Archive for April, 2009

Company Culture For Intangible Assets…

April 22nd, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, Intangible Asset Value. No Comments.

Michael D. Moberly    April 22, 2009

 

It Makes Good Business Sense…!

Why does it make good business sense for companies to devote time to developing a ‘company culture’ that recognizes, produces, and sustains control, use, ownership, and value of its intangible assets?  Perhaps the biggest reason is because, even in the midst of this recession, it remains a business reality – economic fact, that 65+% of most company’s value, sources of revenue, and sustainability lie in – are directly linked to intangible assets!

 

Why then, do so many decision makers continue to express unwillingness to (a.) learn more about intangible assets, and (b.) put forth the effort to build an internal (company) culture that effectively and efficiently exploits its intangible assets?  Typically, the reasons decision makers are reluctant to engage their intangible assets are that they (the intangible assets) (a.) lack physicality, (b.)  don’t appear on company balance sheets, (c.) tend to fall outside conventional ‘mba’ precepts for business decision making, and (d.)require ‘outside-the-box’ thinking to identify, unravel, position, leverage, monetize, and extract value.

 

What’s a good starting point…?

A good starting point is to examine Dr. Edgar Schein’s work (on company cultures) in which he points out that a company culture begins when c-suites, business units, and employees collectively recognize there is a ‘learning outcome’ when they confront, engage, and solve (company) problems, i.e., the efficiencies, competitive advantages, and new knowledge that follows from solving problems and the value incurred to a company from those efficiencies, competitive advantages, and new knowledge.  These intangibles should be identified, unraveled, assessed,  positioned, leveraged, and exploited to maximize and extract value rather than going unrecognized, dismissed, or perhaps worse, unmeasured and unvalued!

 

Another good starting point is recognizing that the ’knowledge economy’ is a reality, not merely a cliché relevant/applicable only to Fortune 500 and intellectual property (IP) intensive firms. 

 

So, what’s the ultimate objective…?

The ultimate objective for decision makers’ putting forth the effort to build an enduring company culture, that actually recognizes, produces, and sustains its intangible assets, is to achieve a shared and intertwined set of (a.) characteristics, (b.) beliefs, (c.) assumptions, and (d.) behaviors about intangibles that will underlie and guide company’s and their business units in their strategic business planning.

So how will an intangible asset oriented company culture deliver returns…?

The answer is, the point in which decision makers observe:

employees expressing – manifesting the newly acquired ‘culture’ as being valid and worthy enough to be taught to new employees as representing the correct (best, most effective, efficient) way to (a.) perceive, (b.) think, and (c.) feel in relation to addressing new, as well as routine problems and challenges (both internal and external) that a company and/or its business units face.

So, why is an intangible asset focused ‘company culture’ important today, right now…?

It’s because it (an intangible asset oriented company culture) is a good and effective vehicle to elevate company-wide awareness for the relevance and importance of the real sources (influencers) of company value!  An intangible asset focused company can also serve as a catalyst for internalizing strategies and incentives to begin monetizing the dominant sources of company value, revenue, and sustainability away from tangible (physical) assets to intangible assets!

Designing and executing a ‘company culture that’s focused on intangible assets requires decision makers to initially determine – assess:

1.      What attitudes and beliefs need to be established that will effectively lend themselves to producing, recognizing, and sustaining control, use, ownership, and value of a company’s intangible assets?

2.      How those attitudes and beliefs will be translated-communicated to and by employees, business units, c-suites, and boards to ultimately manifest themselves as consistent best practices (training, policies, procedures, etc.) relative to the stewardship, oversight, and management of the company’s intangible assets?

Bunn and Water revive the adage that a good corporate culture is comprised of (a.) 20% equipment, and (b.) 80% people.  That said, it’s important to recognize that the best practices, policies, procedures, regulations, and standards, cannot compensate for apathy or conceptual dismissiveness about intangibles!

And, as repeatedly conveyed by Dr. Ken Jarboe, there are several factors considered by financial markets and presumably (would be) buyers and sellers of intangibles with respect to determining the ‘suitability’ of an intangible asset, one of which is whether it is transferable?  In other words, is a company’s culture (and its intangible assets) so specific to that company, industry, and/or geographic locale, that it can’t be replicated or sustained through a market change or significant economic downturn, i.e., recession?

Protecting University IP and Research…

April 17th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, University R&D. 1 Comment.

 Michael D. Moberly    April 17, 2009    (Part 3 of 3 part post)

 

 

 

Should Colleges and Universities Care?

 

In the ‘global (business – transaction) economy no longer is there any practical or useful distinction between national economic relations and international economic relations.  Most national economies, like that of the U.S., are no longer islands where domestic preferences alone dictate outcomes.  (Sean Gregory and William Warner)

 

Similarly, the perception that university-based research is removed from all worldly concerns, vulnerabilities, and threats e.g., misappropriation, infringement, economic espionage, targeting by adversary (terrorist) organizations, etc., belongs more to wishful thinking than reality. 

 

Legislation in the late 1980’s and early 1990’s (Cooperative Research and Development Agreements – CRADA’s, etc.) prompted significant interest in commercializing academic (university-based) research.  Researchers and scientists were encouraged to collaborate with (private) industry to speed the transfer – commercialization of ideas from academia to the marketplace, particularly new technologies with dual-use capabilities to, among other goals, ensure the intellectual resources developed within university research communities would contribute to U.S. economic competitiveness.  (Is Science For Sale?: Transferring Technology From Universities to Foreign Corporations.  Report by the Committee on Governmental Operations. October 16, 1992. House Report 102-1052)

 

Today’s goods and services though, frequently demand such high technology content to remain competitive, that fewer companies can afford full, vertical integration and mastery of all the technologies required for inclusion and ultimately, manufacturing.  One outcome is a marked increase in alliances, consortiums, and collaborative relationships between universities and corporations globally.  Collaborations on this scale and at this level are not only a result of today’s highly competitive, go fast, go hard, go global environment, they’re also actively shaping the competitive arena in many industries.  Such collaborations, alliances, and consortiums have evolved into competition in a different form!

 

Another outcome is that a growing number of universities are becoming more ‘entrepreneurial spirited’ in terms of their interest (receptivity) to consider – pursue new collaborative opportunities to secure research support. (M. Moberly)   As reported by the Association of University Technology Managers (AUTM), the growth in academic technology transfer is having a positive impact.  Companies are investing in technologies licensed by academic institutions.  This investment yields jobs and economic growth, and the resulting products benefit the public and the communities in which the universities reside.  In some instances, the royalties generated can (a.) provide incentives to inventors (researchers, scientists), (b.) contribute to reimbursing the institutions’ considerable (technology transfer) costs, e.g., patenting and licensing, and (c.) be reinvested in research and teaching, thus ensuring future advances are more probable.

 

Initiatives like this, also present new challenges and even some vulnerabilities for some universities relative to the shareability and accessibility of university developed research, e.g., know how, intangible assets, and intellectual property.

 

It’s not the intent of this post to advocate controls be placed on the communication or collaborative arrangements of university-based scientific research in a manner that would unnecessarily undermine the principles of academic freedom and open scientific communication. 

 

It is the intent of this post however, to encourage the inclusion, in future debates in which open scientific communication and academic freedom are debated; the existence and adverse effects of technologically sophisticated, aggressive, predatorial and global competitor-economic intelligence and terrorist organizations’ interest in acquiring not only economic information and science for competitive advantage, but dual-use technologies as well…

 

By encouraging this element be included in future debates, it should prevent some to wrongfully characterize this post as a:

 

           protectionists ’ attempt to influence debate about scientific communication in favor of exerting – imposing greater controls, or

 

          subterfuge by private R&D firms to exploit or legitimize their growing influence over research agendas in universities, or even

 

          poorly disguised attempt to ride the wave of domestic (homeland) security initiatives and rhetoric following the terrorist attacks of September 11th.

 

Any such interpretation would be naïve and short-sighted and certainly a disservice to any future discussion about open scientific (university) communication if the proliferation (adverse effects, impact) of competitor and economic intelligence and various elicitation-solicitation practices were not fully considered (factored).

 

In the final analysis, this issue may have little, if anything, to do with secrecy or an institution’s well intentioned desire to sustain and continue to foster scientific openness on behalf of its researchers and scientists.  Rather, the issue will certainly evolve around (a.) personal privacy, (b.) professional attribution, (c.) sustaining control, use, and ownership of the intellectual property rights and (proprietary) competitive advantages, and perhaps most importantly, (d.) keeping military-defense related advances and technologies out of the hands of (economic, competitive, terrorist) adversaries.

Protecting University IP and Research…

April 16th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, University R&D. No Comments.

Michael D. Moberly    April 16, 2009    (Part 2 of 3 Part Post)

Open scientific communication and university research has traditionally been a two-sided debate.  On one side stood those who argued that open scientific communication has resulted in a net flow of scientific and technical information to other countries including economic adversaries, and competitors.  Those favoring less openness by imposing controls and/or limitations sought stronger national security policies to safeguard that scientific knowledge, innovation, and subsequent discoveries.

On the other side of the debate stood those who expressed concern that imposing (any) controls and/or excessive constraints on the open, unfettered flow of scientific information within and between university research communities, in the name of national security would (a.) adversely affect the overall operational environment of institutions, (b.) contribute to reducing incentives for innovation that bring R&D findings to new markets, and (c.) make it harder to repeat or confirm research findings (outcomes, results).

Proponents of openness also argue that science is best served (advanced) through openness (transparency) and broad critique which to expose weaknesses, flaws, identify necessary improvements, or even total rejection.  This can only occur, proponents of openness suggest, by upholding the principles of academic freedom which, of course, favor unfettered sharing – dissemination of research methodologies and findings.

In 1982, former Deputy Director of the CIA, Admiral Bobby Inman aptly characterized the situation in the following manner, which still has relevance today; ‘there is an overlap between technological information and national security which inevitably produces tension.  This tension results from scientist’s desire for unconstrained research and publication on the one hand, and the federal government’s need to protect certain information from potential adversaries who might use that information against the U.S.  Both are powerful forces.  Thus, it would be a surprise that finding a workable and just balance between them is quite difficult”.

Quite correctly, university’s have a societal role to encourage the creation and dissemination of knowledge and research.  Progress in science is generally premised on the free, open exchange, and widest possible sharing.  Achieving a consensual (practical, viable) balance between sustaining ‘openness’ and imposing ‘controls’ on research products’/findings is a worthy objective, especially today as (a.) the life-functional (value) cycles of knowledge-based assets is increasingly abbreviated, and (b.) the traditions of open scientific exchange are being challenged by (1.) advancements in technology, (2.) a truly inter-connected global economy, and (3.) legacy free players with differing perspectives and respect for intellectual property rights and how to gain economic – competitive (and military/defense) advantages and market dominance.

Are the traditional arguments still relevant and what’s needed to advance the two-sided debate?  This post is not intended to merely rehash the time-honored and polarizing positions, nor does this post intend to portray this important issue narrowly as if there are only two sides, nor does this post wish to pit those favoring controls on scientific communication against those seeking to retain complete and unfettered openness.  At minimum, the traditional for – against debate has become blurred, increasingly complex, and perhaps obsolete!

Continuing to frame university research and open scientific communication in narrow, two-sided contexts:

1. does little to advance the discussion beyond its 16th century origins when academics sought independence from church doctrine in terms of their study and research.

2. neglects to consider the adverse impact-effect of the proliferation of ultra-sophisticated, aggressive, and globally predatorial state-corporate sponsored economic and competitor intelligence operations.

3. overlooks the fact that most government sponsored intelligence agencies have included acquisition of economic – business intelligence and public/private/government research as integral elements of their tasking.

4. does not recognize the economic fact – business reality that 65+% of organization – institution value, potential sources of revenue, and future wealth creation (sustainability) today lie in – are directly related to intangible assets and intellectual property.

 

Protecting University IP and Research…

April 15th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, University R&D. 1 Comment.

Michael D. Moberly    April 15, 2009     (Part One of Three Part Post)

“Without an appreciation of the larger shifts that are restructuring our society, we act on assumptions that are out of date. Out of touch with the present, we are doomed to fail in the unfolding future.” – James Naisbitt, Megatrends

This post is not about keeping innovation and science out of the public domain! Rather, it’s about protecting and preserving intellectual property rights and keeping dual-use technologies out of the hands of adversaries. Predatorial data mining technologies, legacy free players and winner-take-all intelligence operations makes university-based ideas and innovation (R&D) vulnerable to compromise, theft and infringement at their earliest stage of development.

Open scientific communication and university research are deeply rooted in the hard fought and time honored principles of academic freedom which still spark emotional and polarizing debates anytime controls or impediments to either are proposed or implied.

This post does not examine open scientific communication in a conventional ‘academic freedom’ context. Rather, it considers the prudence of strictly adhering to those (academic freedom) traditions and principles without any regard for (factoring) the ever growing complexities and intertwined interests, not too mention, the vulnerabilities associated with a nanosecond, globally connected R&D environment in which attribution and intellectual property rights are being routinely outpaced, circumvented, and eroded.

National debates about applying controls to university scientific communication emerged initially (in modern times) in 1945 and again, in the early 1980’s. In each instance, the National Academies played a key role. But, in the aftermath of the terrorist attacks of September 11, 2001, the debate emerged again with the Center for Strategic and International Studies (CSIS) serving as a moderator – facilitator to those serious discussions and debates.

Over the years, in each instance in which scientific controls vs. scientific openness were being debated nationally, the government, under the name of national security, sought (desired) to impose restrictions (controls) on the communication and dissemination of scientific research originating (developed) in U.S. universities. Consistently, the government’s chief concern has been, and continues to be for the most part, that because of their ready (largely open source) access to technical material and innovation evolving from pre-patented and/or pre-classified university research, certain foreign nations (and, foreign nationals) are gaining economic and military/defense advantages that can impair – undermine U.S. national security and further diminish the U.S.’s ability to compete commercially, not too mention, a university’s standing, reputation, image, and goodwill.

The traditional two-sided debate about university research, i.e., controls vs. no controls, has taken on additional and more complex dimensions…As increasingly sophisticated IT systems and their PDA (personal data assistant) counterparts permit unfettered, instantaneous, at will, global communication and collaboration, one outgrowth is that the traditional two-sided debate about university research, i.e., controls vs. no controls, has taken on additional and more complex dimensions, for example…

– Decisions about when, where, and the circumstances in which the product of research (private, government grants, etc.) are disseminated have become blurred and increasingly risky. This is especially relevant if the originator of that research has a personal or professional interest in sustaining control, attribution, use, and ownership (IP rights) to his or her scientific work products/research.

– Know how, intangible assets, and intellectual property has outpaced tangible (physical) assets as the dominant source of value, revenue, (future) wealth creation and instituion sustainability and routinely comprises 65+% of an organization’s (company, institution’s) market value.

– Sophisticated and predatorial open source data mining technologies aligned with global commercial (business, competitor) intelligence operations now render ideas and innovation vulnerable to compromise, value – competitive advantage dilution and/or infringement at their earliest stages of development and well before conventional forms of IP are applied or provide legal standing for recourse.

The fact that university-based research is of interest to (specifically targeted by) global (public, private, government) intelligence collection entities is not new. Unfortunately, some institutions still trivialize its impact and lean toward dismissing it as another government initiative to impede (or, apply controls to) university research and scientific communication that, according to opponents, would, in effect, keep beneficial science out of the public domain – consumption.

Those expressing opposition or skepticism about government controls on open scientific communication often use some form of the following argument to present their opinions ‘…in today’s highly advanced R&D environment, there is little need for anyone (economic adversaries or competitors) to surreptitiously or otherwise disguise their intent to access (target, collect) R&D-related data and information because it’s often readily accessible, sometimes merely for the asking or through commercial (publicly available, open source) data bases and information sources. Or, interested parties can merely wait until the results/findings are published or presented at professional association seminars, or posted on researchers’ websites…’ (Moberly, 2009)

Intangible Assets In Business Transactions

April 14th, 2009. Published under Business Applications, Intangible Asset Value. No Comments.

 Michael D. Moberly     April 14, 2009

Business transactions are no longer (exclusively) shaped by the flow and/or exchange of physical goods and services, e.g., tangible assets. Rather, most business transactions are initiated and evolve around the flow and exchange of intanigble assets, e.g., proprietary, competitive advantage information and intellectual property (IP).

Why is this?, because its an economic fact – business reality that 65+% of most company’s value, sources of revenue, sustainability, and future wealth creation lie in – are directly linked to intangible assets and IP.

Thus, today, when engaging in a transaction in which a significant component of the deals success and profitability literally lie in the ability to sustain control, use, ownership, and value of the intangible assets and IP in play, its important to consider most all transactions through these prisms…

Prism #1 –  mere proof of IP ownership, e.g., patent filings, provisionals, or issuances, are no longer synonomous with (a.) 17-20 years of ‘absolute’ control, use, and value, or (b.) assurances that the holder will receive all of the anticipated economic – competitive advantage benefits…

Prism #2 – it’s prudent to adjust the protection – preservation of a company’s IP and intangible assets to the ’life – value cycle’ of those assets’, not necessarily for the life time of the company…

Prism #3 – ultra-sophisticated and predatorial data mining tools and the winner-take-all global (business-competitor) intelligence operations renders every company’s assets vulnerable to compromise which can readily undermine and/or erode deal success and profitability…

Prism #4 – precursors to disputes and challenges over the control, use, ownership, value, and economic – competitive advantage of a deal’s intangibles and IP must be anticipated and thwarted prior to deal closure (execution) especially those that cause – accelerate (legal) ensnarements and/or entanglements of the assets…

Prism #5 – IT security is not synonymous with information – intangible asset – IP security!

A Business Case For Intangible Assets!!

April 13th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, intangible assets. No Comments.

Michael D. Moberly     April 13, 2009

First of all, let’s agree at the outset, it is an economic fact – business reality that upwards of 65+% of most company’s value, sources of revenue, sustainability, and foundations for future wealth creation lie in – are directly linked to intangible assets and intellectual property (IP) including reputation, image, and goodwill.

For various reasons however, there remains considerable uneasiness among business decision makers about precisely what intangible assets really are, and how to best utilize – leverage – extract value from something that’s yet to appear on their balance sheets.

Building the proverbial, but always essential ‘business case’ (rationale) for devoting the time and resources to identify, assess, value, utilize, and extract value from a company’s intangible assets begins with a thorough and practical understanding of intangibles.

Conceiving and presenting a ‘business case’ for any new, and, for some, untested (risky) initiative as those with the insight and fortitude for such things know, can be a daunting task and responsibility in which preparation, as always, is the key.  The challenges associated with that task elevate, in part because:

   – the subject matter, in this case intangible assets, are, quite literally, intangible, in other words, they lack physicality.

   – many decision makers still carry misgivings, misunderstandings, and/or literally dismiss intangibles as being (too) esoteric, or worse, irrelevant to their company and circumstances.

The following represent (some) key factors that should be considered when conceiving and presenting a ‘business case’ to decision makers for identifying, utilizing, and exploiting a company’s intangible assets:

1. Bring definitional – operational clarity to intangible assets, e.g., what they are, what they aren’t, and how they’re relevant…

2. Describe a repertoire of relevant and current examples of intangible assets applicable to a cross-section of industry sectors, products, and services…

3. Describe why it’s necessary to sustain (protect, preserve) control, use, ownership, and value of the assets, e.g., it may not be a case of ‘use’m or lose’m, rather use’m or don’t receive any economic – competitive advantage benefits…

4. Avoid reliance on subjective – worst case scenario risks and threats as the dominant method to attract decision makers’ attention, e.g., business decision makers are frequently risk takers and are often well atuned to distinguishing subjective risks vs. reality…

5. Describe plausible, practical, and understandable –‘economics 101’ – approaches for valuing the assets, not extraordinarily complicated mathematical formulas with subjective outcomes…

6. Describe how and why it’s necessary to identify and unravel asset origins, location, ownership, e.g., to avoid having the assets become ensnared – entangbled in costly, time consuming, and (project) momentum stifling legal challenges…

7. Describe conventional (understandable) factors for determining/assessing asset ‘suitability’ (recognition, valuation, separability, transferability, life cycle, and risks) etc…

8. Demonstrate practical/realistic connections, relationships, and linkages between the production, acquisition, and/or use of intangibles and their direct, supportive, and/or multiplier-effects (contributions) to company value, revenue, sustainability, and (positioning for) future wealth creation…

9. Describe ways to position and/or bundle particular assets (if feasible) to achieve broader ‘leveragability’ and/or value potential, e.g., examine how some of the assets are sufficiently ‘intertwined’ to be bundled together for added attractivity and/or value…

10. Emphasize the importance of practicing consistent stewardship, oversight, and management of intangible assets, framed as fiduciary responsibilities…

11. Describe practical strategies for measuring the contributions – performance of intangibles and converting same to value, revenue, sustainability, competitive advantages, reputation, image, goodwill, etc.

 

Company Value and Intangible Assets

April 10th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, Intangible Asset Value. No Comments.

Michael D. Moberly     April 10, 2009

Question #1 – If a tree falls in a forest when no people are around, does it make a sound?

Question #2 – If an asset is intangible, can you hear – see – feel it contributing to your company’s value, revenue, reputation, image, goodwill, competitive advantages, and overall sustainability?

While we clearly know the answer to Question #1 is yes, the answer to Question #2 remains less clear to many business decision makers because intangible assets (a.) lack a conventional sense of physicality, (b.) don’t follow traditional ‘mba’ precepts, and (c.) require different metrics for measuring their contribution.

One thing that would significantly contribute to addressing the outstanding issues in Question #2 is arriving at a (a.) clear and consistent ‘business’ definition of intangible assets, (b.) absent an accountancy or legal orientation, (c.) pass the mba smell test’, and (d.) generate understanding and confidence for intangible assets. (For a practical definition and examples of intangible assets see April 3d post at this blog.) 

With respect to intangible assets, it may not always be a case of ‘use’em or lose’em’, but it’s always a case of ‘if you’re not using them, you’re not benefiting from them’, and that translates as lost or, at minimum, significantly reduced value, revenue, and sustainability.  However, there’s one economic fact – business reality though that is perfectly clear; 65+% of most company’s value, sources of revenue, future wealth creation and overall sustainability lie in – are directly linked to intangible assets and IP.

Today, regardless of what products or services a company produces or whether it’s a Fortune 500, SME (small medium enterprise), or SMM (small medium multinational) it’s increasingly likely that internally developed, hard earned, and valuable proprietary experiences, know how, image, good will, and reputation, etc., underlie and are thoroughly embedded in that company’s products and/or services.  For example, slight advances in technology, minor improvements in production, and/or small refinements in business processes (each of which can constitute an intangible asset) can produce substantial competitive advantages for a company.

For the intangible asset skeptics what’s needed is (a.) a clearer recognition-appreciation for the various forms intangible asset value takes, (b.) how to leverage – extract value from those (intangible) assets, and (c.) how to sustain (protect, preserve) control, use, ownership, and value of those (intangible) assets indeterminately!

Don’t be an ‘intangible asset skeptic’ and don’t permit your valuable intangible assets to go un-noticed, (un-) or undervalued and equally important, un-protected!

Recession and Intangible Assets!

April 9th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Due Diligence and Risk Assessments. No Comments.

Michael D. Moberly    April 9, 2009

The economic recession has spawned a range of additional and parallel risks and challenges for companies particularly in the area of safeguarding information assets, i.e., intellectual property, intangible assets, sensitive information, trade secrets, and proprietary business processes, etc.

Personnel layoffs and terminations, regardless of severance package, advance notice, or opportunity for ‘call back’ are likely to produce disgruntled and worried individuals due to, among many other things, the uncertainty it produces about one’s financial future and solvency.  But also, it conjures a sense of employer disloyalty and collectively these factors can manifest themselves into elevated propensity (proclivity, receptivity) to engage in illegal and/or unethical acts (sabotage, theft, misappropriation, infringement, etc.) against their employer.

Obviously exit interviews must be ratcheted up at this point to emphasize the (legally binding) contractual components of non-disclosure and confidentiality agreements, as well as, non-compete agreements where they’re enforceable especially for employees who have access to sensitive-proprietary information.

The recession has also prompted countless companies to initially ‘look to the low hanging fruit’ for budget reductions by curtailing if not eliminating (security) travel and training budgets.  Translated this means fewer information asset audits and less direct oversight, stewardship, and management of information assets which includes intangibles, intellectual property, sensitive information, and proprietary competitive advantages and business processes.  Collectively, these assets conservatively comprise, for most company’s, 65+% of their value, sources of revenue, and future sustainability.

We see many companies reallocating (re-distributing) their security resources or literally dismantling their security departments causing decentralization of security responsibilities and delegating (entrusting) those responsibilities to untrained – inexperienced personnel and/or business units unaccustomed to consistently addressing security issues which, practically speaking means, inconsistent interpretation, assessment, and treatment of risk and threat thresholds.

We can also presume, (with considerable certainty) there will be an elevated presence of even more aggressive – predatorial tactics emanating from information brokers and competitor intelligence operations that will specifically target ’disgruntled employees’, e.g., elicit – solicit sensitive, proprietary information.

Similarly, we can presume, with equal certainty, there will be an elevated propensity of laid-off (disgruntled) employees who try to ‘leverage’ (offer) their knowledge of former employer’s sensitive-proprietary know how and/or trade secrets for (a.) cash payment from competitors, information brokerss, competitor intelligence entities, etc., (b.) employment with a competitor, or (c.) start their own company.

A collective bottom line to all of this is that some company’s appear to be positioning themselves, at least during the recession, to accept increasingly higher thresholds for risks and threats.  The question – challenge for information asset protection professionals is how much company value, reputation, image, goodwill, and IP, etc., will be eroded, de-valued, or outright lost in the interim?

Inventors Should Ask These Questions Before…

April 8th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, Fiduciary Responsibility. No Comments.

Michael D. Moberly    April 8, 2009

The question underlying this post is directed to the literally thousands of SME (small, medium enterprises), SMM (small, medium multinational) decision makers and extraordinarily gifted and independent entrepreneurs and businesses globally.  The question is this; why is it that when a company realizes they have developed a truly innovative product and/or service their thoughts tend to rapidly gravitate to (a.) I must contact intellectual property counsel to get the innovation patented, rather than, (b.) I must review my past, current, and future practices to ensure control, use, ownership, and the projected value of that innovation has been – can be effectively safeguarded and sustained for an indeterminate period of time until proper assessments can be made regarding (1.) its patentability, (2.) the costs to market and commercialize the innovation, and (3.) the costs to defend the patent and aggressively pursue infringers

According to an U.S. Patent and Trademark Office (USPTO) report: 97% of patent holders own patents that will never make a profit, and only about 3% of all patents ever make more money than the patent cost in the first place.  Assuming the USPTO report still reasonably reflects the current state of patenting outcomes, does the above 97% figure reflect, (a.) the innovators poorly conceived and under-funded innovation commercialization initiative, or (b.) a time-honored, but narrow view of innovation commercialization priorities, e.g., patent first, then try to safeguard the sensitive/proprietary aspects of the Innovation later, (c.) wishful, but naïve (I’m going to win the lottery) thinking, (d.) un-familiarity and under-appreciation for the globally predatorial, winner-take-all practices of infringers, trollers, misappropriators, and other adversaries, or, (e.) the extraordinary costs associated with monitoring patents, pursuing infringers, and the ‘deep pockets’ necessary for any IP litigation.

Yes, patent filings-issuances provide legal standing, and without legal standing, an innovator’s options are surely limited, if non-existent, with of course the possible exception of trade secrecy. But, the number of Coca-Cola’s are few in number.

The point to this exercise is quite straightforward and it has virtually nothing to with the time honored question ‘which came first, the chicken (profit) or the egg (patent)’? Rather, it has to do with the reality of the extraordinarily inter-twined, aggressive, predatorial, and winner-take-all global business environment in which respect for ‘intellectual property’ is dismissed, circumvented, and/or outpaced by a growing global cadre of independent legacy free players and nations who’s GDP is supplemented by an ever thriving infringement, counterfeiting, and product piracy operations supported by consistent demand from the western (developed) nations with indifferent consumers.

Intangible Assets and MBA Curricula…

April 6th, 2009. Published under Business Applications, Intangible Asset Value. No Comments.

Michael D. Moberly      April 6, 2009

Intangible assets should be integral components of MBA – MHR programming – curricula.  While preparing the syllabi and lectures for a graduate management course recently I was determined to introduce (and integrate throughout the course) the economic fact – business reality that 65+% of most company’s value, sources of revenue, future wealth creation, and sustainability lie in – are directly linked to intangible assets.  Business – organization management in my judgment, must now include the stewardship and oversight of intangibles which encompass identifying, assessing, positioning, maximizing, leveraging, and extracting as much value as possible from an organization’s intangible assets.

Even though for most students, this would serve as their initial introducation (conceptually speaking) to intangible assets, presumably, it would be a relatively un-challenging, welcomed, and readily grasped element of an MBA course, if, for no other reason, it represented a (albeit a forward looking)  business reality – economic fact .  For some students though, it became evident that intangible assets was a challenging concept to apply in quantifiable (monetary, value) contexts.  The primary (at least, initial) hurdle with respect to their receptivity, understanding, and ultimately the credence most attached to intangible assets appeared to evolve around the reality that intangibles lacked a conventional sense of physicality, that is, they’re intangible! 

By the end of the abbreviated term however, most students could articulate a familiarity for intangibles commensurate with their graduate standing in terms of the contribution intangibles make to a company’s value, revenue, and sustainability in the context of the art and science of ‘managing and management’ of both public and private sector entities.

One graduate student though, with a solid career in financial services routinely challenged the notion of intangible assets, i.e., their relevance and especially their contributions to business operations, transactions, and value.  This student defended his position by using numerous examples of multi-million dollar business loan and acquisition transactions which he lead in which there was absolutely no mention (verbal or contractual) of intangible assets in either value, collateral, securitization, or due diligence contexts.  This student said to me following the last class, in somewhat of a defiant tone, “I understand what you’re saying Mr. Moberly, but I just don’t see it happening in my bank, at least while the current officers remain in place; they are stuck in the tangible – physical asset domain; if they can’t touch or see an asset insofar as collateralization – securitization are concerned they just don’t recognize how to extract value from it if a deal goes south”.

Again, there is absolutedly no question only 25% to 35% of most companies’ value, sources of revenue, and future wealth creation are generated from their tangible – physical assets, i.e., buildings, plants, equipment, machinery, etc.  The remainder is generated from their specialized and often times proprietary know how (intellectual-human capital), competitive advantages, intellectual property, image, goodwill, reputation, relationships, etc.

Introducing seasoned and successful business decision makers, or MBA students, to intangible assets, admittedly remains somewhat of a hard sell for some, perhaps more so when ‘one is up to his or her hip’s in this recession as we are now and fighting for financial survival unfortunely, does not leave much time for reflection on how to best utilize your intangible assets’.  All that said, intangible assets are integral to most every company’s value, sources of revenue, future wealth creation, and overall sustainability and should not be overlooked, dismissed, under-valued, or neglected!