse effects be it in the form of employee attrition, stakeholder hesitation, brand, or reputation. Unfortunately, in numerous instances, managerial arrogance has become so thoroughly embedded in a company’s culture that it manifests and replicates involuntarily, that is until a substantial reputation risk materializes which prompts wholesale changes in leadership as a company endeavors to regain its economic – competitive composure, should that be possible.

Anecdotally though, I find managerial arrogance is often rationalized, not as an intangible asset or relationship capital negative as I am proposing here, rather as a necessary and justifiable expectation associated with a particular job, profession, or mission, i.e., perhaps as a deep seated extension of McGregor’s Theory X.

If truth be told, as an intangible asset strategist and risk specialist, I may respectfully bow out of an engagement when I sense managerial arrogance will inhibit or preclude my charge to effectively bring a company, its management teams, employees, and culture to the intangible asset table.

As always, reader comments are most welcome.

Safeguarding Intangible Assets: Responsibilities for Security and Company Management Teams!

December 5th, 2014. Published under 'Safeguarding Intangible Assets', Fiduciary Responsibility. No Comments.

Michael D. Moberly    December 5, 2014    ‘A blog where attention span really matters’!

“Intangible assets take years to build and a second to lose”! That’s a statement attributed to Gerald Ratner, a former UK retail magnate following the demise of his £500M jewelry business. As unfortunate as that circumstance was for Mr. Ratner, his company, its employees, and stakeholders, as an intangible asset strategist and risk specialist, the statement speaks volumes when it’s understood 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!
  • unlike conventional forms of intellectual property, i.e., patents, copyrights, and trademarks, etc., each of which, by the way, are categories of intangible assets, governments’ issue no certificate that tells company’s what their intangible assets are. So, identifying, assessing, and safeguarding the contributory value of a company’s intangible assets are (fiduciary) responsibilities of management teams’ regardless of a company’s sector, size, or headquarters.
  • growing percentages of companies operate in aggressive, hyper-competitive, and predatorial business transaction environments wherein intangible assets are at risk to an ever expanding array of asymmetric events, acts, and behaviors which can rapidly cascade to adversely affect asset value, sources of revenue, competitive advantages and otherwise entangle assets in costly, momentum stifling, and often irreversible circumstances.

Why? Because regrettably, intangible assets are frequently not identified as value-revenue contributors, therefore they go unrecognized, under-utilized, under-valued, and un-protected. In large part, this is related to intangible assets’…

  • lacking physicality.
  • falling under conventional ‘MBA light’ radar.
  • mistakenly presumed to be the sole/primary function of legal and/or accounting.
  • seldom, if ever being reported on balance sheets or financial statements.

So, is Mr. Ratner’s statement relevant to global businesses, and should companies’ begin engaging intangible assets they produce, possess, and become embedded as value laden intellectual, structural, and relationship capital? Absolutely!

As always, reader comments are respected and welcome!

Frugal Innovation: Changing the Center of Innovation Gravity From West to East…

December 4th, 2014. Published under Frugal Innovation. No Comments.

Michael D. Moberly   December 4, 2014   ‘A blog where attention span really matters’!

Has frugal innovation been oversold? If so, should the west’s conventional entrepreneurial community and its stakeholders, often portrayed as consisting of university research, biotech, incubators, venture capitalists, SBIR’s, and quick witted management teams now relax?  These two, much paraphrased, questions were posed to readers in an article in The Economist (March 24, 2012) aptly titled ‘Asian Innovation: Frugal Ideas Are Spreading From East to West’.

Oh contraire! Those inclined to characterize frugal innovation as merely representing a new ‘flash-in-the-pan’ simplistic business model that will likely never gain sufficient traction in western economies to become viable, are encouraged to re-think that position. Frankly, I do not sense frugal innovation, conceptually or practically, will become subordinate to business start-up convention and fade from western business lexicon. Those who convey it will may not have taken the time to understand it or perhaps are themselves stakeholders in retaining existing conventions.

It’s short-sighted to characterize frugal innovation as merely a business start-up model which befits (a.) simplified products or services, (b.) work force demographics frequently associated with developing countries, (c.) limited availability of or access to start-up capital, (d.) investor returns in single vs. double or triple digits, and (e.) subordinate to western conventions.

Interestingly, in The Economist’s Schumpeter column (March 24, 2012) titled ‘Asian Innovation’ it’s noted that numerous universities are in somewhat of a ‘scramble mode’ to design and integrate in academia, courses focusing on frugal innovation. This suggests the fundamental principles and concepts of frugal innovation are variously resonating in the west insofar as accommodating the dual visions and/or requisites of (a.) do-ability and work ability, and (b.) attracting – reaching a broader range of prospective entrepreneurs whose innovation does not require substantial and immediate infusions of investment.

To be sure, frugal innovation represents a principled, but less structured path for developing and hopefully commercializing 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 to innovation commercialization, absent many of the conventional hurdles and/or constraints, particularly those having to do with securing substantial investment are attracting some well deserved interest.

“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 CEO, Jeffrey Immelt.

Intangible Assets: What Management Teams Need To Know?

December 2nd, 2014. Published under Intangible asset training for management teams., Managing intangible assets. No Comments.

Michael D. Moberly   December 2, 2014   ‘A blog where attention span really matters’!

During initial engagement conversations it’s instructive when clients convey indifference to or underestimate intangibles’ various contributory roles as sources of value, revenue, competitiveness, reputation, etc. Since I began researching, publishing, and consulting in the intangibles’ arena, I have encountered clients and company management teams who…

  • are unfamiliar how to identify, unravel, assess, and exploit intangibles’ to fit their company, its circumstances, and various transactions it engages.
  • find it challenging to distinguish how certain intangibles’, e.g., intellectual, structural, and relationship/social capital are embedded in routine (company) processes, procedures, and/or practices.
  • are inclined to characterize activities related to the management, development, value preservation, and exploitation of intangible assets as…
  • being too difficult or time consuming to do.
  • unappealing because intangibles are not reported on company balance sheets or financial statements.
  • an uncompetitive activity until competitors are observed doing it.

Of course, the opposite sentiments are what management teams should be expressing because it’s an economic fact today that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets!

And, intangible assets are not exclusive to early stage or newly launched companies’ nor are they subordinate synonyms for intellectual properties, rather they are relevant to any company regardless of size, sector, product/service offerings, revenue, or transactions.

Early Stage Companies: Mitigate Risks To Intangibles Assets

December 1st, 2014. Published under 'Safeguarding Intangible Assets', Early stage companies.. No Comments.

Michael D. Moberly     December 1, 2014    ‘A blog where attention span really matters’!

There are four (typical) ways in which early-stage companies’ proprietary intangible assets, i.e., IP and its underlying intellectual, structural, and social/relationship capital become ensnared in time consuming, costly, momentum stifling, and sometimes irreversible personal disputes and/or legal challenges. That is, they are frequently a consequence and/or combination of…

  1. misplaced (or violation) of trust in business partners, research collaborators, employees, colleagues, and/or professional service providers, etc.
  2. operational or procedural miscues, etc., i.e., poorly executed manufacturing and/or design and delivery of product/services, market entry planning and launch, being dismissive about sustaining control and use of key assets, or monitoring their value, materiality, and risk.
  3. unethical or illegal conduct of others (internally, externally), etc., i.e., theft, misappropriation, infringement, intentional leakage, etc.
  4. key intangible assets acquired through competitor/business intelligence, data mining initiatives, and/or economic espionage, etc.

Entrepreneurs and early stage company management teams who are inclined to mistakenly characterize or dismiss any of the above as merely constituting a necessary risk of doing business, do so at their peril. That’s particularly evident in today’s instantaneously competitive, globally predatorial, and winner-take-all business (transaction) environments.

For even what may be ostensibly well managed early stage companies, asset monitoring and safeguard practices must go beyond ‘mba light’ takeaways because absent such attention, asset vulnerability and criticality will rise beyond being a mere probability to inevitability!  In other words, the probability an early stage company, especially those embedded with particularly innovative, commercializable, and possibly dual-use intangible asset rooted technologies will have one or more of the above risks materialize, elevates.

Understandably, it’s often tempting for early stage company decision makers, to focus their time, attention, and limited resources on what may appear, at the time, to be more immediate concerns such operations, management, raising capital, marketing, and commercialization issues. The reason, the latter largely represents the conventional, sole, and time-honored path to successful startup, while the stewardship, oversight, and management of key, foundational intangible assets beyond patent filings or trade secrecy requisites frequently remain mis-portrayed as unrecoverable costs and elusive initiatives versus on-going fiduciary responsibilities.

Equally unfortunate, some early stage company management teams presume a patent application, provisional, or issuance are sufficient (stand alone) forms of protection and/or deterrence, something which I refer to as the ‘patent and walk away’ syndrome.

This contributes to making most any delay in or reluctance to execute relatively simple, yet absolutely necessary asset value – competitive advantage preservation safeguards as risks which elevate the probability that economic – competitive advantage risk will materialize.  Too, absent the presence of value and competitive advantage safeguards, options for legal recourse will be limited. Collectively, this positions early stage companies to lose everything their principals have worked so hard to achieve, particularly in this ‘winner-take-all’ global business – market entry environment.

As always, reader comments are welcome and respected.

Reputations’ risk of risks, the holiday retail season!

November 28th, 2014. Published under Reputation risk.. No Comments.

Michael D. Moberly    November 28, 2014    ‘A blog where attention span really matters’!

I suspect the economic fact (business reality) that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, competitiveness, and sustainability lie in or evolve directly from intangible assets may have been, at least, one factor to influence The Economist’s Intelligence Unit (EIU) to produce a ‘global risk briefing’ paper titled Reputation: Risk of Risks. www.eiu.com/report_dl.asp?mode=fi&fi

Obviously, reputation is a highly prized and increasingly acknowledged as a valuable (intangible) asset which, not so coincidentally, a high percentage of respondents to the EIU survey conveyed, i.e., ‘sustaining a positive company reputation is a main concern for risk managers’, exceeding, for example…

  • regulatory risk
  • human capital risk
  • IT network risk
  • market risk, and
  • credit risk.

In the U.S., ‘risk to reputation’ is akin to a fiduciary responsibility that prudently extends beyond conventional risk management, ala Stone v Ritter, 911 A.2d 362 (Del. Supr. 2006).

Unfortunately, there are far too many examples that suggest a holiday retail season will elevate probability that (reputation) risks will materialize because vulnerabilities will be probed, exploited, and manifest as costly and potentially irreversible reminders of reputations’ fragility and the overnight gestation period for risk materialization.

As always, reader comments are encouraged and respected.

St. Louisan’s Perspective About St. Louis’ Reputation!

November 25th, 2014. Published under Reputation risk.. No Comments.

Michael D. Moberly    November 25, 2014    ‘A long form blog  where attention span really matters’!

A St. Louisan’s perspective about St. Louis’ reputation!

The events of August and November, 2014 have long surpassed merely being a public relations issue which can be remediated and eventually dismissed through boastful and ‘chest thumping’ rhetoric.   The events have now materialized as full blown reputation risks that will be long lasting, costly, and perhaps irreversible.  Perhaps that is the only path to influence policy makers and/or business management teams to first ‘listen’ to citizens or consumers and engage in serious, necessary, and hopefully permanent change!

You pick the city and I’m confident you will find its reputation evolves not from a single asset, rather from an array of predominantly intangible (non-physical) assets which collectively meld together to intellectually and emotionally influence – distinguish our memories, experiences, and feelings that influence residents, visitors, or consumers favorably or unfavorably. Remember the adage, ‘first impressions last a lifetime’.

In other words, a cities reputation is embedded with many different intangible assets, some etched firmly in history, that is, they may flow from long held practices which have become institutionalized or emerge from single or multiple events, acts or behaviors, perhaps in concert that can alter (favorably, unfavorably) one’s previous sentiments or memories.

St. Louis city and St. Louis County, unlike its downriver cousin New Orleans’s, possesses an array of intangible assets upon which its reputation has firmly been laid and continues to be assembled. Arguably, New Orleans’s reputation will forever be rooted in two intangible assets, three property-based assets that deliver many intangibles, and one horrific weather event, i.e., Cajun cuisine and music, Bourbon Street, the French Quarter, the ‘lower 9th ward’, and hurricane Katrina. On the other hand, St. Louis’ and St. Louis County’s racial, cultural, and ethnic diversity are embedded intangibles, more so than designated pieces of real estate, a single cuisine, or it’s newly polished steel structure along the river.

Now, many in this city are resurrecting their memories and veiled sentiments or endeavoring to add their heartfelt voices into the milieu of intangible assets that flow from institutionalized practices which, in some instances, have become documentable injustices. The latter, where and when it exists, has been, by most any objective assessment, negligently tolerated so long as ‘it’s not in my neighborhood’.

There is an important, but often overlooked component to intangible assets, particularly our memories or experiences. If generationally repeated, intangibles are apt to accumulate and fester, as they have in numerous of the 90+ municipalities that comprise St. Louis County, particularly the north city-county real estate which the national and international media do not distinguish, nor perhaps should they. So, what transpired in Ferguson, Missouri in August, 2014 also transpired in the south, east, and west neighborhoods of St. Louis City and St. Louis County.

But, whether it’s a company or a city, a reputation will inevitably lie in interwoven collections of intangible assets which individuals and/or entities do play and have a role as do tragic events. It is here we begin to see some commonalities between reputations’ of cities be they St. Louis or companies like GM, Takata, and BP. In the latter, not unlike the former, we know there were years of culturally embedded neglect and poor, if non-existent mismanagement and turning the proverbial, convenient, and expedient ‘blind eye’, i.e., a culture for doing so!

These culturally institutionalized practices that festered were absent just, sincere, and impartial oversight which we know represent the key factors in the materialization of reputation risks, but not merely emotional rhetoric padded with offers for ‘beginning a conversation’ which frequently translates as quick fixes may on the way, but unfortunately, seldom do they permanently reach the emotionally embedded roots of the complex generational challenges before us.

Individuals and organizations who want to and believe they can make a difference and alter which intangible assets are dominant are also obliged to reflect on how they conceive their strategy to achieve change, i.e., as a conventional ‘public relations’ issue, or a city-county wide reputation risk that continues to adversely affect all citizens of the city and county. Let’s be clear, should anyone elect to interpret/conceive the challenge as the latter, that is a fresh coat of paint can be applied to conceal long standing structural flaws and weaknesses, should continue reading.

Perhaps, one distinction between a public relations issue (problem) and a materialized reputation risk for a county, city, or company for that matter, is the time frame in which a challenge either can and/or will ‘fester and/or exacerbate’ among its residents, consumers, and stakeholders until someone, often a previously voiceless individual, group, or whistleblower effectively articulates the issue and its underliers and is a force to execute the necessary changes. Seldom in my experience in elevating awareness among company decision makers about their reputation risks, are those risks difficult to identify and reveal. The difficulty, as a consultant, comes in reaching agreement they exist and consensus about strategies to achieve permanent change and mitigate the probability for relapse.

But, for government institutions and their leaders who are unaccustomed to listening or trying to understand underliers, to be sure, as a well known individual once suggested and I paraphrase, ‘stupidity occurs when one continues to do the same over and over while expecting different outcomes’. In the circumstance before us, reputation risk to St. Louis city and county has indeed materialized largely because well intended organizations and individuals have continued doing the same thing, but with little or no expectation or hope that change would be imminent.

Using ‘consumer – resident festering time’ as a metric for distinguishing challenge resolution in a public relations context vs. a reputation risk context assumes the players share the capability to genuinely assess – distinguish public relations issues for their near term gravity and criticality, i.e.,

  • through a lens exclusive of the lens of consumers, visitors, prospective investors, and other would be (future) stakeholders, and
  • possess a clear understanding of the various intangible assets which collectively comprise a company or city’s reputation.

Exacerbating problem resolution further is another reality, which is, the various voices and decision makers’ inclination to calculate the already adverse affects in quarterly or quick fix contexts. Let’s think about that. Does anyone believe the challenges that enveloped GM, Takata, or BP fall into a ‘quick fix’ category? I don’t believe so. Quick fixes in companies, and I suspect, cities as well, are seldom permanent, or really very useful unless and/or until there is a strong commitment to ‘listening’ and changing the underlying culture that tolerated and permeated the challenge in the first place. Through my lens, for companies anyway, calculating adverse affects of materialized reputation risks in quarterly – quick fix contexts is certainly more aligned with a public relations patch and not a characteristic of strategic reputation risk thinking, management, or listening.

As always, reader comments are encouraged and welcome!

Public Relations vs. Reputation Risk: When Does The Former Become The Latter?

November 24th, 2014. Published under Intangible Asset Value, Intangibles as strategic assets, Managing intangible assets, Reputation risk.. No Comments.

Michael D. Moberly   November 24, 2014   ‘A blog where attention span really matters;!

Admittedly, having worked almost exclusively on the intangible side of businesses for 20+ years, this question still is not an easy one to answer, nor perhaps, should it.

In part, I suspect, it’s because a company’s reputation is the epitome of an intangible asset, and unfortunately, for far too many company management team members…

  • intangible assets have yet to be operationally integrated into their lexicon.
  • have yet to cross the ever narrowing chasm which distinguishes conventional PR issues and the ‘over night’ rapidity which they can transform into full blown, costly, and irreversible reputation risks.

Perhaps, one distinction between a public relations issue (problem) and a materialized reputation risk is…

  • the time frame in which either can and/or will ‘fester and/or exacerbate’ among consumers, shareholders, stakeholders, and investors to the point,
  • someone, often a previously voiceless individual quantifies its adverse affects – impact to the company’s reputation and articulates the connection.

But, using ‘consumer festering time’ as a metric for distinguishing public relations and reputation risk assumes each company has the capability to correctly assess – distinguish public relations issues for their near term gravity and/or criticality, i.e.,

  • through a lens exclusive of the lens of consumers, investors, and other stakeholders, and
  • possess a clear understanding of the various intangible assets which collectively comprise a company’s reputation.

Exacerbating the issue further is another reality, which is, decision makers’ inclination to calculate adverse affects in quarterly contexts, regardless how an event is being characterized, i.e., as a public relations or reputation risk problem. Through my lens, calculating adverse affects in quarterly contexts is more aligned with the notion of assuming there are quick public relations ‘fixes or patches’ versus more strategic reputation risk management!

As always reader comments are welcome and respected.