Archive for May, 2016

Assessing Intangible Assets

May 26th, 2016. Published under Due Diligence and Risk Assessments, Fiduciary Responsibility, Intangible asset assessments/audits.. No Comments.

Michael D. Moberly May 26, 2016 ‘A blog where attention span really matters’!

What Are Intangible Assets…
Company and institutional value has shifted from collections of physical (tangible) assets to synergistic assemblages of non-physical IA’s (intangible assets) rooted in – evolving from intellectual, structural, relationship, and competitive/entrepreneurial capital.

However, unlike conventional IP (intellectual property), i.e., patents, trademarks and copyrights, there is no certificate issued by the government that says ‘these are your IA’s and competitive advantages’. Instead, the responsibility for identifying, assessing, safeguarding and otherwise preserving the value of those assets is a fiduciary responsibility for each company – organization and its management team.

Margaret Blair and Steven Wallman, previously associated with the Brookings Institution’s ‘intangibles project’, serving as that project’s principle investigators, along with Jonathan Low, describe IA’s as…“non-physical factors of production that contribute to or are used in producing goods or services, or as factors expected to generate future benefits for the individuals or firms controlling the assets”.

I see, with increasing consistency IA’s are the product of uncoordinated, unplanned, variously collaborative, and occasionally serendipitous actions of knowledge relevant individuals, and not necessarily the result of a decision arising from a dedicated capital allocation. Specific examples of IA’s are described with considerable specificity in numerous posts at my ‘Business IP and Intangible Asset Blog’ and distinguished in some 14+ categories.

The relevance of IA assessments…
An IA assessment is a methodical, insightful, and ultimately prescriptive tool for identifying, unraveling, and distinguishing the contributory – competitive value of key – strategic IA’s that underlie (serve as the foundation to) a company’s stability, profitability, and sustainability, and reputation.

To be sure, IA-specific assessments remain relatively new. They have largely born out of necessity, that is, the economic fact – global business reality that 80+% of most company’s value, sources of revenue, and sustainability lie in – evolve directly form IA’s, no longer tangible-physical assets. As such, a new, non-conventional approach (method, model) to identify and assess those assets was needed; distinguishable from conventional IP valuations and inventories. To accommodate IA’s, this approach must, of course, be sufficiently flexible to (reveal) identify IA’s in a variety of inter-linked and global circumstances and contexts in which they’re being used and the formats in which they exist.

Professional Service Firms and Intangible Assets

May 23rd, 2016. Published under 'Safeguarding Intangible Assets', Business Transactions, Fiduciary Responsibility, Professional service firms.. No Comments.

Michael D. Moberly May 23, 2016 ‘A blog where attention span really matters’!

The rationale underlying any business initiative – transaction should always be to maximize and ultimately extract as much value as possible from the assets in play because it’s an economic fact that…

…80+% of most organization value, sources of revenue, sustainability, competitiveness, and wealth/profit creation today lie in – directly evolve from IA’s (intangible assets).

It is then, an organization’s IA’s that will most always be in play because they are integral to both…
• transaction value, and
• near term outcomes.

This economic fact – business reality presents various fiduciary obligations to PSF’s and company decision makers irrespective of whether they are the originator, owner, buyer, or seller, etc.,

…to know, with the necessary specificity, what IA’s are and how to identify, unravel, and sustain their control, use, ownership and value throughout their respective economic, competitive, and/or functionality cycle and certainly a relevant pre-post (transaction) period of time.

Seldom can asset value maximization – extraction be fully achieved using conventional, generic precepts, checklists, or mere confirmatory reviews of registrations and filings. That’s because, the pillars of any organization’s IA’s are it’s…
• intellectual,
• structural,
• relationship, and
• competitive capital.

…which are routinely embedded in operations, processes, and/or functions that create efficiencies, competitiveness, brand, and value, etc., and generally lie under most conventional business radar.

So, when the motive – objective for parties is to initiate and/or be receptive to a transaction, there must be skill sets applied in advance to identify, unravel, preserve. maximize, and extract as much value as possible from the relevant assets in play, particularly, the IA’s. It’s prudent then for PSF’s (professional service firms) retained to support-oversee such transactions, regardless how small or periodic they may occur, possess current operational skill sets necessary to…

…strategize about ways to achieve sufficient operational familiarity with IA’s to respectfully engage business clients to recognize, assess, and distinguish their composition and contributory role and value in the global market space, particularly if/when the assets are effectively integrated, bundled, and safeguarded in both pre and post transaction contexts.

In far too many transactions, IA functionality – contributory value is overlooked, improperly assessed, misunderstood, or neglected insofar as the integral and contributory role they consistently play as sources of revenue, value, and competitive positioning.

The ‘Business IP and Intangible Asset Blog’ is designed to elevate awareness – bring operational familiarity to IA’s in the irreversible global business environment where 80+% of PSF’s business client’s value and sources of revenue actually lie.

To dismiss the importance for PSF’s to integrate this dimension into their practice area – service deliverables will, at minimum, manifest as adversely impacting firm’s billable revenues, competitive positioning, brand, and attractivity. On the other hand, offering IA services to existing and prospective clients is nearing a requisite for being consistently recognized as horizonal in the delivery of relevant and effective services to business clients in 2016, and for the foreseeable future.

The root of such services lie in preparing – positioning business clients to identify, preserve, safeguard, and extract value, efficiency, competitiveness, and sources of revenue from their IA’s. And, doing so, will most certainly, favorably affect their sustainability and outcomes to any transaction they wish to enter.

Company Culture Valuable Intangible Asset

May 20th, 2016. Published under Company culture and reputation., Intangible asset focused company culture.. No Comments.

Michael D. Moberly May 20, 2016 ‘A blog where attention span really matters’!

A company’s culture, and its management, are two of many ‘intangibles’ that play increasingly pivotal roles in – contributions to (company) performance, retention, and sustainability, among other things. The credibility-validity of this perspective lie in the findings of numerous studies/surveys commissioned-undertaken by professional associations and academia not unlike a Society for Human Resource Management (SHRM), survey, circa 2012, which asked HR (human resource) leaders to identify significant ‘workforce management and staffing challenges’, which 770 respondents identified…

• employee engagement
• employee retention
• effective performance management
• employee recruitment, and
• company culture management

To some, this survey example, may appear dated, especially if considered in the context of today’s increasingly entrepreneurial and go fast, go hard, go global business environment. To be sure, the commonality of findings, replicated – validated through numerous other studies/surveys and, whether taken individually or collectively, are indeed instructive. Preferably, they have and will continue to influence business leaders and management teams to conclude that devoting time, energy, and yes, some resources to developing and sustaining a relevant-intelligent (company) culture will deliver measurable positive returns. So, no rocket science here, a company (sector relevant) culture is a prized and measurable achievement and powerful contributor to performance, competitiveness, value, and, of course, brand.

A company culture…whereby employees, management teams, c-suites, and boards alike, are collectively committed to sustaining a principled base of intellectual, structural, relationship, and competitive capital ala IA’s (intangible assets).

This reality manifests in the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today lie in – evolve directly from IA’s, of which company culture is a potent example. It’s certainly not a stretch then for experienced business leaders to also conclude that a principled and consistent company culture can, and frequently does, serve as a catalyst for internalizing and enhancing other IA’s among them being, employee engagement, retention, performance, as well as attracting – recruiting new employees.

What is a company culture…?
Based on the fine work of Dr. Edgar Schein, a company culture consists of progressive stages that observably emerge, that is, if one looks for them, i.e.,

• employees (collectively) recognize and begin to act on a shared system of values, norms, beliefs, and attitudes that defines and clarifies what is important.

• employees at all levels recognize they learn as they’re solving problems and, if the problem solving methodologies work well enough, employees will consider them valid and worthy of being taught and passed along to new employees, because…

• they represent the correct way to perceive, think, and feel in relation to addressing (internal, external) problems that their company routinely face, which, in turn, leads to efficiencies, competitive advantages, and reputational value, etc. (Adapted by Michael D. Moberly from the work of Dr. Edgar Shein)

For most companies, the initial step in developing a principled company culture involves…

• determining what attitudes and beliefs need to (should) be established, and

• having a clear understanding how those attitudes and beliefs can translate (become operational) as sector-business relevant behaviors on an enterprise-wide basis.

Transferability of company culture…
As aptly pointed out by Dr. Kenan Jarboe in his Athena Alliance monograph appropriately titled ‘Intangible Asset Monetization: The Promise and the Reality’, there are six factors considered by financial markets (i.e., asset buyers, sellers, and investors) with respect to determining the ‘suitability’ of an (intangible) asset. Of those six factors, one is an assets’ transferability. In other words, is a ‘company’s culture transferrable? Or is it so (company, business unit) specific that would make its replication and/or sustainability challenging should any base changes occur?

Unfortunately, the contributory value of a company culture seldom, if ever, appears on management teams’ conventional mba oriented dashboards, in part, I believe, because those dashboards remain largely focused on tangible (physical) assets vs. intangible (non-physical) assets, i.e., company culture.

Too, for some management teams, c-suites, and boards, a principled company culture, remains somewhat of a managerial, financial, and competitive advantage mystery in terms of understanding how best to utilize – exploit this increasingly influential and catalystic asset.

A much desired objective of course, is to build a resilient, self-perpetuating, and principled company culture that is readily scalable and supports development-acquisition of intellectual structural, relationship, and creative capital to consistently deliver measurable performance and returns.

Of course, building a principled company culture today, is seldom something which evolves exclusively in a top-down fashion and as such, it is seldom a characteristic wholly owned and executed by a management team or c-suite. Instead, a well-grounded and principled company culture provides permanence, depth, and confidence among employees and their abilities. (Jennifer King, Software Advice Blog)

Professional Service Firms’ Intangible Asset Deliverables A Lucrative Game Change Strategy!

May 11th, 2016. Published under Intangible asset training for management teams., Intangibles as strategic assets, Law Firms. No Comments.

Michael D. Moberly May 11, 2016 A blog where attention span really matters!

Expand deliverables to include intangible assets. Create new sources of sustainable revenue, enhance firm value, reputation, and competitiveness. Rationale…

• It is an irreversible economic fact that…80+% of most company’s value, revenue, competitiveness, and sustainability today lie in – evolve directly from IA’s developed internally or acquired externally.

• In every business activity, initiative, and/or transaction…valuable – competitive IA’s will be in play and at risk.

• Delivery of professional services are legitimately premised…on client companies, management teams, and boards recognizing their fiduciary responsibility, arising from Stone v Ritter, to ask…

…is their company properly positioned, insofar as possessing the expertise and skill sets, to identify, unravel, develop, bundle, utilize, and extract – exploit as much value and competitive advantage as possible from its IA’s, while simultaneously safeguarding and monitoring risks to those assets’, which, if materialized, are all but certain to adversely affect the assets’ materiality, contributory value, competitive advantage, and sources of sustainable revenue.

• Intangible asset identification…assessment, exploitation, and risk mitigation are integral to client company’s economics, competitive advantages, and (global) commercial success.

• Acquiring sufficient operational familiarity…of IA’s to design, market, and deliver client specific services are now fundamental requisites to professional service firm’s strategic planning, expansion, sustainability, and revenue generation.

• Each professional service firm deliverable…is obliged to recognize strategies to exploit – apply client companies unique knowhow, particularly where there is clear IA intensity and dependency held in intellectual, relationship, structural, and creative capital.

• Its imprudent for professional service firms to characterize…client company’s IA’s are mere addendums (subordinate) to conventional IP (intellectual property).

• Operational familiarity with IA’s are legitimate entrées for professional service firms to…re-engage existing clients and engage new – prospective clients…

• Professional service firms that frame their services to encompass IA identification, stewardship, management, and stewardship can expect 15+% growth…in billable client services in year one following effective marketing and delivery.

Venture Capital Questions About Intangible Assets

May 9th, 2016. Published under Due Diligence and Risk Assessments, Early stage companies., IP strategy., Sustainability of intangible assets.. No Comments.

Michael D. Moberly May 9, 2016 ‘A blog where attention span really matters’!

Venture forums…
My experiences as an observer of venture forums is that they are fast paced and highly charged ‘electric’ events wherein management teams of a growing array of RBSU’s (research based startups) university-based spinoffs, and early stage companies, most all of which are rich in – dependent upon IA’s (intangible assets) give impassioned ‘elevator pitches’ to prospective investors whose expertise and inclination – receptivity to invest have evolved to become increasingly narrow and specialized, as perhaps it should.

The format for venture forums I have attended is that pitches are limited to 3-5 minutes wherein the spokesperson explains their companies’ mission, key-competitive aspects of their innovation, additional research-trials necessary, fiscal projections, business model, why investment is warranted, and how the investments will be applied should an investor deem it a worthy risk. Should a ‘pitch’ be well received, the company representative will likely be peppered with questions from prospective investors or their representatives, one of which is invariably ‘what’s your IP position’?

What’s your IP position…
Of the numerous venture forums attended, the most consistent answer to this albeit over-rated, misunderstood, yet seemingly obligatory questions are…
• has a patent application has been filed (provisional),
• is a patent pending, or
• has a patent been issued?

Through my lens as an intangible asset strategist and risk specialist, the importance attached to achieving formal/official IP (intellectual property) status for one’s innovation is overstated, perhaps variously inflated. And, the consistency which prospective investors ask the IP position question collectively suggest both parties assume conventional IP, patents particularly, are requisites to securing investment capital necessary to proceed. I hold a somewhat different perspective. There are other equally, if not more relevant factors to any innovation under consideration which prospective investors should sort out as part of their ‘invest – don’t invest’ decisions.

Legal symbolism…
True, IP status does provide investors with the necessary legal standing and recourse options should the invested enterprise fail, not meet its projections, or its (protected) proprietary information succumb to infringement or challenge within the typical 3 – 5 year exit strategy plan investors frequently demand. And, yes, patents and other forms of intellectual property are obligatory for WTO and TRIPS signatories.

But, the global business transaction environment is becoming increasingly aggressive, predatorial, competitive, and legacy free. This translates of course to proprietary information, irrespective of its IP status, is, all but certain, to be targeted and sought. That coupled with the persistent challenges and vulnerability to intangible asset (IP) infringement, theft, and/or counterfeiting make an RBSU’s IP position little more than legal symbolism. Should companies elect to pursue other strategies to safeguard their proprietary – competitive advantage intangible assets, i.e., trade secrecy for example, those legal portals for bringing action against the inevitable infringers, thieves, and counterfeiters in locales where a company’s most valuable assets are in play also carries some ambiguity.

Legal – economic safety nets…
Through my lens, conventional IP has less relevance as a legal – economic safety net than startup management teams – prospective investors should assume. Too, the costs associated with mounting an IP infringement – misappropriation suit are significant, if not cost and time prohibitive for resource conscious startups to pursue regardless of case credibility.
It’s prudent for investors and IP holders alike to acknowledge patents and most other forms of IP, no longer serve as…
• standalone deterrents, or
• reliable prognostications of innovation value.

The more relevant venture forum questions are…
I urge prospective investors – venture capitalists to re-phrase their ‘IP position’. For example, rather than merely asking ‘what’s your IP position’ assuming it is an important criterion, perhaps a more relevant and telling question would be…

has the proprietary know how, i.e., intellectual, structural, and
relationship capital that underlie the startups’ innovation and
serve as the cornerstone to the IP on which an investment would be
premised, been adequately safeguarded from its inception!

Important to recognize patents start life as proprietary information and trade secrets…
It’s a well acknowledged adage in the information asset protection arena that patents typically start life as trade secrets and proprietary know how. Therefore, if key – distinguishing know how underlying innovation and its prospective investment has been treated in a cavalier manner…
• absent the requisite minimums of trade secrecy or other best
information asset protection practices
• prior to filing a patent application,
• it’s prudent for prospective investors to ascertain
• the status, i.e., fragility, stability, and commercial-fiscal
sustainability of the assets being considered for investment.

Asset vulnerability, probability, criticality, and speed…
Today, the vulnerability, probability, criticality, and speed which know how, i.e., intellectual and structural capital assets particularly, can be compromised, infringed, misappropriated, or stolen are integral to any ‘invest – don’t invest’ decision.

Follow-up questions…
Before making an investment in intangible asset rich and dependent companies, it’s important to direct probing follow-up questions to company management teams. Doing so will allow prospective investors to more objectively assess whether control, use, ownership, and value of the underlying intangible assets are…
• sustainable relative to an intended exit strategy, and
• reflective of the assets’ functionality and value cycle.

Today, with increasing certainty, ineffectively safeguarded intangible assets (IP) will quickly hemorrhage in value, competitive advantage, and elevate investor’s vulnerability to costly, time consuming, and momentum stifling challenges and exit strategy headaches!

Reputation Risk Avoid Response Translate As Cover Up

May 7th, 2016. Published under Due Diligence and Risk Assessments, Reputation risk.. No Comments.

Michael D. Moberly May 7, 2016 ‘A blog where attention span really matters’!

Once acts, events, or behaviors, perceived as adverse or illegal materialize, and are captured and distributed on social media, and intensified through photographic characterizations that convey indefensible aggressiveness, hostility, and confrontational demeanors by authorities…well, these are Dr. Nir Kossovsky’s prime ingredients for a hard to refute reputation risk.

The originating incident represented in this post occurred in November, 2011, sparked by an order from University of California-Davis administrators for their campus police department to remove ‘Occupy Wall Street’ (movement) protesters encamped on university property.

As if the manner in which that order was executed, i.e., the accompanying behaviors-demeanors exhibited by university police were not enough, in mid-April 2016, Sam Stanton and Diana Lambert, reporters for the Sacramento Bee (newspaper) learned and wrote that senior University of California-Davis officials, already operating under extremely tight economic constraints (placed on the entire UC system), had spent at least $175,000, following the 2011 incident to hire outside consultants to engage in an “online branding campaign designed to clean up the negative attention UC-Davis, and its Chancellor, Dr. Linda Katehi had received.”

It is not my intent here to re-litigate – second-guess the event and the actions of university police. That’s for others to interpret-decide ala reading the independent investigation chaired by Cruz Reynoso, a former associate justice of the California Supreme Court along with a separate, independent fact-finding document assembled by Kroll, a consulting firm that specializes in investigations.

The point I wish to make here is that the university’s resourcing for ‘an online branding campaign designed to clean up the negative attention UC-Davis, and its Chancellor had received” was misplaced, likely produced little, if any measurable return, and online activities for this purpose variously discount – are dismissive of intellectual memory.

To be sure, I am not suggesting an outcome of this incident, however needless and botched it was, would necessarily translate as stifling student applications to attend UC-Davis. Similarly, being reasonably well versed in reputation risk matters and their mitigation, I am hard pressed to embrace the premise that ‘online clean-up of negative’ – adverse publicity, standing alone, will measurably mitigate or reverse reputation risks which have already materialized.

Reputation, is a variously delicate intangible asset with relevance to every company, organization, institution, and individual. After all, reputation is perhaps the most complex of intangible assets which for the most part derives from perceptions, experiences, and observations of others. Respecting the expanding reliance on various social media as people’s primary means (source) for receiving – conveying information, I remain, at this point, unconvinced that the act of erasing or favorably modifying – re-writing existing (on-line) information in open source, is a viable path or perhaps even ethical practice for trying to re-attach or re-affirm reputation in which risk has materialized.

Lethal Autonomous Weapons Systems’ Intangibles

May 5th, 2016. Published under Communicating Risk, cyber warfare.. No Comments.

Michael D. Moberly April 5, 2016 ‘A blog where attention span really matters’!

Lethal autonomous weapons systems (LAWS) represent, in my judgment, an inevitable, but, as yet, incomplete class of weapons embedded with capabilities to independently select and engage targets (adversaries) without human (operator) assessment and/or interventional oversight.

LAWS are unlike existing (conventional) pilotless drone ‘aircraft’ in the sense they are – will be largely, if not wholly, autonomous. In other words, as I have come to understand LAWS, once deployed in various manifestations, they can surveil, assess, and execute in a wholly independent manner presumably with internal assessment and decisional guidance wrapped in AI (artificial intelligence) software.

The development and introduction of remotely piloted – controlled drones for operation in theaters of combat. counter-insurgency and counter-terrorism and for surveillance and intelligence gathering serve as real time hedges favoring expansion of risk adverse strategies, particularly, human life. Obviously, drones deployed in war fighting circumstances can deliver devastating munitions to specified adversaries – targets with the aid of satellite and global positioning systems, but only at the direction of their human operators and overseers, thus mitigating risk to requisite for ‘boots on the ground’.

Presumably LAWS, on the other hand, will be designed – programmed with capabilities to identify, assess, and self-authorize target engagement, i.e., seek, find, distinguish, select, and engage targets absent human intervention or oversight ala simultaneous introduction of infinite numbers of ‘jason bournes’ to a conflict theater. LAWS could presumably function (also) as ‘defensive’ weapons, i.e., as a theater interceptor – destroyer of an adversaries’ incoming munitions to supplant human reaction times.

Aside from the autonomy and independence of such weapons systems, their development and use is presumably intended to mitigate – favorably affect human’s – societies’ intangible senses – perceptions of risk, fear, and safety, while simultaneously serving as formidable strategic deterrents each being an intangible. To be sure, adversaries and allies alike are aggressively pursuing comparable-competing LAW war fighting capabilities, the theater functionality of which may be more-less effective, at which time the aforementioned intangible (asset) senses will likely change accordingly.

This post was inspired by the writings of Heather M. Roff, particularly an article published in Slate Magazine (online) dated April 7, 2016, titled ‘Killer Robots on the Battlefield: The Danger of Using a War of Attrition Strategy with Autonomous Weapons’ in advance of her testimony at the U.N.’s, April 11, 2016 ‘Convention on Certain Conventional Weapons’ in Geneva.