Archive for February, 2013

Intangible Asset Management ‘S.O.M.’ Plans: Stewardship, Oversight, and Management

February 20th, 2013. Published under Managing intangible assets. No Comments.

Michael D. Moberly    February 20, 2013

It’s an economic fact that 65+% that most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today arise from – are embedded in intangible assets including IP (intellectual property).  Irrespective of the on-going economic challenges, business decision makers will find it both prudent and lucrative to put forth the relatively minimal time and effort necessary to devise and implement an asset stewardship, oversight, and management (S.O.M) plan.

There here are numerous perspectives about what the ingredients of an effective S.O.M. plan should include.  My perspective is that it include the following sequenced ideologies, i.e.,

  • first, identify, unravel, and assess (distinguish) each intangible asset relative to its contributory value, sustainability, and vulnerability to compromise, i.e., undermine its competitive advantages or other act that adversely affects asset value.
  • second, identify specific (asset) S.O.M. measures to ensure the rightful asset holder (company) are positioned to sustain control, use, ownership of the assets and monitor their value, materiality, and risks.
  • third, explore – examine ways and opportunities which certain assets may be bundled or otherwise monetized and/or commercialized, i.e., licensing, as collateralization, auctioned or collaboratively applied to joint ventures.

A critical attribute of an intangible asset S.O.M. plan is for its designers – implementers to avoid focusing on an unmeasured presumption that a particular asset will deliver the most sustainable and strongest contributory value while being dismissive of other equally strategic intangibles.

Again, a well structured intangible (IP) asset S.O.M. plan should include a strong forward looking (projective oriented) posture that encourages identifying, unraveling, and examining specific assets that can serve as ‘building blocks’ (foundations) to a company’s future opportunities for growth, sustainability, and profitability.

So, an intangible (IP) asset S.O.M. plan is not solely about today, tomorrow, or otherwise, the near term, it’s also about taking the proverbial ‘long view’ with respect to adopting  prudent strategies for utilizing and exploiting all things intangible.

Why is an intangible asset S.O.M. plan necessary?  The answer lies in the fact that when business (asset) valuations were initiated in the 19th and 20th centuries, they were, at the time, exclusively about measuring the value of physical (tangible) property (assets), e.g., real-estate, inventory, and equipment, etc.  But, beginning in the late 20th and certainly now in the 21st century, the value of businesses and companies are increasingly embedded with and dominated by intangible asset (and IP) portfolios.  The reason is, globally speaking, businesses are significantly more dependent on and utilize these largely knowledge or know-how based assets which include all forms of intellectual, structural, and relationship capital to achieve competitive advantages, elevate company value, generate revenue, and (build) extend sustainability.

The Brookings Institution contributed to a global awakening of the intangible asset phenomena when it conducted and publicly released the ‘Intangibles Project’ report in the late 1980’s which clearly gave business credence to the economic fact – business reality that intangible assets, including IP, does not merely serve as a company’s market – sector competitive differentiators’, but also represent the increasingly dominant (primary) source of current – future company value, revenue, and sustainability.

With few exceptions at the time, there were seemingly few sufficiently forward looking – thinking management teams that understood the permanence, significance, and impact of the Brookings’ report other (intangible asset) value signals would come to have on business operations and transactions.  For many management teams who ‘got it’, embarked on various transformations away from the conventional management and extraction of value from tangible-physical assets to identifying, nurturing, acquiring, and extracting value from intangible assets!

Let me be clear about a particular aspect of intangible (IP) asset S.O.M. plans.  That is, I remain unconvinced that a pre-requisite for either plan development or commencement occur only after an intangible asset – IP audit and/or valuation have been completed.   I am not suggesting, neither may not be helpful to management teams. But likewise, neither should be considered the absolute starting point for an intangible asset S.O.M. plan.  That’s especially relevant in light of my perspective that an unnecessarily high percentage of companies and their management teams remain dismissive at best, or operationally unfamiliar at worse, of intangible assets and their stewardship, oversight, and management.

There are of course, specific accounting – valuation standards and methodologies used which can be useful rebuttal to technical scrutiny when asset origination, ownership, and/or value are being contested or litigated.  Frankly, I often sense there are varying levels of subjectivity in asset valuations that reduces their credence.

Two things I remain confident about are, every company management team competing in this irreversible knowledge (intangible asset) based global economy absolutely must…

  • engage their firm’s intangible assets, and
  • be consistently engaged in strategies to exploit value, generate revenue, and elevate competitive advantages of all of its intangible assets.

Determining the group, team, or individual responsible for a intangible (IP) asset S.O.M. plan as well as a company’s intangible asset – IP portfolio, may respectfully warrant some training.  Admittedly, there are various options (possible choices) as to who may be best or at least better suited to assume these responsibilities ranging from inside or outside legal counsel, external licensing agents, and/or intangible (IP) asset disposition firms.

Broadly speaking, any of the above may be a satisfactory choice, but, for this position, it may be somewhat relevant to company size, sector, and affordability.  Professionally speaking, I am an advocate of making the selection internally, e.g., an individual(s) broadly familiar with

  • the company’s operations and culture…
  • inter and intra-sector global competitiveness…
  • objective measurement and performance of individual (intangible) assets and/or the asset portfolio as a whole…
  • current principles of asset assessment and valuation in order to assign values triage
  • a proactive and strategic outlook relative to identifying, assessing, and prioritizing assets’ current contributory and (potential) future value…
  • a current sense of global acts and conduct that can adversely affect asset control and value…

Too, whoever is selected, it is essential they can objectively frame and articulate each of the above as necessary into a ‘best possible and most affordable’ intangible (IP) asset S.O.M. plan.

And, of course, whatever the process and criteria used to select those responsible for the implementation and consistent operationalization of the S.O.M. plan, it will be important they have a clear and unmistakable chain of authority which ‘all things intangible’ flow.

It’s important for management teams to recognize that IP is merely one type or category of intangible asset.  There are indeed millions of companies globally that do not hold or own, for a variety of reasons any issued – registered intellectual property.  That said, it’ important for management teams to recognize that registered intellectual property often, has embedded within it various intangible assets that routinely serve as its foundation or ‘building blocks’.

Too, in most circumstances, comparable intangible (IP) asset S.O.M. practices and methods which are applicable to the Fortune 100’s are also relevant to SME’s (small, medium sized enterprises).  In fact, I’m hard pressed to think of any business and/or sector that would not find an intangible asset S.O.M. plan beneficial insofar as…

  • unraveling (and establishing) a clear, preferably uncontestable – documentable chain for each (intangible) assets’ origin, ownership, control, use, and assignment, if applicable,
  • recognizing intangible assets produce varying levels of contributory value relative to a company’s sources of revenue and competitive advantages, and
  • laying a foundation for recognizing the necessity to not merely utilize intangibles, but safeguard them, which collectively
  • enhances a company’s operational and strategic outlook and positioning capability.

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, 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 or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Cyber Security Presidential Directive: Reputation Risk, Liability Exposure, and Reluctance to Share…

February 15th, 2013. Published under Cyber security, cyber warfare.. No Comments.

Michael D. Moberly    February 15, 2013

To perhaps better appreciate the necessity for the current escalation of national cyber-security initiatives and the associated Presidential Directive, Congressional hearings, lobbying, and blogosphere pros and cons, etc., it’s important to understand the U.S.’s critical infrastructure sectors are distinctive in comparison to numerous other countries, i.e., the European Union for one.  Throughout the EU, much, if not all of the operation, oversight, management, and protection/security responsibilities of their critical infrastructure sectors remain largely in the hands of relevant government entities.

In the U.S., on the other hand, the 18 critical infrastructure sectors, as identified by DHS, have been sliced and diced so many different ways and by so many different (private sector) companies, I’m quite confident that sharing/communicating in a timely manner (a.) a company’s cyber risks, threats, and vulnerabilities, and (b.) the increasingly probable probes, attacks, and breaches they experience will not, at least initially be a very ‘comfortable’ process due in large part to (c.) potential liability exposure and reputation risk, and (d.) the extraordinary value such information would present to any adversary should they access/acquire it.

One strategy which I suspect may be more palatable for c-suites and boards insofar as the detailed ‘sharing’ of incidents is recognizing the extraordinarily costly and quite possibly irreversible reputation risks that will inevitably follow should they elect to opt out, be dismissive of, or merely not comply, in principle or in spirit, with the Presidential Directive.  Of course, that will exacerbate many times over should they fall prey to an adverse cyber event that would cascade beyond the confines of a single company to infect an entire (infrastructure) sector.

One reality shared by numerous company’s I’m familiar, along with their c-suites, boards, and legal counsel is that under most circumstances, unless literally mandated to do otherwise, it is seldom in their interest for a variety of reasons, particularly among globally operating companies which strive to sustain amicable trading – transaction relationships, to be overly ‘public’ about victimizations, unless of course, it is a mandated (legal) requisite that is actually enforced.

Actually safeguarding U.S. national (critical) infrastructure sectors’ from cyber acts/events, carries some significant challenges because (a.) in most instances, a physical and digital interdependence and inter-connectivity exists in and between sectors which require high levels of collaboration and sharing, (b.) there are different organizational and operating structures in the various companies which will inevitably complicate the compilation of the data/information (c.) some critical infrastructure sector companies have multi-national ownership, (d.) c-suites and boards will inevitably interpret the Presidential Directive as an additional fiduciary responsibility whose scopes reaches well beyond the bare essentials and/or minimums versus utilizing known best practices or standards.

Initially, when I and many of my then university-based colleagues applied the terms ‘national critical infrastructure’, in the mid-to-late 1980’s, they were referred to as ‘pillars’ and consisted of only nine in number.  Today, the Department of Homeland Security has refined and extended that number to eighteen and refers to them as infrastructure sectors, i.e.,

  1. Food and agriculture
  2. Banking and finance
  3. Chemical
  4. Commercial facilities
  5. Communications
  6. Critical manufacturing
  7. Dams
  8. Emergency services
  9. Defense industrial base
  10. Energy
  11. Government facilities
  12. Healthcare
  13. Information technology
  14. National monuments and icons
  15. Nuclear reactors including materials and waste
  16. Postal and shipping
  17. Transportation systems, and
  18. Water

I, along with numerous colleagues experienced in the information (intangible) asset protection and economic espionage arena have long realized it is challenging to (a.) create an environment and/or the necessary (company) culture in which (b.) timely detection of adversary probing and/or system compromise or asset theft occurs.  It’s even more challenging to assemble such data and portray it in quantifiably reliable, ‘dollar contexts’.

On a cautionary note however, the public domain is chock-full of variously corroborated anecdotes, all well earned, of state-sponsored entities engaged in, for the most part to date, relatively low level and non-cascading cyber attacks, aside of course, from the theft of proprietary information and intellectual capital.  I believe it’s reasonable to suggest, that in a number of critical infrastructure sector c-suites and boardrooms, there may be a predisposition, again, well earned, to assign (assume) any offensive cyber probing, attacks, and/or breaches to particular state-sponsored entities or otherwise emanating from specific countries.

The fact is, the catalog of potential culprits possessing both the means and motives to engage in cyber attacks has expanded into the realm of well taught and under-the-radar ‘legacy free players’ globally.  So, I would respectfully add that critical infrastructure sector companies may exercise prudence in assuming those ‘handful’ of state-sponsored actors are the only ‘players’ in this extremely high stakes circumstance.

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, 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 or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Do Cyber Warfare and Cyber Security Terminology Limit Our Perspective?

February 14th, 2013. Published under Cyber security, cyber warfare.. No Comments.

Michael D. Moberly    February 14, 2013

Some time ago, I’m not really sure precisely when, a transition (change) in language occurred with respect to computer/IT system security with respect to what had traditionally been referred to as primarily defensive actions to prevent and/or mitigate (computer/IT system) vulnerabilities and infiltrations by hackers or economic-competitive advantage adversaries.  The terms now widely used to describe, at least what I believe, are similar phenomena, are cyber-security and cyber-warfare.  The distinction between the two is that the latter is generally presumed to occur on a larger scale, with greater frequency, sophistication, and asymmetric elements, which can destroy, deploy malware, or siphon (extract) specifically targeted intangible assets from a single company and/or a ‘pillar’ of our national infrastructure literally, in nanoseconds.

What troubles me most about this ‘language change’ is that the term cyber-warfare particularly, comes with the inference that ‘all things evil’ to a companies’ computer/IT system(s) emanate from afar, that is primarily (foreign) state sponsored, non-state actors, or the growing numbers of global legacy free players.  Let’s be clear, I am in no way questioning whether either of the above are regular, if not the primary initiators, as there is ample evidence (anecdotal and otherwise) that is the case.

The attention and the alarms both the private sector and government agencies furnish regarding cyber threats, security, and warfare are obviously warranted and I seek not to dispute nor diminish their significance.  After all, the cascading infrastructure havoc created by a significant offensive cyber attack could be incalculably cataclysmic.

But, identifying the absolute best strategy, tools, and/or practices to address these persistent challenges, especially considering there is no reason to believe (they) will dissipate in the future, represents where much debate lies today in c-suites globally, e.g., amongst CSO’s (chief security officers), CRO’s (chief risk officers), CISO’s (chief information security officers), CIPO’s (chief intellectual property officers) and certainly legal counsel.

That is, with respect to the private sector, is it best to remain primarily in a defensive mode consisting of repelling, preventing, and containing?  Or, should the private sector engage in independent offensive and/or pre-emptive initiatives, e.g., mounting IT system (cyber) attacks toward known adversaries in hopes such undertakings will produce a deterrent effect versus an escalation?

Before we get too far down a particular strategic path on this issue, it’s important to refresh our memories that the U.S. remains distinctive from most other countries because the key pillars of our national infrastructure are generally privately owned and operated, apart from direct government control. This distinction suggests independent offensive or pre-emptive action taken by the private sector toward known state sponsored actors (cyber adversaries) would produce some unknown reactions and/or consequences that may well exceed our natural inclination to publicly expose ‘who’s doing what to whom’.

From an information (intangible) asset protection practitioners’ perspective, I believe the subject is being too narrowly framed and perhaps overly influenced by an IT – computer security orientation ala cyber security and cyber-warfare.  By continuing to frame this issue in this manner, little or no space is left for recognizing that companies’ mission critical, sensitive, and proprietary information (intangible) assets routinely exist in formats other than electronic ‘ones and zeros and bits and bytes’.

I am certainly not suggesting the prevailing perception regarding the origins of adversaries, cyber attacks, and cyber warfare (directed against the private sector) are misguided or misplaced.   I am suggesting, that perception and its accompanying strategies gives short shrift to the economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability today lie in – evolve directly from intangible assets e.g., intellectual property, competitive advantages, brand, reputation, and intellectual, structural, and relationship capital.  Thus, the real advantages (value, profitability) belonging to companies may not always be found or housed in a computer or IT system and therefore not specifically vulnerable to the exclusivity of cyber attacks or cyber warfare.

Too, information asset protection policies and practices which are dominated by an IT or cyber (risk, threat) orientation tend to minimize the reality that most companies today operate in an extraordinarily fast-paced, competitive, and predatorial knowledge-intangible asset based global economy.  In this irreversible global environment, information (intangible) assets are developed, acquired, used, and disseminated in extraordinarily short time frames.  Endeavoring to safeguard or secure these assets, in my view, should not be exclusively conceived or practiced through an IT – cyber security lens.  Instead, responsibilities for safeguarding valuable information (intangible) assets must become embedded in peoples’ respective orientation, ethic, and (company) culture, because increasingly that information – those assets exist in the form of intellectual capital.

As information (intangible) asset protection specialists know well, proprietary – sensitive business information will percolate throughout a company and is not confined or limited to what is accessible solely through one’s laptop, desktop, or ‘from the cloud’.  Too, intellectual capital cannot be reduced solely to those electronic ‘ones and zeros or bits and bytes’.

But, information safeguard policies and practices that infer, by having a presumptively superior IT – cyber security program, can send a misleading message, e.g., if an organization’s IT system is proclaimed to be secure, presumably then, a company’s proprietary information is also secure, which we know is not the case.  In today’s increasingly predatorial and incessantly thirsty global business environment for information assets, that’s a message no company should accept.

It is certainly not my intent here to be dismissive about the absolute necessity to rapidly identify, assess, and successfully and consistently thwart the very real risks and threats posed by state-sponsored and independent cyber-attacks.

But, it’s equally important to recognize that both (cyber) terrorist organizations and economic/competitive advantage adversaries can acquire, with varying degrees of ease, a single company’s most valuable and treasured trade secrets and literally wreak economic, competitive advantage, and market havoc, one company at a time.

 (This post was inspired by NPR’s Tom Gjelten’s three part series on cyber attacks and cyber warfare, February 11th, 12th, and 13th on Morning Edition.)

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, 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 or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Post America Invents Act: Necessity For IP – Patent Counsel

February 13th, 2013. Published under IP strategy., Law Firms. 1 Comment.

Michael D. Moberly   February 13, 2012

I found an interesting read in an article published in Bloomberg Law Reports titled ‘Your Opinion Matters to Us – The Continued Value of Patent Counsel Opinions in a Post American Invents Act Era’.  The authors, lawyers of course, describe how patent counsel opinions have declined since the Federal Circuit’s 2004 decision in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corporation in which the court held that…

  • no adverse inference of willful infringement of a patent may be drawn either from the failure to obtain legal advice, or
  • the invocation of the attorney-client privilege concerning the advice sought.

The America Invents Act (AIA) actually extended the Knorr-Bremse decision by…

  • prohibiting one’s failure to obtain the advice of counsel, or
  • failure to present such advice to the court or jury,
  • from being used to prove either willful and/or induced infringement.

More specifically, AIA’s Section 298 (35 U.S.C.) includes the “Advice of Counsel,” which states…

The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.

Previously, of course, potential infringers who possessed actual notice of another parties’ patent rights, had an affirmative duty to obtain competent legal advice before initiating any infringing activity.  Failure to do so could lead to a finding of willful infringement.

AIA framers suggest that Section 298 was inserted to (a.) protect attorney-client privilege, and (b.) reduce pressure on accused infringers to obtain opinions of counsel solely for litigation purposes.

Insofar as understanding Section 298’s affects, the authors suggest it’s useful to examine current law, one of which is the doctrine of willful infringement.  This particular doctrine exists to inhibit objectively reckless behavior.  For example, if an innovator or entrepreneur inadvertently engages in infringement by neglecting to consider (a.) the likelihood that their actions (will/may) constitute infringement of an existing valid patent, and (b.) this probability (risk) is known and/or obvious, then (c.) it’s possible that the entrepreneur or innovator may be found liable for willful infringement with the accompanying substantial damages.

Insofar as matter-of-factly stating whether or how the AIA has affected the demand for IP (patent) counsel, I don’t believe the following quite meets the ‘rocket science’ test because I have no objective data to support it either way, i.e., that there has been a general reduction in legal (particularly, outside counsel) budgets due to one or a combination of (a.) the global economic downturn, (b.) the new provisions incorporated in the AIA, and/or (c.) the demoralizing and momentum stifling costs associated with securing competent IP (intellectual property) counsel by individual entrepreneurs, innovators, and R&D intensive SME’s (small, medium enterprises).

Some IP law firms are politely serving up warnings that dispensing with opinions from expert patent counsel does carry some downsides.  Certainly, no argument from me!  One of the (potential) downsides I hear mostoo is the proverbial ‘I wish I had done – known that’. Such sentiments become particularly acute when, not so much if, challenges, disputes, or litigation arise at some point, regarding the propriety or status of a patent.

The inference that patent counsel wish to convey is that (IP) clients will be better positioned to (a.) avoid having their IP challenged, disputed, and/or litigated, and (b.) defeat claims of willful infringement, enhanced damages, or induced infringement if experienced and competent IP (patent) counsel are involved at the outset in terms of rendering opinions. Such timely and experienced perspectives that a patent, and the embedded intellectual capital, are not infringed, invalid, or both, will likely continue to be an influential defense to allegations of willful infringement.

There’s no argument from me that competent and experienced IP counsel can, and routinely are necessary and beneficial.  I am particularly supportive of those seemingly few IP counsel who can articulate for clients’, an evidence-based, 360 degree picture for clients absent over-dramatized FUD  factors, i.e., fear, uncertainty, and doubt.  That said, there is absolutely no question a persistent, aggressive, globally asymmetric, and increasingly predatorial environment of risks, threats, and vulnerabilities exist, including ‘trolling’, which are variously directed to proprietary intellectual, structural, and relationship capital, i.e., intellectual properties.   This leaves ample room for competent, current, knowledgeable, and experienced IP counsel to remain valuable collaborators to entrepreneurs, innovators, and corporate R&D processes in the post AIA era.

(The inspiration for this post evolves from article written by Edmund J. Haughey and Stephan Yam of Fitzpatrick, Cella, Harper & Scinto in Bloomberg Law Reports, February 14, 2012.)

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, 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 or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Law Firms Playing To Win: Get Serious About Providing Intangible Asset Services

February 8th, 2013. Published under Intangible asset strategy, Intangible asset training for management teams.. No Comments.

Michael D. Moberly   February 8, 2013

Strategy is about (a.) ‘shortening the odds’ and (b.) ‘winning with choices’, i.e., choices that apply firm wide and in a manner that turns strategy making into a collaborative dialogue where not a single individual’s perspective is necessarily dominant according to A.G. Lafley and Roger L. Martin in their newly published book ‘Playing to Win: How Strategy Really Works’.

Winning however is not always about ‘stomping one’s competitors out of a sector market space or otherwise engaging in activities to ensure competitors lose’.  Quite the contrary, say Lafley and Martin, many firms can actually ‘win’ while being in (competitive) proximity to one another.

In this post, I am extrapolating some of the authors key views (found in and applying them to law firms and how they should genuinely consider developing and honing ‘strategies that really work’, insofar as deliberating the economic – business reality that intangible assets have relevance/application to each practice unit within a law firm.  In other words, I genuinely believe intangible assets are not the exclusive domain of intellectual property (IP) practice units.

One objective here, not unlike Lafley and Martin’s broader perspective, is to elevate awareness of intangible assets and encourage a law firm wide dialogue.  A preferable outcome of such dialogue would be that operational consensus is achieved about how intangible assets have relevancy to…

  • each practice area
  • the various legal transactions executed on behalf of clients, and whether
  • a professional obligation exists to conduct an intangible asset assessment at the outset of an engagement to determine which (if any) intangibles are
    • relevant to the legal service(s) being rendered
    • at risk
    • in play
    • affect or influence legal tactics, strategy, and/or outcome.

With respect to the practice of law, I say, any reasonably experienced practitioner would be hard pressed to identify a practice area in which intangible assets are neither relevant nor play a role to the legal work being executed on behalf of a client.

After all, it is a globally universal economic fact – business reality today, that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability reside in – evolve directly from intangible assets.  However, such recognition and application of this economic fact – business reality is incumbent on both legal counsel and their client to recognize.

Absent such recognition, by either party, I can suggest, with a high degree of certainty, that money, value, sources of revenue,  and/or assets themselves, will be ‘left on the table’, or worse, their contributory value irreversibly lost and/or relinquished to a competitor or legal opponent.

But, as Lafley and Martin point out, generally (not specific to law firms) it’s only when, in the scenario I’m describing, a firm’s practice leaders and managing director recognize the importance of literally ‘getting under the skin’ of client companies, does strategic clarity commence between a firm and a their (business) clients.

For many entities, be they law firms or businesses, their strategy is poorly, if not improperly, equated with merely a plan or vision.  When this occurs, it makes it much more challenging to articulate and legitimately practice ‘a strategy’.  And, in most instances Lafley and Martin point out, any absence of clarity makes it all the more difficult to describe ‘what winning really is’, which of course, should be any businesses primary objective.

Returning to law firms, in my view, this is where intra-practice recognition, collaboration, and adoption of respectful and practical strategies that genuinely recognize intangible assets play various roles and degrees of relevance to most every client engagement regardless of practice area distinctiveness or expertise.

Conventionally speaking, Lafley and Martin point out, businesses (not unlike law firms in my view) are inclined to seek-select clients (customers) whom they want (assume) to be ‘special, where it becomes, almost exclusively about ‘articulating and winning the value equation’ with these special clients.  I assert that any ‘client – law firm value equation’ today should, among other things, factor all intangible assets a client has produced and/or acquired which obligate collaborative insights (about intangibles) being offered from other practice areas, especially given the depth, breadth, range, and embedded characteristics of intangible assets.

Please remember, it is an economic fact that steadily rising percentages (65+%) of  most company’s value and sources of revenue, etc., evolve from intangible assets.  Logic suggests that equally significant numbers of clients experiencing legal challenges or seeking legal counsel come from intangible asset intensive businesses.

To me, this business reality makes it all the more essential that law firms acquire an operational and strategic familiarity with intangible assets which can be immediately applied to client engagements that translate as timely, relevant, and forward looking (firm) differentiators.  I am not reluctant to say intangible asset operational familiarity should  include at minimum the capability to identify, unravel and assess the assets’ control, use, ownership, value, and sustainability.  Such familiarity lays the foundation for firms, so inclined, to offer services to aid clients’ in achieving a much needed and higher level of stewardship, oversight, and management of their intangible assets.

Simply stated, any law firm should ‘feel’ a professional obligation as a client-centered and dependant entity to make its client’s happier than its competitors.  Fully addressing clients intangible assets is a clear, low cost, and potentially lucrative path (strategy) to achieve such a forward looking and competitive stature.

There’s no question ‘winning is important’ Lafley and Martin point out.  But, while short term (specific/individual client) wins are duly recognized as being important, long term strategic wins also carry significance and importance.  For example, if a law firm doesn’t genuinely sense the importance of trying to make each of its client’s happier, compared to competitor firms, overtime, its clients will recognize they are not be getting what they may otherwise with another firm, in this instance, excellent and practical counsel regarding the stewardship, oversight, management of their intangible assets.

Unfortunately, there are some (law) firms that consistently ‘aim too low’ which means’ they convey satisfaction with ‘just gliding along’ in their current state. based largely on past practice and assuming satisfaction with the status quo. That’s not to suggest they don’t want ‘to be in the game’ and acquire new clients.  But, a reality is, some clients are increasingly likely to trade one firm off for another as they learn they need – want specialized expertise, particularly in the area of identifying, unraveling, exploiting, managing, and monetizing their intangible assets.  The firm that’s traded off then tries to rationalize why the client opted out and sought legal services elsewhere.

To at least mitigate this practice of clients ‘trading off’, law firms need to convey a genuine willingness to achieve clearer understanding of clients’ strategic, not only their immediate needs.  This can be achieved by exhibiting absolutely no reticence about…

  • recognizing 65+% of most company’s value and sources of revenue reside in intangible assets and therefore, a growing percentage of clients’ need for legal counsel will involve intangible assets.
  • artfully and respectfully ‘getting under a client’s skin’ coupled with the courage to suggest implementing slight alterations and/or modifications, not wholesale changes, to a business clients’ operations to better engage in the stewardship, oversight, and management of their intangible assets.

Enhancing – broadening a firm’s practice to provide intangible asset services, especially to the increasing number of companies that exist and prosper based on the effective attraction, utilization, and management of their intellectual, structural, and relationship capital, vs. just focusing on or limiting the firm to delivering IP only services, i.e., patent searches and issuances.

There is absolutely no evidence to refute the reality that if will likely prove quite prudent for law firms to consider ‘carving out’ groups of existing or prospective clients currently being un-served or under-served insofar as their intangible assets are concerned.  To be sure, by skillfully and respectfully doing so carries a high probability of making clients happier and more satisfied and propel a firm to becoming a more lucrative differentiator in this expanding market space.

Again, by artfully and respectfully ‘getting under the skin of an existing or prospective client’ a clearer understanding can be achieved about which clients need and/or are (knowingly or unknowingly) seeking intangible asset related services.  By having intangible asset services and expertise, at the ready, and understanding that specific (legal) ‘jobs’ client’s need/want to get done, there is a cascading probability that client
expectations will rise accordingly which will contribute to making those law firm that possess intangible asset expertise to become a market space leader.

An important factor toward achieving this lies in respectfully communicating the enduring characteristics of intangible assets to existing as well as prospective clients, i.e.,

  • the irreversibility of the trend toward global economies that are increasingly dependent on – embedded with knowledge-based intangible assets, and
  • the (global) universality of intangible assets that play a consistent, but rapidly rising role in business transactions, company value, and sources of revenue.

A special thanks to A.G. Lafley’s and Roger L. Martin’s newly published book ‘Playing To Win’ for providing inspiration for this post.

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, 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 or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Security Product Marketing and Deployment Should Emphasize Intangible Assets

February 8th, 2013. Published under Intangible asset strategy, Intangible asset training for management teams.. No Comments.

Michael D. Moberly   February 7, 2013

Important, but often overlooked aspects today to marketing – promoting security products, systems, and/or services is recognizing the globally universal economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today, lie in – evolve directly from intangible assets!

Thus, when security products are deployed properly and integrated with supportive practices and culture, their functionality is threefold, i.e., contribute to…

  1. safeguarding tangible (physical) assets, i.e., equipment, inventory, access control, intrusion detection, etc.
  2. producing valuable assets that are intangible, e.g., users’ sense – feeling of being (more) safe, secure, and productive, company reputation, structural and relationship capital, etc.
  3. mitigating risks to intangible assets., e.g. the best way to describe this is that today, any deal or transaction under consideration or about to be executed, valuable intangible assets will be not just be in play, they will be directly relevant to the outcome.

Number one and number two above are intuitive and generally, from my experience, serve as the primary starting points for framing promotional pitches related to security products because most buyers (aside from security practitioners) (a.) assume these outcomes are what’s needed – necessary and (b.) are unfamiliar (un-schooled) in other contributions and/or functions of security products, systems, or services like producing or mitigating risks to intangible assets.

With respect to #2 above, it’s essential, in my view, to incorporate the correct descriptor in ‘the pitch’, i.e., intangible asset to (a.) elevate awareness of the assortment of intangible assets that are commonly embedded in every environments representing all business sectors, (b.) ensure the functionality – deliverables of security products are distinguished relative the sector they are deployed, and (c.) recognize intangible by-products of security products, systems, and services.

For example, when users of an environment, e.g., retail, office, etc., feel (sense) that environment respects their patronage or productivity by introducing sector specific security measures to make it as safe, secure, and productive/efficient as feasible, they will be inclined to return that respect by (a.) being a repeat customer/client, or (b.) be more productive and elevate employee retention rates.

Security product developers, producers, and vendors would be well served by adapting and incorporating variants of this (sector specific) language in their marketing/promotional materials and/or sales pitches.  Again, the rationale for incorporating this language is that today’s business environment is global, increasingly competitive, predatorial, and aggressive, and dominated by knowledge-intangible asset intensive firms regardless of sector.

It seems obligatory then, that security products, and how they are marketed, promoted, and ‘pitched’ reflect these irreversible and paradigm shifting economic facts and business realities particularly as management teams, c-suites, and boards become more attuned to intangible assets in fiduciary (responsibility) contexts.

Various combinations of #1 and #2 are the dominant marketing – promotional messages relied upon by security product vendors.  However I have yet to hear a ‘pitch’ related to #2 using the correct descriptor, i.e., intangible assets.

Important, but often overlooked aspects today to marketing – promoting security products, systems, and/or services is recognizing the globally universal economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today, lie in – evolve directly from intangible assets!

Various combinations of #1 and #2 are the dominant marketing – promotional messages relied upon by security product vendors.  However I have yet to hear a ‘pitch’ related to #2 using intangible asset descriptors.

Here are two important guides…

1.      Focus on business realities and economic facts, i.e., 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability lie in – evolve directly from intangible assets. These are irrefutable. Every existing, as well as prospective client produces, possesses, and should be engaging their intangibles as part of their enterprise risk management program.

Real and sustainable value can be brought to clients by helping (training) them to identify, unravel, and sustain control, use, ownership, and monitor (asset) value, materiality, and risks. This can be achieved by respectfully guiding clients to recognize what intangible are, their relevance, and the expanding fiduciary responsibilities to safeguard them.

2.      The conventional practice of framing security product ‘pitches’ that emphasize fear, uncertainty, and doubt (FUD), while difficult to completely set aside, especially when existing and/or prospective clients are dismissive of and/or express reluctance to apply metrics or principles of enterprise risk management.

If security product (system, service) vendors commence engagements with a strong methodology and narrative that is not based exclusively on the subjective and conventional FUD approach, and instead, replace it with a ‘forward looking’ focus on safeguarding the value and sources of revenue produced by a client’s intangible assets, the probability of experiencing consistent success increases.

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, 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 or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

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