Archive for April, 2010
Michael D. Moberly April 28, 2010
Intangible assets are increasingly valuable and exploitable commodities that allow company management teams and boards to consider and pursue an ever widening range of business transactions in which intangibles will be part of the deal, that is, they can be bought, sold, transferred, traded, assimilated, or licensed.
Business transaction management teams have those same responsibilities, only they’re elevated somewhat, due to the expectation that in most any transaction, one or both parties’ intangible assets will be in play, that is, they will be integral factors when negotiating and pricing a deal. That’s because, 65+% of most company’s value and sources of revenue today lie in – evolve directly from intangible assets!
However, absent effective guidance in the development of intangible assets, most would score high on the transferrability, replication, and/or imitation scale. This makes the the assets particularly vulnerable to devaluation, or hemorrhaging, as I refer to it, that is, they become impaired in some manner relative to their ability to produce/deliver the projected value, competitive advantages, and revenue streams after the deal has been closed.
For transaction management teams, it’s absolutely essential that they be alert to the potential for, if not the probability that, some level of asset hemorrhaging can occur in both pre and post transaction contexts. In some instances, asset hemorrhaging can literally commence before the ink dries on a transaction contract.
A key starting point to prevent and/or mitigate any asset hemorrhaging from occurring, is to avoid permitting an over-heated sense of urgency and speed to affect the transaction management teams’ responsibilities. When management teams view a transaction primarily through a lens of urgency and speed, a frequent consequence is that the critical due diligence and asset assessments become hurried and templated and not as thorough and specific, nor examined in both pre and post transaction contexts, as they should. Of course, in today’s hyper-competitive global business environment, where its likely there will be multiple and simultaneous suitors to a transaction, a sense of urgency and speed are almost endemic!
Transaction management teams are obliged then, to frame – structure their role, particularly the duties related to the due diligence and assessment of intangible assets, in a manner that:
1. Recognizes the ability to obtain (retain) full control, use, ownership, and value of those assets is essential to negotiating a profitable and sustainable transaction outcome.
2. Secures approval to integrate asset protection and value and materiality monitoring measures at the earliest stages, as well as, throughout the transaction negotiation process to reduce the probability of and be promptly alerted to actions that can (a.) undermine asset value, competitive advantages and the assets’ ability to continue to produce revenue, and/or (b.) trigger costly and time consuming legal disputes and challenges that can disrupt the momentum of and/or jeopardize an otherwise viable transaction.
While the goal of a transaction management team remains the same; to facilitate stronger, more secure, and profitable transactions, its now prudent to include an intangible asset specialist on the team, who can, among other things, identify, unravel, and assess the value, risks, defensibility, and sustainability of the intangible assets that are in play.
I welcome and look forward to receiving your thoughts and comments.
Michael D. Moberly April 27, 2010
An increasingly important requisite to a successful launch of new innovation or product is, as Apple knows better than most, not permitting prototypes to be left in bars. For Apple, long recognized as the epitome of corporate secrecy, that particular incident was, to be sure, an anomaly.
An increasingly important requisite to successful launches of a new product or innovation today, is not overlooking the economic fact-business reality that 65+% of the value underlying that launch are intangible assets!
Apple clearly understood this well, by virtue of the remote ‘shut down’ capabilities it incorporated into its prototypes and could be executed once the absent minded engineer alerted the company to his blunder. In the R&D world of prototypes and new product launches, be assured, there is no lack of adversaries, competitors, and a variety of other entities who are well positioned to instaneously exploit, if not influence, such opportunities (misques).
Thus, the effectiveness and success of new product-innovation launches today are increasingly dependant on protecting and sustaining control and use of any and all distinguishing and competitive advantage delivering features, i.e., those intangible assets embedded in the innovation-product.
The premature disclosure or compromise of any distinguishing or competitive advantage delivering feature or component, particularly in about-to-be launched innovation or products, will, for most company’s, present a substantial and generally irreversible economic – competitive advantage blow by, among other things, (a.) putting the company in the untenuous (undesirable) position of having to decide whether to waylay an already announced launch date, or (b.) advance a launch date in a not-so-disguised defensive effort to deflect or absorb any adverse publicity stemming from the reality that the product – innovation has probably already fallen into the hands of adversaries and/or competitors, been dissected, and the findings disseminated. Depending on what the ‘finders’ objectives are, those findings may enter the public domain.
But, if/when the genie gets out of the bottle, an essential requisite for commencing recovery is no delay in discovering and/or being alerted to the incident. Delays will complicate and weaken a company’s (legal) position and the possibility of achieving even a reasonably favorable outcome, i.e., retrieval of the intangible assets.
Integral to the asset – value recovery process is having conducted, in advance, a thorough intangible asset – competitive advantage assessment of the new product – innovation to identify each of the ‘genies’ embedded in the product-innovation and what will be required to return them to their bottle while reducing the probability they could/would be acquired by adversaries or competitors in the interim.
A specialized intangible asset – competitive advantage assessment can position management teams to deliberate and act on two important points:
1. The circumstances, priorities, and options relative to trying to (re-) establish ownership and/or (re-) obtain control and use of the, by now, economically – value hemorrhaged asset.
2. Strategies to try to stop and/or mitigage further economic -competitive advantage hemorrhaging (of the assets), i.e., devaluation, undermining, public scrutiny and criticism, shareholder value, consumer goodwill, company reputation, etc.
Far too many companies lose, inadvertently relinquish, and/or become entangled in extraordinarily costly, time consuming, and momentum stifling legal disputes and challenges over the ownership, control, use, and value of their intangible assets and IP. Frequent reasons are that management teams (a.) dismiss the fiduciary responsibilities of addressing the persistent and stealthy risks-threats to those assets and their value, and (b.) underestimate the role and contribution which their intangible assets make to successful and sustainable launches of new companies, ideas, and products!
I welcome your thoughts and perspectives.
April 26th, 2010. Published under Analysis & Commentary: Studies, Research, White Pap. No Comments.
Michael D. Moberly April 26, 2010
Throughout my 25+ years of experience in the intellectual property – intangible asset arena, much of which remains focused on the protection side, seldom do I recall specific dollar values of stolen, infringed, or misappropriated corporate (trade) secrets and proprietary information being the subject of conversation. However, I have been part of countless conversations when wide-ranging and subjective ‘guesstimates’ would be offered about the value of missing information assets.
There were, and remain, various reasons why companies do not provide more detail about losses and/or compromises of corporate (trade) secrets. One is, there is no objective methodology or formula in which to calculate/assign a precise, defensible, and un-challengable dollar value to losses of company (trade) secrets.
Not in-frequently, I would find that when companies experienced a particularly significant loss or compromise of a trade secret, they would hurredly resurect a laundry list of resources used to produce that asset (from its inception to its execution) along with estimates of the associated cost of those resources. The results would then be tallied to represent the value of the now missing asset.
This approach would not account for or reveal however, the underlying and contributory (enterprise-wide) value of a compromised information asset. In other words, if the secret/proprietary information was embedded in, for example, multiple processes or procedures that permitted a company to achieve (current, future) competitive advantages or an enhanced market position, it was unlikely those initial calculations revealed that additional, but very real, value.
A second reason companies were, and generally remain reluctant to provide more precise information about a dollar value of lost and/or compromised (trade) secrets is that it may become problematic from a public relations, shareholder, or legal strategy perspective, particularly if litigation is pursued, by:
1. Undermining consumer – shareholder confidence.
2. Encouraging (leaving the door open to) unflattering challenges about the validity and replicability of how the value of the missing information asset was reached.
3. Prompting (legitimate) questions about the company’s overall information asset protection capabilities and practices, on a fiduciary responsibility level.
Relevant to all of this is a recently published (March, 2010) Forester Research study commissioned by Microsoft and RSA, titled ‘The Value of Corporate Secrets: How Compliance and Collaboration Affect Enterprise Perceptions of Risk’.
Having read and studied numerous similar surveys and studies, this particular Forrester Research product is distinguishable because the principle investigators, in conducting the research, sought to incorporate their understanding of the following into the findings, i.e., the,
1. Value of sensitive information contained in corporate portfolios, as a whole.
2. Variety of security controls used to protect that information.
3. Drivers of information security programs, i.e., what influences companies (internally, externally) to impose security controls on its information assets.
4. Cost and impact of enterprise data security incidents, apart from corporate (trade) secrets and sensitive, proprietary information.
The key findings of Forrester Research’ ‘The Value of Corporate Secrets: How Compliance and Collaboration Affect Enterprise Perceptions of Risk’ study were:
1. Secrets comprise two-thirds of the value of most companies information portfolio.
2. Compliance, not security, is the primary driver of (information) security budgets.
3. Companies focus a great deal of time/resources on preventing accidents, but theft (of trade secrets) is actually more costly.
4. The more valuable a company’s trade secrets/proprietary information is, the more ‘incidents’ it will likely experience.
5. Chief Information Security Officers (CISO’s) typically do not know how effective, or perhaps conversely, how ineffective, their company’s information security controls really are.
And, let’s not overlook the fact that corporate trade secrets and proprietary information constitute intangible assets, and the economic fact that 65+% of most company’s value, sources of revenue, and foundations for future wealth creation and sustainability lie in – are directly related to intangible assets.
I welcome your comments and perspectives.
Michael D. Moberly April 23, 2010
Are there sufficient incentives for management teams and boards to devote time and resources to consistently and aggressively engage their company’s intangible assets as a prelude to extracting value and converting it into revenue?
We’re well into the 21st century and the role intangible assets’ are playing in companies as value and growth contributors and creators is widely understood at the 5,000 foot elevations in business communities globally.
At those elevations, it’s a well known economic fact and business reality that steadily increasing percentages (65+%) of most companies value, sources of revenue and future wealth creation have literally shifted from tangible (physical) assets to intangible assets, or, as the British sometimes refer to them as the ‘invisibles’.
But, why isn’t this reality resonating more and with a broader sense of urgency at all levels of a business enterprise? And why aren’t more management teams and boards willingly, and yes, even perhaps eagerly, engaging their company’s intangible assets and devising strategies to maximize, exploit, and otherwise seek ways to extract as much value as possible from un-under-utilized assets.
I, like other voices advocating greater recognition and utilization of intangible assets, meet with very astute, intelligent, and extraordinarily talented and successful business leaders who are apt to use sophisticated techniques and/or technologies to, for instance, schedule employee work schedules to reduce overtime pay, but, mention the words intangibles or intangible assets and their eyes are likely to glaze over and their minds wander.
Intangible assets, are, in most instances, the ‘low hanging fruit’ and the ‘in your face’ sources (facilitators, enablers, creators, and contributors) of value and revenue for companies, but, in many instances, they’re overlooked, neglected, or sometimes, literally dismissed.
In part, the lack of management team and board enthusiasm for intangible assets may be attributed to:
1. Accountants who may or may not fully grasp the contributory significance of intangibles (and reporting – accounting for same) and therefore are reluctant to introduce or explain the relevance of intangibles to their clients.
2. Faux strategic planning, e.g., near term – quarterly focused perspectives that exclude interest in longer term (strategic) planning, particularly regarding the development, utilization, and exploitation of non-physical and intangible assets which are not typically reported on company balance sheets and whose performance is often perceived as being difficult to objectively measure with precision.
3. A tendency to characterize intangible assets as being synonymous with intellectual property (IP), when, in reality, IP is actually a subset (category) of intangible asset.
4. A self-deprecating assumption by some management teams and boards that their company does not produce or possess any significant or valuable intangible assets worthy of their time to identify and assess.
5. The mere lack of physicality of intangible assets, i.e., their non-physical nature which can’t necessarily be seen or touched in the same vein as conventional tangible (physical) assets such as equipment, inventory, property, vehicles, etc.
6. The seldom portrayed or poorly articulated ‘value proposition’ (pathways, strategies) for extracting value from intangible assets.
7. And, consultants’ who, for their own reasons, may be inclined to characterize any one, or all of the above as being far more complicated, time consuming, and costly to execute than necessary, and I hasten to add, is the reality.
In response, I say to those hesitant management teams and boards; positioning and aligning intangible assets to extract value involves several intellectual/conceptual processes, or steps, that are indeed worthy of your time and attention, starting with…
1. Acquiring a genuine curiosity about identifying the intangible assets a company produces and/or has acquired.
2. Recognizing that intangible assets exist in many different formats and contexts, in other words, not solely as goodwill.
3. Learning how to identify centers, clusters, and origins of beneficial and contributory intangibles within a company.
Unfortunately, in far too many instances, management teams and boards initially learn about the existance and/or value of their firm’s intangible assets under distressed circumstances, i.e., the assets have been lost, stolen, undermined, etc., in which case it may be too late for a company to fully (economically) benefit from those assets. That’s because, often times, intangible assets are perishable and transferrble and once compromised, recovery and/or retrieval can be costly, time consuming, and seldom whole.
Interestingly, in 2004, Deloitte teamed with the Economist Intelligence Unit to conduct a survey titled; ‘In the dark: What boards and executives don’t know about the health of their businesses’. The survey produced the following three key findings related to the importance of boards and senior managers to track non-financial aspects of company performance, i.e., intangible assets:
1. Factors driving boards and senior managers to monitor key non-financial performance indicators are:
a. increasing global competition
b. growing customer influences
c. greater awareness of risks to company reputation, and
d. accelerating product innovation
2. Despite the growing need to monitor non-financial vital signs of their businesses, most boards and senior managers are struggling to do so.
3. The biggest obstacles to enabling boards and senior management to track non-financial vital signs of their business are:
a. lack of sophisticated measures, and
b. doubts that they truly matter.
This Deloitte survey also found that an overwhelming majority of respondents (ranging from 90+% to 78%) described ‘critical and important drivers to (their company’s) success’ as (a.) customer satisfaction, (b.) service quality, (c.) efficiency and effectivness of business processes, (d.) brand strength, (e.) innovation, and (f.) quality of relationships with external stakeholders. Please note that each of the aforementioned are routinely classified as intangible assets!
Understanding and taking affirmative steps to identify, maximize, exploit, and extract as much value as possible from a company’s intangible assets is not rocket science, it’s just prudent business practice today!
Michael D. Moberly April 21, 2010
In my view, managing a company’s intellectual capital (IC), in its most simplistic form, consists of two key responsibilities:
1. Conducting/maintaining an inventory of a company’s IC.
2. Having the knowledge and skill sets to objectively assess and distinguish how much and what aspects of the IC inventory are:
a. In Use – and, determine if they can be used more effectively and profitably to add value to the company.
b. Not In Use – and, determine if they remain relevant and/or useful to the company in some manner (or, perhaps to other entities) vs. remaining as stagnant assets and costs.
Interestingly, Davis and Harrison (authors of ‘Edison in the Boardroom’) estimate that only 30% of many company’s entire IC portfolio may actually be in use, with the remaining 70% likely found in various (other) forms, e.g., intellectual property that has become obsolete, and/or products or services that are no longer in the company’s inventory. I would not advocate those estimates should be used to pre-judge the outcome of an IC inventory/audit because most companies have a variety of (IC) nuances that need to be investigated. But, the Davis and Harrison percentage estimates do catch one’s attention!
Let’s suggest for a moment that a company’s board and senior leadership would find it useful to resource an IC management (audit, use, inventory) team. I am reasonably confident, that agreement to create such a role would include a requisite that team members be business centered, strategic in their outlook, and possess a strong profit orientation. In other words, the team would be inclined to manage the company’s IC as genuine business assets.
Unfortunately, there remain far too many company management/leadership teams and boards who hold the mistaken perception that intellectual property registration is synonymous with IC management when in fact it is only through the managed exploitation of IP that value, revenue, and wealth can be generated.
Michael D. Moberly April 20, 2010
If you build a better mouse trap (tangible asset) the world will beat a path to your doorstep. In the knowledge-based economy, that time hnored cliche’ has given way to ‘if you build better knowledge paths (intangible assets) you will achieve sustainable value and long term competitive advantages’.
Below are some key knowledge paths for company management/leadership teams and boards to consider insofar as utilizing their intangible assets to sustain and build value and competitive advantages:
1. Avoid under-estimating, being dismissive, or neglectful about the contributory value of intangible assets. Learn how to identify and assess the intangibles your company produces and/or acquires and be alert to subtle, below-the-radar contributions intangibles make to particular processes and procedures that enhance such things as (company) brand, reputation, customer/client relationships, and overall efficiency. etc.
2. Take steps to protect and monitor the status, sustainability, defensibility, value, and risks to your company’s intangible assets. This is particularly important for those intangibles embedded with proprietary elements and which replication and/or imitation by a competitor would be quick and pose irreversible economic and competitive advantage affects.
3. Ensure agendas for the management/leadership team and board consistently include mandates to identify and assess any unrecognized or under-utilized intangibles. This should include exploring opportunities to license, buy, sell, trade, or apply the assets to strategic alliances. Ultimately, the objective is to ensure the assets are shared company-wide with the mandate to explore ways to utilize/combine them with existing assets to develop, enhance, exploit other products and services or otherwise achieve efficiciencies.
Michael D. Moberly April 19, 2010
Intangible assets evolving from small and mid-sized companies (SME’s) tend to be knowledge-based and serve as market/competitive differentiators, that is, if management/leadership teams and boards recognize and utilize them as such.
Intangible assets seldom contribute as ‘stand alones’ in companies. Instead they more likely serve to support, facilitate, and enable other assets’ contributory value embedded in a companies products, services, and/or capabilities. In other words, they frequently exist in clusters and/or collections (of assets) which together, favorably influence a firms’ overall reputation.
But, the development, accumulation, and effective utilization of intangibles in SME’s are reflective of the entrepreneurial and forward looking/thinking orientation of a management team and/or board. To say then, that it’s essential, if not critical today, that SME management teams and boards recognize and effectively utilize the intangible assets being produced in their company is certainly not an over-statement!
Personally, I advocate a three step process or practice to producing and utilizing intangible assets:
1. Intangibles should be thoughtfully produced and objectively monitored, rather than merely permitted – hoped to evolve over a period of time.
2. Proper and effective integration of intangible assets in the appropriate (company) processes, products, and services, so they can not only enhance (company) value, but also contribute to potentially new sources of revenue, is a key.
3. Perhaps equally important, intangible assets should be developed in ways so they can, if feasible, serve as hindrances, inconveniences, and/or barriers to (market) entry by competitors.
The latter can be achieved by purposefully designing those intangibles’ that can deliver value, revenue, and competitive advantages to include certain degrees of (proprietary) complexity and obscurity that create certain challenges and/or hurdles that will require competitors’ significant time, expense, and resources to try to replicate or imitate.
In addition, its essential for SME management/leadership teams and boards to recognize that, as their company matures, its likely there will be a commensurate increase in experience, expertise, and knowledge that will enable/facilitate the development and integration of additional sets of intangibles that mirror an SME’s stage and/or life cycle, for example, (1.) a start-up with little or no customer capital/relationships as yet, (2.) established SME’s which have already developed customer bases and reputations, but have few, if any other intangible assets, and (3.) established SME’s built exclusively around one or two specific intangibles, or (4.) SME’s that have established multiple (clusters of) intangibles.
(This post was inspired by a 2006 research report titled ‘SME Intangible Assets’ produced by the (Association of Chartered Certified Accountants with Chris Martin and Julie Hartley serving as principle investigators.)
Michael D. Moberly April 16, 2010
What is a company culture? Basically, a company culture is a shared system of values (within a company) that defines what is important. Those values become blended with other norms and beliefs that convey (to employees) what the accepted (appropriate) attitudes and behaviors are.
Schein, among others, suggests a company culture will emerge as management teams, boards, and employees collectively recognize the beneficial outcomces that accrue as each group successfully solves problems by applying those shared norms, values, and beliefs.
What is a knowledged-based economy? The phrase ‘knowledge-based economy’ was popularized, if not invented by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity. A knowledge-based economy refers to the use of various knowledge technologies such as knowledge engineering and/or knowledge management to produce economic benefits for a company. In a knowledge-based economy, knowledge essentially becomes a tool, not necessarily a product.
The center piece of the knowledge-based economy in my judgment, are the intangible assets companies produce. Simply stated, developing a company culture to fit and reflect the knowledge-based economy means acquiring a level of familiarity with and an attitude toward intangible assets that permits management teams, boards, and employees to be able to identify, build, protect, and effectively utilize intangibles to for example, enhance a company’s value and competitive advantages, generate revenue, and/or lay a foundation for future growth.
Why is an intangible asset company culture necessary in a knowledge-based economy? – First of all, it’s an economic fact that 65+% of most companies value, sources of revenue, future wealth creation and sustainability lie in – are directly linked to intangible assets. Unfortunately, but, all too frequently, the existance and/or contributory value of intangible assets simply does not appear on business radar screens, because, in large part, those screens still remain fixated on tangible-physical assets. Also, in many instances, intangibles remain somewhat of a mystery to management teams and boards particularly in terms of how to extract value or competitive advantages from assets that are non-physical and are seldom, if ever, reported on company balance sheets. Trust me, the ‘coin of the realm’ for this knowledge-based economy is intangible assets!
The desired outcome is to build an enduring, yet flexible, company culture that collectively understands its internal value creation processes, i.e., how ideas and innovation (intangible assets) evolve and can be fostered to the point they deliver returns. In the context of intangible assets, those outcomes may take the form of newly created efficiencies within the company, stronger competitive advantages and customer relationships, new knowledge, and/or greater reputational value.
(Some definitions contained in this post relating to knowledge-based economy were adapted by Mr. Moberly from Wikipedia.)
Michael D. Moberly April 13, 2010
The newly published (2009) book ‘Reorganize For Resilience: Putting Customers At The Center Of Your Business’ by Ranjay Gulati is, in my judgment, not merely another book that describes an alternative view or re-emerged importance of customer centricity.
Rather, it’s a book about recognizing that customer relationships are intangible assets. And, as intangible assets, in order for customer relationships to be as effective and profitable as possible, consistent engagement and high level inquiry with customers that extends beyond the often times siloed boundaries of a company’s products and/or services, is essential.
There is an analogy here that is not unlike conducting an intangible asset assessment for a company. Wherein company management teams may not fully recognize or be dismissive about the potentially valuable and revenue producing intangible assets that are routinely embedded in (their company’s) processes and practices and contribute to a company’s value and revenue through better products and/or services.
In part due to intangible assets and customer centricity essentially lacking a conventional sense of physicality, and neither being reported on balance sheets, there is a tendency for both to become neglected and distanced abstractions, rather than the ‘in your face’ realities they really are!
An adverse alternative Gulati suggests, is that if customers’ real needs go unrecognized as conveyed in his book, they (customers) will likely commence ‘commoditizing’ a company’s products and services by making purchase decisions based primarily on price rather than retaining a personal connection to a company.
Also, management teams and boards that continue to assume that a company’s brand (an intangible asset) standing alone, will serve as a perpetual life saver, is an assumption, Gulati points out, that no longer reflects the realities of a globalized market place that is filled with competing options, products and services.
Thus, to more effectively compete, companies must define themselves beyond a single intangible asset, i.e., a brand, product, and/or service, especially in the increasingly globalized and knowledge-based economy. Being first to identify and address ‘problem spaces’ for clients represents a powerful business intangible asset that can produce value, revenue, and serve as distinctive foundations for future wealth creation.
Michael D. Moberly April 9, 2010
In a 2006 ACCA study, the principle investigators (Chris Martin, Julie Hartley) stated that in most instances a company’s intangible assets could be imitated – replicated, presumably by competitors or other economic/competitive advantage adversaries, given (a.) sufficient time, (b.) resources, and (c.) incentives to do so. So far, no big surprise here.
More specifically, the research report stated that (intangible) asset imitation correlated to the assets’ (1.) technological complexity, (2.) obsurity, or non-obviousness, and (3.) cost of replication. Again, a pretty straight forward perspective.
The significance of this study, in my view, does not lie so much in the reality competitors will attempt to imitate/replicate others’ intangible assets, which occurs routinely. Rather, the significance of this study is that it points to management/leadership team and board fiduciary responsibilities to exercise consistent oversight and monitoring of their intangible assets’ status, i.e., value, revenue producing, and competitive advantage delivering capabilities.
Effective starting points to achieve this, in my judgment, are for management teams and boards to:
1. Be less passive and assuming about the development and evolution of their company’s intangible assets.
2. Adopt a much more proactive and aggressive role in developing and utilizing intangible assets as sources of value, revenue, and growth.
3. Put in place practices to effectively protect and monitor the assets (contributory value and performance) throughout their value and functionality cycles.
The key underliers to this lies with management team and board foresight and leadership to recognize two things, (a.) the inevitability that competitors and adversaries will endeavor to imitate others’ intangible assets if/when possible, and (b.) the importance of taking time during the (intangible) asset development and utilization process to integrate often times inexpensive, but critical features that will not only reduce the assets’ vulnerability to imitation, but also create disincentives to imitation, e.g., making the asset more:
1. Technologically complex that dis-incentivizes adversaries because replication requires incurring costs for the aquisition of new, perhaps specialized, technologies.
2. Obscure and non-obvious to competitors and adversaries in ways that they cannot readily observe or deduce.
3. Costly to replicate by requiring time, resources, and costs comparable to the learning and development processes the originator of the asset experienced.
For management/leadership teams and boards today, the above represents not only prudent business practices, but fiduciary responsibilities as well.