Archive for January, 2009
January 31st, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Insider Threats. No Comments.
Michael D. Moberly January 31, 2009
It’s a wake-up call for companies globally, that is, it’s essential to ‘shift their mindsets in the way they value (their) intellectual property’ and, I might add, that mindset shift should also include their intangible assets, competitive advantages, and proprietary information. The fact that 70+% of most company’s value, sources of revenue, and sustainability are directly linked to intangible assets and IP is, slowly being recognized – accepted by c-suites as both an economic fact and business reality. In other words, information assets are ‘becoming firmly established as an (the) international form of currency’.
But, to exacerbate the situation, ‘traditional operational boundaries of organizations are (literally) disappearing’, that is, ‘information assets are subject to various jurisdictions, infrastructures, and cultures, including those of suppliers and partners’. These trends are ‘making it more difficult to lock down IP in order to ensure its safety’.
Despite these well grounded concerns, as reported in McAfee’s study, but well known among information asset protection professionals, ‘many companies continue to leave themselves open to exploitation and attack because they don’t realize (1.) the value, and (2.) location of their IP’. Let me emphasize to the readers how unfortunate this particular finding really is. As consistently reported in this blog, it’s an undisputed economic fact – business reality that increasing percentages (ranging from 60% to as high as 90+% depending on the type of company) of (a.) company value, (b.) sources of revenue, and (c.) future wealth creation (sustainability) lie in intangible assets and IP. For c-suites, not knowing either the value or the location of the dominant sources of their company’s value, revenue sources, or sustainability speaks volumes about what may be in the offing.
Michael D. Moberly January 14, 2009
A key, in my judgment, for successful venture capital initiatives, is balancing the attention given to putting in place experienced management teams (in an invested firm) with ensuring control, use, ownership, and value of the invested intellectual property (IP) and intangible assets is sustainable.
Achieving that balance begins with a genuine recognition that a well constructed (IP, intangible asset) assessment and due diligence process will provide investors (VC’s) with current and objective pre/post deal insights and perspective that can serve as the foundation for facilitating (consumating) a more secure, profitable and sustainable transaction, not impede it!
Investors need relevant, insightful, and forward looking (over-the-horizon) perspectives that go well beyond mere ‘snap-shots-in-time’, i.e.,
1. about embedded, under-the-radar risks, vulnerabilities, and operational – usage complexities that may impair and/or entangle assets that could become preludes to costly and time consuming legal disputes and challenges.
2. to identify and unravel any additional (internal) centers (chains, clusters) of valuable, leveragable, and potentially revenue producing intangible assets and competitive advantages beyond what is espoused (boasted) publicly, and
3. to identify (invested) asset protection and value preservation measures that are aligned with (a.) the investers’ objective, (b.) the company’s strategic business plan, and (c.) the functional (life, value) cycle of the invested assets.
A key focus of the assessment – due diligence process is to identify, unravel, and mitigate circumstances that can adversely affect the company’s and VC’s ability to sustain control, use, ownership, and value of the invested assets.
It is not uncommon for 75% to 90+% of start-up – early stage firms’ value, sustainability, projected sources of revenue, and future wealth creation potential lie in – are directly linked to their IP and intangible assets. If an assessment-due diligence reveals any of the key assets are suspect, impaired, or have been compromised, the investment may warrant reconsideration and/or inclusion of specific (risk mitigation – transfer) covenants before going forward. Under such adverse circumstances, its unlikely that a management team alone, regardless of their experience and skill, can fully overcome or reverse such asset transgressions absent costly, time consuming, and momentum stifling legal challenges!
January 9th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications. No Comments.
Michael D. Moberly January 9, 2009
Here’s an interesting analogy, dichotomy if you will, relevant to product counterfeiting and piracy. Presumably most sports fans (consumers), with the notable exception of followers of so-called ‘professional wrestling’, deeply care about player – contest (sporting event) authenticity. By authentic, I mean, fans prefer contests to be a genuine battle of tactics, skills, and physical ability and free from player use of performance enhancing drugs, incompetent referees, points shaving scams, and/or players betting on outcomes, etc.
Its quite possible however, that a significant percentage of those ‘consumers’ (sports fans) may not convey or share the same sense of concern about the ‘authenticity’ of products or services they purchase and may willingly and knowingly seek and purchase knockoffs, counterfeits, and pirated products. I realize that for some readers this may be interpreted as one of those ‘apples and oranges’ comparisons. But, I don’t think so, and here’s why.
There is growing evidence, albeit anecdotal in most instances, that consumer indifference is elevating regarding the purchase – use of certain categories of products in terms of whether they’re authentic and legitimate, or infringed, counterfeited, and pirated.
For companies with intensive – valuable portfolios of IP, intangible assets, and competitive advantages that are regularly spending large sums to protect and defend their brands, IP and use rights, the broader and perhaps irreversible challenge (consequence of the recession) may come when consumer (brand, product) loyalty, exacerbated by the recession, declines further to the point that concern (care) whether a product or service is ‘fake’ becomes secondary to cost.
Of course, when-if this occurs on a large scale, it will surely and adversely affect a company’s value, revenue, and sustainability. And, interestingly the cause won’t be attributable to any of the conventional risks or threats to reputation or brand integrity, rather merely a reflection (consequence) of changes in consumer attitudes toward spending. And, I fully expect that the well organized global product counterfeiting and piracy industry has already ‘geared up’ to accommodate those consumers so inclined.