Archive for September, 2008
September 25th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, intangible assets. No Comments.
Michael D. Moberly September 25, 2008
I’ve never met a business decision maker yet who doesn’t claim to engage in competitor (business) intelligence. Often, in my experience, such statements are usually prefaced or followed by some blend of rationalization ranging from (a.) everybody does it, to (b.) you’re a fool if you don’t conduct competitor intelligence.
While there is virtually no data regarding the accuracy of such statements, I do suggest, with some degree of experiential certainty, that a significant percentage of businesses do regularly, if not consistently, engage in some form of competitor-business intelligence. I must point out that when I use the word ‘businesses’, I’m not referring only to the Fortune 500’s, but literally to thousands of SME’s (small, medium enterprises) and SMM’s (small, medium multinationals) as well. While their collection techniques and assessments may not be as sophisticated, analytical, or strategically oriented as those conducted by (a.) large corporations, or (b.) the countless private (independant) competitor intelligence firms operating globally, they still usually provide SME – SMM decision makers with useable insights (prognostications about the plans, intentions, and capabilities of their competitors, i.e., what they are doing, have done, or, are about to do!
I have researched and studied (domestic and international) competitor intelligence operations for many years and addressed numerous audiences on these issues, admittedly largely on countermeasures, that is, how to mitigate the potential adverse affects of competitor/business intelligence. Simply stated, I found the adverse affects (of competitor intelligence) usually materialize in one of four ways, that is, the purpose, intent, and/or objective is to (a.) undermine, (b.) erode, (c.) stifle, or (d.) get ahead of a competitors’ initiatives, competitive advantages, market position, or strategic planning.
Any company’s efforts to counter or mitigate the potential, but, very real, adverse affects of competitor intelligence absolutely begins with understanding its intangible assets. This means recognizing that intangible assets comprise increasing percentages, as much as 65+%, of most company’s value and sources of revenue and future wealth creation. In other words, intangible assets constitute the ‘drivers’ of that value, revenue, and future wealth creation which is precisely what competitor-business intelligence operatives are seeking, whether, I might add, they actually realize it or not!
Michael D. Moberly September 19, 2008
Studies and experiential evidence continue to mount insofar as identifying new twists, nuances, and motives regarding insiders’ inclination to engage in theft, misappropriation, leakage, and/or compromise their employer’s proprietary information, know how, intellectual property, and/or trade secrets which, when it occurs, will, with increasing certainty, have costly and often times irreversible consequences.
In my judgment, companies are now obliged, perhaps more than ever before, to literally re-think those elements of their (enterprise-wide) information security policies that address risks – threats posed by insiders that unfortunately, and all-too-frequently, begin and end shortly after an employee is hired. Companies are further obliged to recognize that periodic (post hiring) monitoring of employees, not solely focused on their IT – computer (system) usage and/or access, but also include their psychological – behavioral (a.) propensity, (b.) proclivity, and/or (c.) receptivity to engage in adverse acts and/or policy violations that expose a company’s extraordinarily valuable and revenue producing information-intangible assets to compromise, theft, misappropriation, or infringement, etc. Of course, any such initiatives must be (d.) respectful, (e.) legally defensible, and (f.) culturally compatible with the increasingly diverse work force which is the norm for globally operating companies.
The importance of addressing the risks – threats presented by insiders is elevated, again, in my judgment, due to the economic fact – business reality that today, increasing percentages, as much as 75+%, of most company’s value, sources of revenue, and future wealth creation lie in – are directly linked to intangible assets, that is, its IP, proprietary information and know how, etc., each of which are knowledge based, originated, and built.
As a company’s (g.) profitability, (h.) sustainability, (i.) global market position, and (j.) future wealth creation are increasingly and inextricably linked to those information (intangible) assets, the will and resources necessary to appropriately and effectively address the significant and persistent challenges presented by insiders should become a routinely visited – monitored fixture on every security managers’ dashboard and every company’s c-suite agenda!
Michael D. Moberly September 10, 2008
Not infrequently, I find that strategic planning tends to (a.) focus predominantly on a company’s external environment, and (b.) see all things tangible. My point is this; conventional strategic planning templates often overlook – do not fully address a company’s internals’, more specifically, its intangible assets. That is, coventional strategic planning may not include processes to (1.) identify them, (2.) unravel them, (3.) value them, (4.) leverage them, (5.) position them, (6.) sustain (protect, preserve) their control and ownership, or (7.) strategies to extract value from them!
Strategic planning, after all, is about articulating a clear and practical vision about where a company ‘wants to be’ at some future point, typically, three to five years. Strategic plans describe ‘action steps’ to achieve those goals and vision, along with an assessment of the resources (human, capital, material) necessary to achieve the plan.
Today, business decision makers should be hard pressed to argue intangible assets are not relevant to strategic planning and should also find their exclusion disconcerting, especially in light of the economic fact – business reality that steadily rising percentages, as much as 75+%, of company value, sources of revenue, and future wealth creation lie in – are directly linked to intangible assets, i.e., intellectual property, proprietary information/know how, competitive advantages, trade secrets, goodwill, image, brand, etc.
Of course, the importance of factoring-considering value laden – revenue producing intangible assets in strategic planning processes has been substantially elevated, in the form of fiduciary responsibilities, as emphasized (mandated) by Sarbanes-Oxley and FASB (141, 142).
My experiences suggest however, that far too often, strategic plans overlook (neglect) the inclusion of intangible assets, i.e., the role and contributions (intangibles) make to successfully achieving and/or exceeding the plan’s goals and objectives in both near and long term contexts.
A key and necessary action step in strategic planning is conducting an intangible asset assessment. An ‘intangible asset assessment’ is an efficient, methodical, and company specific process to identify, unravel, and value, those assets in a manner that brings (business) insights and clarity to their identification, production, utilization, positioning, leveraging, as well as ways to extract value. (Please see other posts on these subjects.)
Michael D. Moberly September 6, 2008
Recently, I attended, what I presumed before hand would be, just another standard presentation by a ‘security product vendor’. That is, a spokesperson would espouse the superiority of their product, its compatability – interoperability with other (existing) security systems, availability of technical support, and ultimately, its ease of installation. However, this vendor presentation was atypical for two reasons.
First, the vendor was the actual inventor, designer, and ‘test engineer’ for the product. While this is not uncommon, particularly in the security products/devices field, in this instance, the vendor held multiple advanced degrees and explained (articulated) the product with a high degree of authority, candor, and experiential knowledge that conveyed credence and validity. Also, the vendors’ demeanor and mannerisms, insofar as describing his product, were almost totally void of traditional ‘sales’ techniques that, far too frequently, include the proverbial worst case (hand-me-down) scenarios and/or anecdotes, which are presumably used to convey the all important sense of urgency. In addition, and wisely so, as it turned out, a current user of this product volunteered to be present to provide verfiable examples of the products’ features, usage, and benefits.
Second, but perhaps, more importantly, as I was observing and listening to this presentation, I was literally framing it in intangible asset contexts. That is to say, I was focusing on the array of ‘intangible assets’ that this product could actually produce and deliver to the various facilities and environments where it would be deployed. In other words, when this product is introduced, if (a.) the vendor understands how to respectfully highlight each of the products’ features, and (b.) the user understands each of those features and permits all of them to be fully executed, it could genuinely contribute, in addition to safety and security, to a facilities’ image, goodwill, reputation, competitive advantages, and sustainability, among others.
Interestingly, and most respectfully, while both the vendor and the user, in this instance, extemporanesouly recited numerous examples of the products’ usefulness, neither characterized that usefulness in the context of intangible assets. To be sure, this is not unusual, nor does it convey disrespect to the vendor or the user.
It does however, perhaps suggest something about the strategies, or, so-called ‘business cases’ many security decision makers endeavor to build to justify purchasing new – additional security products (hardware, software). It may also perhaps suggest something about prospective clients (i.e., the buy – don’t buy decision makers’) of security products. That is, they (a.) hold mis-perceptions about what an about-to-be purchased security product can/will deliver, and (b.) are inclined to characterize those deliverables in tangible (vertical, silo) contexts, i.e., prevent crimes, catch ‘bad guys’, etc.
Today perhaps, all parties would benefit from recognizing – factoring the intangible (business) contexts that security products can produce – deliver (horizontally speaking) i.e., enhancing and contributing to image, goodwill, reputation, deterrence, competitive advantages, and sustainability!
Let’s cut to the chase, business decision makers need to know more about their company’s intangible assets!
Michael D. Moberly September 3, 2008
Going way, way back to 2004, Accenture commissioned a survey conducted by the Economist Intelligence Unit in which ‘senior executives from companies around the world were asked to share their views on the management of strategic assets, both tangible and intangible’. Not surprisingly, 94 of the 120 respondents said that ‘managing intangible assets and/or intellectual capital is an important management issue’. But, despite this, 95% of the respondents said (in 2004) they ‘do not have a robust system in place to measure the performance of intangible assets, with 33% saying they ‘had no such system in place at all’ even though, nearly half of the respondents said that ‘the stock market rewards companies that invest in intangible assets’.
So much for the superlatives! While I recognize, and, to be sure, respect each of those executives’ emphasis on measuring the performance of intangibles, perhaps equal emphasis should be placed, up front, on aiding business decision makers along with their boards, officers, and business unit managers to (a.) recognize precisely what intangible assets really are, i.e., how to identify, unravel, and approximate their value, (b.) the various roles – contributions intangibles make to a company’s overall value, revenue, and future wealth creation, in other words, its image, goodwill, reputation, brand, relational capital, and equally important, its sustainability and profitability, and (c.) bringing greater business and economic clarity to a company’s intangible assets in terms of how they can best be utilized and leveraged along with strategies to extract as much value as possible.
Two additional, and perhaps larger points are worthy of making. The first is this; intangible assets are not the sole province of large, multi-national corporations. Rather, intangible assets are truly embedded in most every company, ranging from start-ups and spin-off’s to SME’s (small, medium enterprises) to mature, as well as, maturing firms. Intangible assets have little, if virtually nothing to do with a company’s size. It’s truly not a case of ‘size counts’! Rather, it’s a matter of business decision makers really recognizing what intangible assets their company possesses, produces, and/or has acquired.
And secondly, most issues today related to – affecting a company’s intangible assets have moved from merely being voluntary (I’ll do it if I have time) to truly constituting a fiduciary responsibility!
For the still skeptical, I’m hopeful your time will permit you to assess numerous other posts at this blog.
Michael D. Moberly September 2, 2008
A key and essential starting point, insofar as conceptualizing a company’s information asset protection policy, is to ensure it is framed in a manner that reflects the real goal-objective, that is, to sustain (protect, preserve) control, use, ownership, and value of knowledge-based, and largely intangible assets which include intellectual properties.
By framing the policy in this context, it gives recognition and credence (company-wide) to the economic fact – business reality that today, 65+% of most company’s value, sources of revenue, sustainability, and future wealth creation lie in – are directly linked to proprietary know how and information, intellectual property, competitive advantages, brand, reputation, goodwill, etc., which of course, are forms of intangible assets! And, if those assets’ control, use, ownership, and value are not sustained (protected, preserved), the alternative (consequence) is seldom favorable.
In too many instances, company information asset protection policies, practices, and procedures are (a.) too narrowly framed – categorized in sometimes confusing military (DoD oriented classification contexts, i.e., sensitive, confidential, secret, top secret, etc., (b.) are likely to be (heavily) influenced, if not substantially written by an IT unit which embeds the policy with an over-riding IT security orientation, and (c.) may have little or no recognition that proprietary information (i.e., a company’s trade secrets, IP, know how, competitive advantages, etc.) exist in formats or contexts other than electronic bits and bytes.
Information asset protection policies composed with a dominant IT orientation and absent a broader – inclusive intangible asset context result in minimizing, if not undermining, the larger and more important policy message, which is, all employees, not merely those in a company’s IT (security) unit, have an individual and collective responsibility (role, contribution) to safeguard their company’s proprietary information, regardless of the context or format that information exists!
Today, a company’s information asset protection policy should be a collaborative and cross-functional initiative, one that expressly conveys the reality that valuable, proprietary know how is not the exclusive domain of a single business unit, i.e., IT, R&D, legal, or manufacturing, etc. As most practitioners realize, proprietary and sensitive business information (that produces and delivers value, revenue, competitive advantages, brand integrity, goodwill, etc.) often percolates throughout a company and is not strictly confined or limited to what one can access through their laptop or desktop.
To be sure, an information security policy that infers, through a dominant IT orientation, that all valuable, important, and proprietary (company) information (a.) evolves from, (b.) is stored in, and/or (c.) is backed-up in the IT system, can inadvertently provide employees with the assumption that if the company’s IT system is proclaimed to be secure, then the company’s proprietary information is likewise secure; an assumption company’s literally can’t afford to convey.
For the unconvinced, try listening to cell phone conversations in hotel lobbies and airport lounges, or glance at the laptop screen of the person seated next to you. I’m sure you will find that all valuable proprietary information really doesn’t exist exclusively in electronic bits and bytes!
Michael D. Moberly September 1, 2008
With all things intangible, as always, the starting point remains the same, that is, it’s essential for business owners and decision makers to recognize the indispustable economic fact – business reality that today, 75+% of most company’s value, sources of revenue, and future wealth creation lie in – are directly linked to intangible assets, i.e., intellectual property (IP), proprietary know how, competitive advantages, goodwill, reputation, brand, etc.
An intangible asset assessment is not merely a ‘warmed over’ (generized) version of an IP audit. Rather, an intangible asset assessments’ primary objectives are to…
1. serve as an efficient, methodical, and company specific procedure to identify, unravel, value, and ultimately bring (business) insight and clarity to a company’s intangible assets, i.e., utilization, leveraging, extracting value, and
2. objectively identify any gaps – disconnects that may exit relative to what’s necessary to sustain (protect, preserve) control, use, and ownership of those assets throughout their respective functional – life/value cycle.
In other words, an intangible asset assessment brings to the surface – sheds light on a company’s underlying, and, what I often refer to as its, real sources – drivers of value, revenue, and competitive advantage.
As a procedure, I advocate that an intangible asset assessment should not rigidly adhere to a preconceived or generic template, rather, the assessment should include protocols that are sufficiently flexible to reflect (identify, unravel) each company’s nuanced circumstances and the various contexts – formats in which its intangibles’ exist, including those produced and used internally, as well as, those acquired externally.
There are three additional objectives to be achieved when conducting an intangible asset assessment:
3. objectively identify and mitigate risks-threats that elevate the vulnerability of those assets to circumstances that are known to ensnare and/or entangle them in costly, time consuming, and momentum stifling legal challenges and disputes that can undermine and/or erode their value and competitive advantages…
4. objectively align the assets with the company’s core competencies, mission, and business strategy (vision)…
5. objectively identify practical and efficient strategies to better utilize, leverage, and/or bundle the intangibles to lay a strategic foundation for extracting as much value as possible from them!
Remember, the value, sources of revenue, and future wealth creation attributed to intangible assets, for most companies, ranges from 40% to as as high as 90+%!