Archive for September, 2012

Yahoo’s General Counsel: Admonishment Regarding Leaks…Music Too My Ears!

September 28th, 2012. Published under Company culture and reputation., Fiduciary Responsibility. 9 Comments.

Michael D. Moberly   September 28, 2012

Few words can accurately convey how refreshing and encouraging it is to not just see this language produced in some non-descript corporate memo or employee handbook, but assertively voiced by a newly appointed general counsel of a major media company, i.e.…

“…Yahoo has a one-of-a-kind combination of assets. It is a leading global brand, has cutting-edge advertising platforms, huge scale and audience, a talented work force, and innovative technologies. As the growth of online advertising continues, we are well-positioned to leverage our brand, audience and offerings more effectively than ever before…”

But…

“…it’s never OK to share information in an internal memo, even if the company issues public communications about the same subject, so, also off-limits for sharing are internal presentations and emails, confidential product and business plans, and revenue projections…”

And…

“…we will fire employees who leak company confidential information and we will avail ourselves of all other legal remedies to protect those confidences, and, if you do it, you can go to jail and face a very large fine…”

This language came from Yahoo’s newly appointed general counsel, Ron Bell.  There’s little  doubt it was prompted, in whole or in part by a series of employee leaks to media regarding…well, it doesn’t really matter all that much to me what was leaked, what matters, is the fact that is was leaked!

So, what speaks to me, in this language, and I presume too many of my information asset protection colleagues as well, is that here is a professional, yes, an attorney, who appears, at least at the outset of his tenure, to clearly understand the potentially devastating and irreversible economic, competitive advantage, and reputation consequences which information asset leaks can impose on a company.

After all, in this knowledge-based global business environment, when 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth and sustainability lie in – evolve directly from intangible assets, one of course, is information, such admonitions not only make good business sense, they are, in many respects, business requisites!  But, before I go further, it is only appropriate for me, in good conscience, to distinguish leaks of the type referenced by Mr. Bell from those that may fall under genuine ‘whistleblower’ circumstances.

Interestingly, Kara Swisher, in her September 24th column at allthingsd.com/, suggested Bell’s earnest tone may be setting an unwinnable goal for Yahoo, or perhaps any company or organization for that matter, which after all, Swisher wrote, “people like to talk and share information, especially at a media company.”

What has, is, and in all likelihood will continue to affect Bell’s sensible and shrewd goal is that companies must consider the reality that in a growing number of instances, information that’s been tagged as proprietary, confidential, sensitive, and/or non-public, can be somewhat of a canard.  That is, there is, simply stated, fewer bits and bytes of information, irrespective of safeguards and/or classification that cannot be gleaned rather legally from open sources using extraordinarily sophisticated and nanosecond paced data collection and business-competitive intelligence software.  But too, there is a growing assortment of legacy free players, i.e., economic, competitive advantage adversaries globally, who warrant every company’s constant vigilance.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Rent-To-Own Reputation Risk…A New, But Obvious Twist!

September 27th, 2012. Published under Intangible Asset Value, Reputation risk.. No Comments.

Michael D. Moberly    September 27, 2012

Actually, I would be hard pressed to characterize the following complaint brought by the Federal Trade Commission (FTC) against seven rent-to-own (RTO) operators and a software company as representing a ‘pure’ example of materialized reputation risk.  That’s because, at least in my view, there are quite compelling indicators of intent, collusion, and premeditation. Incidentally, both defendants opted (agreed) to settle the case out of court earlier this week.

The complaint stated that the RTO’s had software secretly installed on (their) rented computers to collect particular data that enabled RTO stores to track the (physical) location, among other things, of rented computers without consumers’ knowledge.

More specifically, the complaint stated that by installing the specifically designed software in its rented computers, allowed the RTO’s to (a.) capture screenshots of confidential and personal information, (b.) log consumers’ computer keystrokes, (c.) track consumer’s location, and (d.) in some instances, take webcam pictures of people (consumers) in their home, again, without notice or consent from the consumers.

The software embedded in the (rented) computers contained a “kill switch” which RTO stores could use to disable a computer if it was (reported) stolen, or if a renter failed to make timely (rental) payments.  The software also had an add-on program known as “detective mode” that…

  • revealed private and confidential details about computer users, such as user names and passwords for email accounts, social media websites, financial institution data, Social Security numbers; medical records; private emails to doctors, bank and credit card statements, and webcam pictures of individuals in their home.
  • could collect data that allowed RTO operators to covertly track the location of rented computers and the computers’ users.
  • presented a fake software program registration screen that tricked consumers to provide personal contact information.

I, and I suspect readers of this blog won’t find the elements in this complaint rising to the level of ‘rocket science’ in as much as this software was designed to facilitate recovery of stolen and/or late rental payment merchandise by the RTO industry.

The settlement that was agreed to prohibits RTO’s from engaging in any further (consumer) spying of this nature, e.g., location tracking without notice and consent of consumers and/or deceptively collecting and disclosing consumer information, etc.

An interesting element of the FTC’s response was directed specifically to the software firm by stating quite succinctly, that providing RTO operators the means, i.e., software, to break the law was deceptive and unfair.

I certainly don’t believe readers should assume incidents such as this represent the proverbial one-off.  Instead, there’s no doubt, at least in my view, that technologies will continue to be developed and applied to achieve whatever a user wishes and wherever it’s functionality may lie on a legal – illegal continuum.  But, one thing is crystal clear, that is, consumer perceptions and expectations (reputation) are powerful and valuable intangible assets, which in most instances, once compromised or lost, are quite expensive and time consuming to recover, if, that is, recovery is even an option?

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Articulating Intangible Assets: It’s Not Always Easy…

September 26th, 2012. Published under CFO's, Intangible asset training for management teams.. No Comments.

Michael D. Moberly   September 26, 2012

Let’s face it, intangible assets are not always easy to articulate, to explain, or define, particularly to those unfamiliar or unaccustomed to recognizing their contribution to a company’s value and revenue.

Unfortunately, intangible assets are, in many sectors, still perceived – interpreted as obscure and/or theoretical concepts best espoused in – suited for university lecture halls’ than ‘real world’ business applications.  After all, intangible assets do lack physicality, thus they bear no conventional ’brick and mortar’ components to measure, manage, or account for using the most customary methods.

Intangible asset practitioners and strategists who conduct briefings, seminars, and/or awareness training about these elusive assets are well advised to have a strong reaching repertoire at the ready to respond to an array of often times warranted criticisms and/or skepticisms about what intangible assets are and strategies to utilize, leverage, and/or exploit them best.  The more persuasive and convincing manner in which such inevitable questions are addressed relative to their global universality and relevance to business wellbeing, will help achieve a two-fold mission….

  • recognize that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth and sustainability today lie in – directly evolve from intangible assets, and
  • demonstrate better, smarter, and more effective techniques to identify, foster, utilize, manage, and exploit (a company’s) intangible assets as attributes that can be converted to value, sources of revenue, competitive advantage, and sustainability.

That’s why it’s absolutely essential for intangible asset strategists to articulate as much (definitional, business, economic, and competitive advantage) clarity as possible to minimize – mitigate any managerial and/or administrative hesitancy, reluctance, and/or skepticism to aggressively engage intangible assets.

So, the mission is quite clear; articulate what intangible assets are, what they aren’t, the various forms they take, and how and when they’re effectively applied,  can lay valuable and strategic groundwork to boost a company’s value, sources of revenue, competitive advantage, market position, and longevity.

Ironically, in the midst of this extended and generally global, economic downturn (malaise), conventional wisdom would suggest that decisions makers of all stripes would find it in their business’ interest to seek, or, at least be more receptive to considering – examining (new, different, viable) options to elevate their company’s performance potential for successfully weathering not just the recession, but achieving a sustainable prognosis well into the future.   Of course, that would require engaging and executing on the intangible assets their respective company’s inevitably produce and possess.

Most respectfully, I return to the original theme of this post, that is, its challenging for some management teams, c-suites, and boards to step outside their ‘past practice’ comfort zones and/or b-school teachings that generally give short shrift to intangibles, to acquire the motivation necessary to critically examine/assess viable alternatives apart from what they believe has worked best for them and their company previously.

Members of management teams, c-suites, and boards are generally, and in most instances, quite correctly, pragmatists who exercise, usually in their own way, varying degrees of risk aversion.  These operational characteristics, while generally admirable, contribute in various ways to sustaining a broader reluctance and/or skepticism about the prospects of embracing any new, and for many, untested initiative, particular in the midst of an economic slowdown.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Technology Review’s 50 Most Innovative Companies Deliver Intangible Assets!

September 25th, 2012. Published under Intangibles as strategic assets, IP strategy., Managing intangible assets. No Comments.

Michael D. Moberly – September 25, 2012

Wouldn’t it seem reasonable, even plausible, to suggest that particularly innovative companies, like, for example, Technology Reviews’ 50 Most Innovative Companies for 2012, www.technologyreview.com/tr50/2012 would likely produce (and logically) possess more, and perhaps a higher level of intangible assets than say, less innovative companies?

Let me say at the outset, being an advocate of and strategist for intangible assets, I generally hold the view that most every company, regardless of size, industry sector, or location, produces and possesses intangible assets.  It’s often a matter of revealing and unraveling them, and identifying strategies to exploit – utilize them in ways that fit best with the holder (company).

Technology Review’s annual list of the 50 most innovative companies are, relative to TR’s criteria, businesses whose innovations influence (force) other businesses to alter their strategic planning and/or course. TR50 firms are nominated by editors of Technology Review, who distinguish companies which, over the preceding year, have…

  • demonstrated original and valuable technology
  • are bringing that technology to market at a significant scale, and
  • are clearly influencing their competitors.

Eighteen of the companies selected for 2011’s TR50, remain on their 2012 list, with seven firms achieving a third appearance. Perhaps more interesting, at least in my view, are 32 companies which TR selected for the TR50 2011 list that are no longer on the list, which readers can assume no longer meet the above (TR’s) criteria.

One example being, TR states that some companies are excluded from the list because of a decline in the prospects of an entire (their respective industry) sector.  A more specific example TR sites, has to do with advanced-biofuel companies which were strongly represented on TR’s list in both 2010 and 2011, but not in 2012.  The reason, TR offers, is that the bio-fuels sector as a whole has generally not scaled up production to a level that can begin to make sustainable inroads relative to the use of conventional oil or otherwise influence the fuel and transportation industries’ respectively. That’s not to suggest however, that advanced bio-fuel technology is now absent potential, rather, for 2012, this sector merely conveys less (sustainable) potential than it did in 2010 and 2011.

Dr. Ken Jarboe, President, Athena Alliance, www.athenaalliance.org, a highly respected, Washington-based ‘think tank’ on the intangible economy, agrees in part with my opening premise, by saying there would be a presumption that TR 50’s are stronger in intangibles than most, however, he expresses some skepticism whether this presumption should go so far as to include the full range of intellectual capital.

More specifically, Dr. Jarboe points out that TR 50’s are traditionally strong in IP (intellectual property) and technology.  Too, he says, they are probably strong ‘right now’ (emphasis added) in strategic capital and structural capital primarily because TR’s criteria for inclusion in the 50 most innovative companies includes both “vision” and “execution”.

Having strong strategic and structural capital translates, Jarboe says, as company sustainability, not just right now, but for extended, perhaps indeterminate periods.  In the case of TR50’s,

Jarboe quite correctly states they admit that they remove companies from the their list because, among other reasons, they no longer demonstrate sufficient vision and/or execution.  TR specifically mentions Netflix and Amazon as examples.  Companies that have strong strategic and structural capital Jarboe says, should not quickly lose (their) vision and/or ability to execute, both of which are key contributors to any company’s overall sustainability.

The dropping of Amazon from the list raises another question, Jarboe says, specifically about relationship capital.  The reason given by TR for removing Amazon from the list had to do with the consistent complaints about their (new) Kindle Fire.  But, Jarboe wisely and characteristically asks, was that a case that demonstrated weak intellectual capital, or was it the case that strong relational capital will help Amazon prevail over the launch glitches associated with Kindle?

So, while Jarboe believes there is a possible relationship between intangibles and the TR50, but  with this important caveat, i.e., the intangibles component is much broader and much deeper, with the TR50 really being about the successful deployment, commercially speaking, of attractive technology and accompanying applications, and not about intellectual capital, per se.

TR states in other instances, companies lose, neglect, and/or become less attentive to the vision that made them initially worthy of the TR50.  One such example is Netflix, which TR selected for its 2011 list because it piggybacked a video-on-demand service onto its existing DVD-by-mail subscriptions. Netflix had already disrupted the conventional business model of video rental stores and then cleverly engineered a maneuver to prevent itself from being disrupted in turn by streaming video technology.  But later in 2011, Netflix endeavored to split the streaming side of its operations from its DVD service.  This proved to be a less than popular decision with its substantial number of users who rather quickly became irritated which manifested in well-publicized ridicule which led to hundreds of thousands of subscribers abandoning Netflix before they could reverse course. As we now know, this led to a most unfortunate predicament in which Netflix was no longer able to direct its own (strategic) agenda, and certainly within the entertainment industry.

And finally, TR says, some companies merely fell off their list because they were crowded out by newcomer firms communicating new and all-the-more larger ideas that stir up conventions.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

(For this post, a special thanks  goes to Dr. Ken Jarboe, President, Athena Alliance www.athenaalliance.org for his insights and perspectives and to the fine book that I routinely rely on, Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

Intangible Assets: A Product Of Collaborations

September 24th, 2012. Published under Design thinking., Managing intangible assets. No Comments.

Michael D. Moberly    September 24, 2012

Collaboration across functional lines in which such things as, intellectual capital, ‘what works, what doesn’t work’ and structural/process capital, etc., are shared in order to arrive at a solution or achieve a particular objective, will produce new and/or enhance existing intangible assets.  For me, that’s generally a good thing, particularly in the steadily rising numbers of intangible asset intensive companies globally!

Simply put, collaboration is a process in which two or more people and/or organizations work together to achieve or realize a shared goal.  Collaboration is, to be sure, more than the mere intersection of common goals perhaps evolving from a co-operative venture or strategic alliance, etc., rather it’s a collective determination to reach an (identical) objective, that’s usually creative in nature and which experience, knowledge, and learning are shared to the point consensus is achieved.

Substantially reduced costs of communicating, globalization, and the increasing specialization, complexity, and cross-functional knowledge (intangible asset) based work have collectively make collaboration both essential and integral, i.e., anytime, anyplace, anyhow!

It would certainly be naive to assume all collaboration is successful or beneficial.  Again, speaking from experience, in some collaborative environments, rigid adversarial positions surface – emerge that are not receptive to quick or easy amelioration.    Thus, for most of us who have engaged in some type of collaborative undertaking, we recognize that collaboration requires some manner and/or level of leadership that best fits the circumstance, collaborators, and objective.  But, recognizing the latter is what McKinsey describes as a problematic blindspot!

This underscores the need to develop – employ better techniques to manage this expanding, irreversible, and globally collaborative (business, transaction) environment.  In a 2005 study, nearly 80 percent of the senior executives surveyed stated that effective coordination – collaboration across product, functional, and geographic lines was essential for company growth and sustainability. Yet, a mere 25 percent of the respondents characterized their organization as engaging in effective knowledge sharing (collaboration) across those boundaries.

A 2006 report produced by McKinsey Quarterly appropriately titled ‘Mapping the Value of Employee Collaboration’ leads us to believe a significant percentage of companies remain inexperienced about how to best manage, let alone, measure collaboration.  For me, the focal point of collaboration leadership – management is recognizing not just the end product, but the myriad of new – enhancing intangible assets that inevitably evolve when creatives interact and collaborate!

Activity-based costing, knowledge management, business process reengineering, and total quality management, etc., have been the conventional and variously effective tools used to measure collaborative experiences, i.e., efficiencies and task achievement, etc.  But, according to McKinsey, they do not do a particularly good job or shed much light on the largely invisible (intangible) networks that underlie the process and product of collaborations.  Perhaps even more so, when the collaborators work across functional, hierarchical, and business unit boundaries as they commonly do.

Comments regarding my blog posts are encouraged and respected.  Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated.  While visiting my blog I encourage you to browse other topics (posts) which may be relevant to your circumstance.  Either way,  I welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

(A special thanks to McKinsey Quarterly’s fine report titled ”Mapping the Value of Employee Collaboration, Aubust. 2006)

 

 

Intangible Assets Produced Through Design Thinking…

September 17th, 2012. Published under Design thinking., Managing intangible assets. No Comments.

Michael D. Moberly   September 17, 2012

I believe design thinking, by its nature, will bring to light (produce) more intangible assets than conventional linear and/or milestone-based approaches.

Tim Brown, certainly a well-known and key ‘guru’ of design thinking, cites Thomas Edison’s creation of the electric light bulb as an example that remains a relevant analogy today.  As Brown describes it, Edison’s invention of the light bulb, served as one relatively small component of a greater industry which he (Edison) envisioned would come to frame an entire industry.  Edison’s genius, reports Brown, lay not merely in inventing a single, relatively discreet ‘parlor trick’ device (i.e., the electric light bulb) rather in his ability to conceive an eventual fully developed marketplace surrounding use of the electric light bulb. Another element of Edison’s genius evolved from his futuristic vision how people would come to want to possess and use the electric light bulb. A process, by the way, he plotted to achieve that insight!  The vision Edison espoused, and the approach he applied to achieve that vision, constituted an early example of ‘design thinking’ says Brown.  Edison’s visionary marketplace was a system of electric power, i.e., (a.) generation, and (b.) transmission that would render the ‘light bulb’ useful and relevant to people, homeowners, and businesses on a mass scale globally.

By all accounts, Edison was not a narrowly specialized (lone) scientist rather he was a generalist with a keen instinct for business.  It was not sufficient for Edison and his colleagues to merely validate a preconceived hypothesis because design thinking does not follow a pre-defined series of sequenced and/or orderly steps.  What new things one learns from those iterative steps, in my view, are various complimentary and contributory intangible assets.  Thus, the notion that creative ideas suddenly burst from one’s mind already fully formed is seldom the case.

It’s not difficult to see then, that design thinking differs markedly from conventional linear and milestone-based business activities.  Instead, design thinking is more often the product of considerable intellectual work whose core is a human-centered process of discovery coupled with iterative cycles of (a.) prototyping, (b.) testing, and (c.) refining.  Too, design thinking embodies a system of ‘spaces’ that distinguish various activities that ultimately come to form a ‘continuum of innovation’, i.e., (a.) inspiration, (b.) ideation, and (c.) implementation.

So whether it is referred to as design thinking, business thinking, or creative thinking, it’s a methodology that encompasses the gamut of activities related to innovation, but with a specific and very important twist; that is, it has a people centered (design) focus, influenced, Brown says, by direct observation of what people (presumably prospective consumers)…

  • want and need in their lives, and
  • what they like and/or dislike about the way particular products are made, packaged, sold, and supported.

More to come…

(Special thanks to Tim Brown’s fine article titled ‘Design Thinking’, Harvard Business Review, June 2008)

Intangible Assets: The 900 Pound Economic Guerrilla Seldom Found On Balance Sheets and Financial Statements!

September 17th, 2012. Published under Intangible asset training for management teams., Intangibles as strategic assets, Managing intangible assets. No Comments.

Michael D. Moberly    September 17, 2012

Why aren’t more companies engaging their intangible assets on a routine basis through better management, stewardship, and oversight?  So what’s the problem? Where do the challenges lie?

In part, the problem begins with the following.  I am quite confident that when many readers of my blog participate in a business meeting, at say, the c-suite level, whether it’s a small to medium size firm or a large corporation, we’re similarly motivated, as intangible asset strategists, to look for the inevitable but, invisible ’900 pound intangible asset gorillas’ and wonder why they’re not routine action items on the agenda?   Circumstances like this consistently leave me to conclude intangibles are being overlooked, ignored, dismissed, and ultimately misguidedly assumed to not rise to c-suite and board attention levels.

Every company produces and possesses intangible assets. Unfortunately, few use or exploit these important and valuable assets as effectively as they could, even though they constitute most company’s primary source(s) of value and revenue, and ‘building blocks’ for growth and sustainability.

Isn’t it correct to assume talented, intelligent, and experienced management teams, boards, and investors would be naturally inclined to want to wring every last drop of value, revenue, and competitive advantage from their intangible assets which are readily at their disposal?

After all, engaging intangible assets is a relatively straightforward exercise, it’s certainly not overly intrusive, nor is it a necessarily expensive or time consuming task.  And, when executed correctly, it can likely lead to improvements in a company’s financial and competitive advantage health, mitigate risks to asset value erosion, competitive advantage undermining, asset misappropriation, and perhaps most importantly, add value to a company by creating additional sources of revenue, profitability, and sustainability.

I would be hard pressed to assess any company, regardless of its size, industry sector, or maturity, and not find internally produced intangible assets that the company possesses, and uses, less effectively or efficiently as they could.. In a significant percentage of instances, admittedly though, we do not know precisely what percentage, most company’s intangible assets actually deliver some value, some sources of revenue, and some competitive advantages.

How this all translates, at least to me, is that there are substantial numbers of management teams, boards, c-suites, and investors who fully recognize that conventional financial statements and balance sheets simply do not, in the present knowledge (intangible asset) driven global economy, provide a sufficiently complete or necessarily clear picture of a company’s overall (real) financial soundness.  Again, as noted many times here, a primary reason is that intangible assets are seldom, if ever reported on either, unless, they are combined and reported as ‘goodwill’.   More specifically, continued (singular) reliance on conventional financial statements and balance sheets as the only reliable testament of a company’s financial circumstance or its value falls short.

But, conventional financial reports (balance sheets) were not designed to capture (describe) the many and various qualitative aspects, vital signs, and indicators that we now know are directly related to businesses success, i.e., those found in a company’s intangibles (non-financials).  A significant part of the challenge lies in the fact that many companies and their management teams still behave and make decisions as if they did!

So, the fact that intangibles are not being reported on balance sheets or financial statements remains insufficient reasoning for continuing to dismiss or ignore their relevance, contributory value, or the integral role they play in most every company’s internal processes, procedures, practices, and business transactions.

So why is skepticism, reluctance, and uneasiness still so pervasive about how best to cross the economic (intangible asset) chasm that is so integral to the knowledge-based economy?  It certainly should not be linked to the misconception that tracking – monitoring non-financial aspects of company performance, i.e., its intangibles, is a time-resource luxury, only for the few. Rather, it’s truly become a strategic necessity and fiduciary imperative!

Conventional financial statements and balance sheets still have value and importance, figuratively speaking.  It’s not my intent here to advocate their disregard, because they do describe whether or not financial targets have been achieved, and, in that sense, remain a relevant measurement tool.

So, while my conversations with a cross section of management teams and boards, particularly in the small and mid-sized company arenas, reveal a general familiarity with intangibles, there’s little evidence that an extensive  appreciation exists how intangibles have literally become embedded and are integral to most company’s routine (business) operations, processes, and procedures or how they contribute to elevating (company) value, by delivering competitive advantages, and serve as key sources – contributors to revenue.

There is another, very timely and relevant, explanation why some management teams and boards are not as receptive as they should (could) be relative to learning more about and seeking opportunities to more effectively utilize, exploit, and convert their company’s intangibles. That explanation is, as the saying goes, ‘when you’re up to your hips in alligators, one may have forgotten the original goal was to drain the pond’.

So, I hear some management teams and boards say ‘please don’t bother us with presumed theoretical discussions about why we should pay more attention to intangible assets when our company ‘is up to its hips in alligators’ and fighting every day for its financial survival, ala, the recession.

Of course, my response is that intangible assets are certainly not a theoretical concept or worse, merely a new ‘buzz word’.  They’re real, integral, and irreversible foundations to the knowledge (intangible asset) based global economies.

The proverbial red line is that there is prudence aplenty in striking a better balance between the oversight, stewardship, and management of financials and non-financials.

Comments regarding my blog posts are encouraged and respected.  While visiting my blog I encourage you to browse other topics (posts) which may be relevant to your circumstance.  Either way,  I welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

Safeguarding Intangible Assets….But, Only For Their Life, Value, and Functionality Cycles!

September 14th, 2012. Published under Intangible asset protection, Intangible asset strategy, Intangible Asset Value. No Comments.

Michael D. Moberly    September 14, 2012

As noted in numerous posts here, it is an irreversible economic fact (business reality) that steadily rising percentages (65+%) of most company’s value, sources of revenue, and ‘building blocks’ for growth and sustainability globally evolve directly from intangible assets!

Ensuring (monitoring) control, use, ownership and value of those assets throughout their respective life, value, and functionality cycle versus for the lifetime of the company and/or holder is, in my judgment, a more practical, efficient, and probably a more advantageous strategy. 

The rationale is, in large part due to the assets’ increasingly integral role and relevance to the growing variants of business transactions constrained only by participant’s collective imaginations how to formulate relationships to achieve lucrative outcomes, be they joint ventures, collaborations, strategic alliances, etc.

But, companies are essentially on their own, to find the requisite expertise to not just understand intangible assets and their respective contributory value, but identify, safeguard, and preserve-monitor their stability, fragility, sustainability, and defensibility.  Importantly, these responsibilities are rapidly becoming fiduciary in nature and fall exclusively to management teams and c-suites to delegate.

Practically, intangible assets actual and contributory value seldom remains static.  In other words, intangible assets’ contributive elements – value may rise, fall, and otherwise fluctuate in cyclic fashion, i.e., in accordance with an assets’ contribution and/or functionality, again to a particular project, initiative, or a company as a whole.

A perhaps crude, but relevant characterization of an assets life, value, and/or functionality cycle is akin to what a doctor once told me about the need for a particular prescription medicine, i.e., ‘you will know when you don’t need it anymore when you start forgetting to take it and realize you are fine without it’.

This cyclic aspect to intangible assets’ (contributory) value, renders most conventional, snap-shots-in-time or one-size-fits-all valuation techniques less relevant or useful because among other things, they

  • do not factor materialized intangible asset risks – threats that can take asset value to zero almost instantaneously, and
  • provide little, if any, strategic (post transaction) context to asset value, in light of consistent presence of asset risks and threats.

We do know, once an (intangible) asset is compromised, infringed, or misappropriated, etc., their contributory value to a company’s competitive advantages, relationship and/or structural capital, or to a company specific initiative can begin to unravel and hemorrhage value and competitive advantages rapidly, globally, and in many instances, irrevocably.

For me, this makes it all-the-more-important to monitor intangible assets life, functionality, and contributory value cycles.  The point in time which assets’ contributive features no longer carry the value they once did or are necessary to deliver competitive advantages, it’s quite logical to assume there is no longer a need to devote resources to preserving their proprietary status. This suggests those resources and that time should be devoted elsewhere, perhaps to newly developed and valuable intangible assets.

Pre-Employment Personnel Screening Produces Valuable Intangible Assets!

September 13th, 2012. Published under Fiduciary Responsibility, Intangible Asset Value, Intangibles as strategic assets. No Comments.

Michael D. Moberly   September 13, 2012

In light of the economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth and sustainability globally reside in – evolve directly from intangible assets, it’s important that management teams, c-suites, and boards recognize, in a fiduciary responsibility context, that sustaining a strong, stable, and loyal base of skilled intellectual capital, i.e., employee know how, is an increasingly relevant and necessary requisite to not just achieving, but sustaining success, profitability.  Of course, an important contributor to those outcomes is safeguarding those all-important ‘knowledge based  (intangible) assets.  Making the latter even more essential lie two important realities, (1.) the reality that most all company’s globally are in the midst, perhaps early stages, of a knowledge-intensive economies, and (2.) most company’s workforce are increasingly diverse, mobile, competitive, and global.

Intellectual capital (IC) represents the value employees provide to a company or client by applying their skills, knowhow, expertise, and the unique understanding of how best to use (exploit) their IC to create efficiencies, commercialization opportunities, and/or generate revenue and competitive advantages, in other words, some manner of competitive advantage.

But too, company management team must recognize that IC is a perishable, vulnerable, usually time-sensitive, and transferrable commodity.  That is, it can ‘readily walk out the door at will’ or be bought, sold, licensed, transferred, loaned, misappropriated, stolen, etc.

Let’s be clear at the outset though, IC is not synonymous with intellectual property, i.e., patents, trademarks, or copyrights.  True, intellectual property is generally composed of intellectual capital.  IC however, standing alone, is not eligible for conventional intellectual property protections unless it would be internally designated as a trade secret. Thus, having pre and in-employment personnel security screening practices in place to ensure IC’s proprietary status is preserved becomes all the more important.

Broadly speaking, achieving and sustaining that level of workforce today is often conditioned less on serendipity and more on having in place an effective recruitment, pre- and in-employment (personnel) security screening, and employee on-boarding processes that function in concert, not as standalones.

Once this level of workforce is achieved, it can translate as valuable intangible assets that can be smartly leveraged and exploited to achieve greater organizational resilience, an embedded institutional culture, and numerous (industry sector) competitive advantages which I’m hard pressed to believe any management team, c-suite, board, or investor would not readily endorse.

There’s no disagreement here that effective employee recruitment and on-boarding programs are contributing factors.  But, the courage and audacity of management teams, c-suites, and boards to recognize, approve, and execute an effective pre-employment (and in-employment) personnel security screening program should not be overlooked based on ill-conceived, uninformed, risk adverse notions.  Similarly, companies that rely exclusively on conventional one-size-fits-all, one time administered ‘paper and pencil’ honesty and integrity tests, while generally better than nothing, are seldom wholly sufficient.

In today’s increasingly global commerce and business transaction environments, pre and in-employment personnel security screening is, to be sure, not redundant to resume, reference, or criminal background checks, nor should it be reserved for only those individuals seeking employment in a classified and/or proprietary arena.

Allow me to draw an analogy to describe how pre and in-employment personnel security screening can produce valuable intangible assets.  Physical security products/systems, i.e., intrusion detection, access control, and surveillance, etc., are common to building-environment design and operation.  When applied correctly, they can deliver-produce, in my judgment, specific sets of intangible assets.  Unfortunately however, seldom do the intangible by-products of tangible (physical) security products get articulated, translated, or leveraged insofar as how they contribute to elevating reputation, adding value to a company, or building-sustaining competitive advantages, etc.

In too few instances, are these intangible ‘feel safe, feel good’ asset attributes articulated as extensions of a company’s fiduciary responsibilities (i.e. Stone v. Ritter) or calculated in return-on-security-investment (ROSI) contexts.  The reason, in large part, is because, intangible asset dimensions and/or by-products of most (physical) security products are frequently not well understood and noticeably absent a persuasive and quantified narrative that describes their contributory value.

In today’s increasingly security conscious global business environment, advocates of pre and in-employment personnel security screening programs should be prepared to offer reasoned, well- articulated, and business oriented counter arguments and rationales to the following, e.g.,

  • The usually risk adverse legal counsel, who warn that caution should be exercised about public displays regarding the presence or deterrent effects of security systems or programs because either may unduly elevate user expectations. If a system and/or program are incorrectly applied or ineffective, and risks/threat does materialize, it may elevate propensity for greater liability.
  • Intangible assets lack a conventional sense of physicality, they’re often obscure to the untrained eye, are challenging to quantify and/or measure performance in ways that translate as contributory value, i.e., delivering competitive advantages, elevating workforce stability, reducing risks-threats, etc.
  • The reality that intangible assets are routinely portrayed through structured (codified) accounting-tax lens and too, they’re not required reporting on financial statements or balance sheets other than collectively as goodwill thus are interpreted as being less useful-relevant.
  • The classical belief that public announcements about the presence-use of certain physical security systems or procedures undermine their presumed deterrent capabilities and thus compromise the intended (designed) benefits.

Some of the above perspectives are deeply held precepts, often based on anecdotal or one-off experiences, more than broad-based fact.  Collectively, this often makes them uniquely challenging to refute, absent a good grounding in intangible assets.  Most unfortunately then, the result often is that the intangible (asset) derivatives of physical security products and systems often go un-noticed, un-leveraged, and ultimately dependent on user-consumer imagination to draw their own, albeit subjective ‘feel good, feel safe’ conclusions versus the actual value-added risk mitigation premiums they produce.

The same holds true for pre and in-employment personnel security screening measures and the truly intangible risk mitigation benefits they can produce.

Again, the economic fact that increasingly higher percentages of most company’s value, sources of revenue, sustainability, and foundations for growth and sustainability globally, evolve directly from intangible assets should clearly serve as a strong signal security practitioners would be well served to learn more about intangible assets.  But, not merely the by-products produced from deployment of physical systems and products, but since 65+% of most company’s value and sources of revenue lie in (their) intangible assets, how to safeguard them as well!

For a comprehensive list of intangible assets see http://kpstrat.com/blochure.

(This post was inspired by the excellent work of Dr. Nir Kossovsky in reputation risk, Zwi Kremer, Berndt Rif, and Michael Rosin on personnel pre-employment security screening, and Mary Adams on intellectual capital.)

Comments regarding my blog posts are encouraged and respected.  While visiting my blog I encourage you to browse other topics (posts) which may be relevant to your circumstance.  Either way,  I welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

Economic Espionage: Quantifying Information Asset Loss…Some Sage Advice For Companies!

September 6th, 2012. Published under Economic Espionage, Intangible asset protection. 2 Comments.

Michael D. Moberly    September 6, 2012

I, along with numerous colleagues experienced in the information (intangible) asset protection, compromise, misappropriation, theft, and economic espionage arena know it is challenging enough just to achieve some semblance of timely detection and it is even more challenging to quantify such losses in actual ‘dollar contexts’.

In part, methods a victim (company, organization, institution) may elect to use to quantify information asset losses will likely pivot on one or more of the following inclinations, sentiments, or factors, e.g.,

  • ethnicity (country of origin) of the alleged perpetrator(s).
  • the perpetrators’ position and level of trust that was delegated.
  • victims’ perspective about potential reputation (risk) fallout related to the nature/type of information assets missing, i.e., if the data/information loss identified customers/clients, and if so, is there a legislative mandate to report?
  • if no such mandates exist, whether the victim company elected to (voluntarily) assign a dollar value to (quantify) their loss, and if so, what methodology was used to arrive at a dollar value, i.e., where, what, and how data was collected and ultimately quantified?
  • the relative importance of the information, i.e., R&D critical to a current project, potential breakthrough, and/or contract.
  • the type of information, i.e., proprietary and/or competitive advantage driving intellectual, structural, and/or relationship capital (intangible assets)?
  • how the loss was detected, how long it took the victim to actually discover the loss?
  • are there immediate and/or strategic consequences to a value chain and stakeholders following the loss?
  • the perceived or proven motive of the perpetrator(s) and if there are ‘end user’ recipients of the information that are economic, competitive advantage, or national security adversaries?

Not discounting any of the above, I believe it’s certainly fair, perhaps even accurate to say today, that a strong and increasingly pervasive notion of ‘risks and threats’ exist today that influence victim companies to characterize information asset losses in worst case scenario contexts based variously on the factors, sentiments, and inclinations cited above.

One reality I am consistently conscious of with respect to characterizing information asset losses, is that in most circumstances, unless literally mandated to do otherwise, it is seldom in the interest of c-suites, particularly globally operating companies which strive to sustain amicable trading – transaction relationships, to be overly ‘public’ about such victimizations and/or ‘going public’ with dollar value loss estimates.

Readers inclined to explore this phenomena further would find it very useful and insightful to read a paper authored by Drs. Julie Ryan and Theresa Jefferson (George Washington University) aptly titled ‘The Use, Misuse, and Abuse of Statistics in Information and Security Research’.

In their paper, the authors analyzed multiple, well known surveys that tout information security trends and losses. They make a quite convincing argument that the findings are frequently anecdotal, not generalizable to the business level, and reported in a cumulative form.  Collectively, this makes most findings unreliable for use to justify infosec resources or their allocation.

A special thanks to Dr. Julie Ryan (George Washington University) co-author to ‘The Use, Misuse, and Abuse of Statistics in Information and Security Research’ as inspiration for this post.

Comments regarding my blog posts are encouraged and respected.  While visiting my blog I encourage you to browse other topics (posts) which may be relevant to your circumstance.  Either way,  I welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com