Business IP and Intangible Asset Blog, Michael D. Moberly

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

September 28th, 2012. Published under Company culture and reputation., Fiduciary Responsibility. No 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

Company Culture Is An Intangible Asset!

July 31st, 2012. Published under Company culture and reputation., Managing intangible assets. No Comments.

Michael D. Moberly   July 31, 2012

Let’s start by taking a look at some intriguing language the Securities and Exchange Commission obliged Omnimedia to state in its 2007 Annual Report regarding Martha Stewart…

Ms. Stewart’s efforts, personality, and leadership have been and continue to be critical to our success…the repeated diminution, or loss of her services, due to disability, death, or some other cause…could have a material adverse effect on our business…

Admittedly, I am one, among many, who acknowledge Stewart’s accumulation of presence and on-camera demeanor, etc., constitute an influential, valuable, and strategic package of intangible assets which, for the most part, have been effectively bundled and leveraged (managed) etc., before, during, and following her temporary change of address to Alderson, West Virginia.

But, interestingly, Grant McCracken of ‘chief culture officer’ fame, rather emphatically characterizes ‘Stewart’s gift of intangible assets (to Omnimedia) being neither mysterious, nor imponderable, or irreproducible. Even more hard hitting, McCracken states, the intangible assets that have emerged from Ms. Stewart and subsequently brought to the business table, are not even essential.  Respectfully, McCracken’s view on this particular aspect is where we depart, practically and philosophically. I’m not so sure Apple employees, board, stockholders, their brand loyal consumers, and the bevy of Apple analysts and pundits would agree with McCracken’s view on this, at least not for awhile anyway.  On the other hand, we must be reminded that GE continues to exist and function profitably following the departure of their version of Steve Jobs, i.e., the iconoclastic Jack Welch.

McCracken notes in his book ‘Chief Culture Officer: How To Create A Living, Breathing Corporation’ that probably the two most significant errors made in characterizing a company’s culture, are (a.) presuming the culture evolves from the presence of a single individual, or (b.) that an individuals’ personality is synonymous with an organization’s culture.

While I do not consider myself to be a ‘company culture’ expert, I have held numerous positions of leadership and here’s what (a.) I do know, and (b.) what I can recognize.  First, a company’s culture can be a useful and influential intangible asset that can garner – deliver a great deal of value and competitive advantages to an organization, large or small, in a variety of ways and in many different venues.  That is, providing of course, employees, as well as stakeholders believe it and the culture is understood and recognized as such!

Let me take this a step further by assuming some literary license from a comment attributed to a former USSC Justice regarding obscenity, i.e., I’m unsure, he said, how to define it, but I know it when I see it!   That’s largely how I, and I believe many of my colleagues, characterize company culture, that is, we’re quite sure that we can recognize a good one when we see (experience) it.

Even more intriguing to me is McCracken’s opinion that most intangible assets, which collectively converge as a companies’ culture, can be reverse engineered.  While I am certainly not denying reverse engineering of intangible assets can and does occur, it seldom does so overnight, rather over periods of time to the point ‘a culture changes’ fully manifests itself in competitors and/or economic – competitive advantage adversaries.  And, should such intangible asset reverse engineering occur, c-suites and boards in my view would have engaged in substantial fiduciary irresponsibility, especially if there were no initiatives (processes, procedures) in place to counter and/or mitigate such inevitabilities.

But, let’s examine company culture a bit further by drawing upon some perspectives found in reputation risk (management).  As has been noted in this blog previously, studies – surveys conducted by respected reputation risk experts routinely find in companies that experience a significant and cascading reputation risk, it may take 3-5 years for that company to recover (partially, fully)from  lost and/or diminished revenue, market space competitive advantages, and consumer-brand loyalty, etc.

In this context, I just don’t believe it’s a circumstance of comparing apples to oranges to suggest there are very plausible correlations between a companies’ reputation (risk) and its culture. More specifically, I believe a company’s reputation risk elevates when a substantial, resilient, and somewhat permanent culture exists.

That is to say, using the Martha Stewart example, I’m quite confident I would be hard pressed to find one reputation risk colleague who would disagree that Omnimedia took a major hit to its reputation before and throughout Ms. Stewart’s trial, including her acceptance of a plea and subsequent incarceration.  Rather obviously though, one of Stewart’s enduring legacies was the existence of a sustainable pipeline of intangible assets, i.e., brand, consumer loyalty, innovation, energy, etc., that did not evaporate either during the trial or her subsequent absence.  Instead, those intangibles rapidly re-emerged upon her return and as strong, profitable, and even perhaps a more sustainable culture.

Company Culture Can Be A Powerful and Valuable Intangible Asset, If…

July 2nd, 2012. Published under Company culture and reputation., Intangible Asset Value. No Comments.

Michael D. Moberly   July 3, 2012

Throughout the past decade, especially following the 2001 publication by the Brookings Institution of two seminal books; (1.) Intangibles: Management, Measurement, and Reporting authored by Baruch Lev, and (2.) Unseen Wealth authored by Margaret Blair and Steven Wallman, there has been a relatively steady stream of well intended and thought provoking articles, studies, position papers, and books written about the role and potential value of the intangible asset ‘company culture’.

Still for some, and one must respectfully include management teams, c-suites, and boards when I say this, ‘company culture’ appears to remain elusive, nebulous, perhaps even mystical insofar as its relevance, and not just its (singular) dollar value, if any, but, its ‘contributory value’ to a company, its stakeholders, and market position.

It’s clear, that the unfortunate passing of Steve Jobs has rejuvenated interest in examining and studying ‘company culture’ which numerous accounts have drawn attention to Jobs’ self-characterized maniacal interest, i.e., embedding and sustaining Apple’s culture.

With all due respect to Steve Jobs and the extraordinarily capabilities of Apple employees, and I do mean respect, having visited the Apple campus, I’m confident countless academics, technology management observers and analysts are devoting time to articulating a ‘before and after’ picture of Apple’s culture. 

In other words, I expect there will be much needed and well intentioned research devoted to offering various perspectives whether Apple’s culture has permanence?  If so, how much can be attributed to personal (Steve Jobs, Apple’s) goodwill, which according to some analysts, may have little or no actual commercial value?   

More specifically, we can anticipate numerous research initiatives, representing a broad spectrum of disciplines, will be examining Apple’s culture to determine if, among other things, it can be replicated, for good or bad, in other companies, and again, if so, what is an objective means to assess and measure its relevance and contributory value to a company?  But, let’s not forget, ‘company culture’ is an intangible asset!

In an article titled “Apple Without a Core,” (Report on Business, January 2012) author Timothy Taylor asked how valuable ‘taste’ is, as an asset, which readers know was a consistent refrain of  Steve Jobs, and also is an intangible (asset).  To support his perspective, Taylor identifies three attributes of Apple’s brand, i.e., (1.) Jobs’ own sense of taste, (2.) Jobs’ personal energy, and (3.) Jobs’ himself, as constituting a unifying symbol to and for the company.  Personally, having visited the Apple campus, I find myself in general agreement with the importance Taylor attaches to these attributes.

Without Jobs, Taylor suggests, Apple’s brand (and, presumably its culture) will be vulnerable to competitors that is, if one fully buys into the three attributes of brand noted above.  To further support his view, Taylor applies one of countless quotes from Jobs himself, i.e., “The only problem with Microsoft is they just have no taste. People like symbols. So I’m the symbol for certain things.”

In America, we sure seem to be receptive, in certain circumstances, to what I refer to as a ‘john wayne’ persona.  That is, the oft repeated statement ‘there is no I in team’ is not consistently practiced. Instead, we appear quite willing to grant credit for a range of achievements, and in some instances rightfully so, to the deeds and efforts of a single individual.  I certainly grant you that one person through behaviour or expression, in particular circumstances, can indeed serve as an impetus, foundation, and rallying point, through persistence and sustained focus, for long-lived change, i.e., culture.  No argument here!  Still, it appears, we’re occasionally too quick to suggest there is ‘an I in team’.  

On the other hand, we need look no further than the top floor of Houston’s former Enron headquarters’ building or to the much ‘globalized wall street’ to see how the embodiment of a culture, albeit generally adverse, can actually and repeatedly, play out.  Now that’s where, in my view, much research is warranted in terms of assessing and measuring the impact of a culture that went far beyond the doors of Enron or investment banking firms.  I believe one would be hard pressed to attribute ‘those cultures’ necessarily to a single individual, whether they were imprisoned or never actually charged with a criminal act.

(This post was inspired by articles respectively titled ‘Defining the Value of Culture Within An Organization’ authored by Bill Bliss and ‘Apple Without A Core’, authored by Timothy Taylor.)

Company Culture: How Definable Is It?

June 28th, 2012. Published under Company culture and reputation., Intangible asset focused company culture.. 1 Comment.

 Michael D. Moberly   June 28, 2012

“Culture eats strategy for breakfast,” is a phrase widely attributed to Peter Drucker, which I understand was framed and hung on the wall of FMC’s so-called ‘war room’.

The phrase itself, was elevated in prominence in 2006 by Mark Fields, Ford Motor Company’s President of the America’s who has been credited with initiating a culture change at Ford.   

A dominant task Field engaged in at Ford was to replace a culture (work environment) that had come to be routinely characterized with terms such as bitterness, distrust, fear, and betrayal, etc., to a culture that came to be characterized with quite different terms such as creativity, innovation, and (employee) sense of responsibility.

Readers familiar with the American auto industry however, surely understand that the culture reversal that took place at Ford, under Field’s tutelage, or any U.S.-based automaker for that matter, is often fragile and linked to collective bargaining agreements. 

There is certainly no intent here to minimize Mr. Fields efforts as I’m confident his presence and advocacy served as both impetus and rallying point to achieve the culture change objective.  But perhaps it’s prudent to recognize that large scale (enterprise wide) culture changes are seldom the product of a single individual’s efforts, i.e.,

no matter how far reaching one’s vision or how brilliant one’s strategy, neither can be realized if they haven’t evolved from and are supported by a receptive and like-minded company culture.!

Realistically, Ford, like other U.S. carmakers at the time were approaching their own respective ‘fiscal cliffs’ which no doubt served to bring about a greater than usual sense of receptivity and urgency to accept change.  Recognizing that if substantial (cultural) change was not forthcoming and in fairly rapid order, those fiscal cliffs would be more than metaphors, they would, in many experts’ view, materialize as irreversible catastrophes to the U.S. auto industry as a whole.

Company culture defined…Like a former U.S. Supreme Court Justice remarked regarding a landmark pornography decision, which I now paraphrase, ‘I don’t know precisely how to define it, but I know it when I see it’.   That’s quite similar to the way that company culture is often characterized, e.g., as somewhat of an invisible (intangible) temperament and/or attitude that links companies, employees, and stakeholders together.

More importantly though I believe, is company culture being characterized as an ‘internal version of a company brand’ because it encompasses a company’s mission, vision, and values.

Grant McCracken is one, among several prominent ‘company culture advocates’ today who clearly understands how an effective (company) culture can impact a business, e.g., “culture is a company’s last mile” as McCracken is often quoted.  McCracken specializes, he says, in the intersection of commerce and culture where company culture sits at the intersection of anthropology and economics.

All in all, McCracken paints a very seductive picture about company cultures and makes a compelling case that culture may well be marketing’s next silver bullet.

But, myself, along with many of my intangible asset advocate colleagues, have long understood, presumably like McCracken, that a well designed, honed, and monitored (company) culture can produce – deliver what I refer to as ‘contributory value’ to many different aspects, venues, and transactions a company routinely engages.  In other words, culture can become an extraordinarily valuable (intangible) asset that can benefit a company in many ways, particularly in the marketplace.

We recognize that any initiative, sometimes regardless of the motivation, to develop – instill a sustainable (company) culture change will inevitably incur various challenges and hurdles, not the least of which are positively re-directing long embedded beliefs and back-channel habits

some of which will be of such significance and duration that the probability for failure will be substantially elevated. 

This is especially significant when company leadership lacks, for starters…

• a clear understanding of their company’s intangible assets, of which company culture is one
• a strategic appreciation for the implications that a culture change will, in most instances, bring to a business, i.e., employees, management teams, c-suites, boards, stakeholders, and a company’s overall perception in its market space, and
• tested strategies at the ready to leverage, exploit, and/or market a culture change once it has been achieved, to benefit a company.
• the ability to promote its own culture internally will likely experience a hard time promoting and defining its brand externally

Another unfortunate reality is that some of the skill sets expected of management teams, c-suites, and boards today related to company success, sustainability and profitability, are not necessarily skills that coincide with initiating, valuing, managing, and monitoring changes in company culture .

While visiting  my blog, you are respectfully encouraged to browse other topics/subjects of interest.  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry or comment at  314-440-3593 or m.moberly@kpstrat.com

SHRM Survey Confirms: Company Culture and Culture Management Are Valuable Intangible Assets!

June 19th, 2012. Published under Company culture and reputation., Intangible asset focused company culture.. No Comments.

Michael D. Moberly   June 19, 2012

Society for Human Resource Management Survey…

Company culture and its management are obviously on the minds of HR managers as SHRM commissioned a survey in early 2012 that asked 770 HR leaders to identify significant workforce management and staffing challenges.  The challenges the survey respondents identified were:

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

To the point of this post, a full ninety percent of the respondents stated that (company) culture management is either important or very important!  That finding is particularly instructive insofar as it should prompt management teams to further recognize that devoting time, energy, and resources to developing and sustaining a positive company culture will deliver impressive and measurable returns.

Most importantly in my view, it can now be stated, with considerable authority, that a well managed company culture, whereby employees, management teams, c-suites, and boards collectively recognize, respect, and are committed to sustaining a principled base of intellectual, structural, and relationship capital, and values (intangible assets) can elevate a company’s overall performance.

Supplementing this view of course, is the economic fact that 65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability today evolve directly from intangible assets one of which is a positive and principled company culture.  It’s certainly not a stretch then, to infer that a principled company culture can also serve as a catalyst for internalizing and enhancing other factors noted in SHRM’s survey, i.e., employee engagement, retention, performance, and certainly, recruitment of new employees.

What is a company culture…?

Based on the fine work of Dr. Edgar Schein, a company culture consists of progressive stages, and will emerge and become observable…

• as employees (collectively) recognize and begin to act on a shared system of values, norms, beliefs, and attitudes that defines and clarifies what is important.
• as employee’s 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 will be translated and ultimately operationalized, preferably as consistent and positive behaviors throughout a company.

But, 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 it cannot be replicated or sustained through a market change or significant economic downturn as we’re experiencing today?

Unfortunately, the contributory value of a principled 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 such as a 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 influential asset relative to enhancing and measuring employee engagement, retention, performance, and recruitment.

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

But, building a principled company culture is not something which evolves exclusively in a top-down fashion, nor is it a characteristic owned and executed solely by a management team or c-suite as aptly noted by Jennifer King (Software Advice Blog, June 12). Instead, a well-grounded and principled company culture provides permanence, depth, and confidence among employees and their abilities.

A risk intelligent company culture…

My professional preference would be that a company’s culture would also be a risk intelligent culture.  An important step toward developing a ’risk intelligent company culture’ is recognizing that risk is not solely an external phenomena, i.e., all risk does not emanate from outside a company.

An equally important step in developing a risk intelligent (company) culture is rooted in recognizing that company value can be favorably affected by integrating aspects of risk management with human resource management, e.g., a significant percentage of (company) risk evolves from various employee behaviors and actions, including management teams and boards.

In other words, according to Deloitte’s, The People Side Of Risk Intelligence: Aligning Talent And Risk Management, risk touches virtually every aspect of employee (HR) management, and employees touch virtually every aspect of risk management.

A risk intelligent company, Deloitte’s report points out, executes at the point in which there is convergence of…

• risk governance – how a company treats (identifies, assesses) risk and assumes responsibility for risk oversight and strategic decision making.
• risk infrastructure management - how a company assumes responsibility for and understands how to design, implement, oversee, and sustain an effective risk management program.
• risk ownership – how and when employees assume some degree of ownership (responsibility) for identifying, assessing, monitoring, reporting, and mitigating risk.

In light of the economic fact that U.S. businesses lose an estimated 7% of their annual revenue to various forms of occupational fraud, a risk intelligent culture (workforce) can be a strong advantage.

In a risk intelligent company (culture), employees, management teams, c-suites, and boards collectively assume an obligation to…

• understand the adverse consequences of unattended risks
• how existing risk management policies are being interpreted and practiced internally by employees

Too, when management teams, boards, and employees collectively assume responsibility for cultivating company-wide awareness (culture) about risks is a prelude to creating a risk intelligent company culture.

Lastly, and perhaps most importantly, it’s important to recognize two realities insofar as developing a ‘risk intelligent company culture’…

• any change in (company) culture generally precedes changes in employee behavior
• cultural and behavioral changes are less a product of formal risk policies, controls, and pronouncements, than they are the result of effective (employee) incentives and rewards.

As pointed out by former Harvard researchers Matthew Bunn and Anthony Wier, a ‘good company culture is comprised of 20% equipment and 80% people’.  Certainly, no argument here!

(The inspiration for developing this post is attributed to a fine piece authored by Jennifer King at Software Advice) http://blog.softwareadvice.com/articles/hr/culture-chief-1061212/

Company Cultures Can Manifest Themselves As Valuable Intangible Assets!

April 9th, 2012. Published under Company culture and reputation., Looking Forward. No Comments.

Michael D. Moberly    April 9, 2012

I am quite confident that devoting time and resources to developing a durable and resilient company culture focused on intangible assets can deliver some impressive returns.  By durable, I mean circumstances in which employees, business units, and c-suites collectively recognize, respect, and are committed to building – acquiring a necessary base of intangible assets.  This also includes all parties acquiring a current familiarity with intangibles to assume a level of responsibility toward intangible assets commensurate with their position that contribute to sustaining control, use, ownership of the assets and monitoring their value and materiality.

In the words of Dr. Edgar Schein, an organizational (company) culture consists of three progressive stages:

1^st – there is a shared recognition – assumption that employee’s at all levels learn while solving problems…and, if those assumptions work well enough…

2d – employees will come to consider them valid and worthy of being taught and passed along to new employees, because…

3d –  they represent the correct way to perceive, think, and feel in relation to addressing (internal, external) problems that their company routinely faces.

So, why is it important and what are the potential benefits that can accrue to a company by endeavoring to build a company culture focused on intangible assets…

First…65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability evolve directly from intangible assets.

Second…a company culture focused on intangible assets can serve as an excellent vehicle to raise enterprise wide awareness about the most important and quite possibly, the real sources of company value and revenue.

Third…an intangible asset focused company culture can serve as a catalyst for internalizing incentives and identifying strategies to more effectively exploit and monetize intangibles assets.

Fourth…companies and their management teams and stakeholders must recognize the economic reality that there’s been a permanent and irreversible shift in company’s primary sources of value, revenue, growth, and sustainability, that is, from tangible (physical) assets to intangible (non-physical) assets!

A company’s initial step for developing a culture that’s focused on intangible assets involves determining…

What…attitudes and beliefs need to be established among employees and stakeholders that lend themselves to not just appreciating the role and contributory value of intangibles, but also internalizing the absolute necessity to sustain their control, use, ownership, and monitor their contributory value and materiality to the company.

How…those attitudes and beliefs will be translated by employees and stakeholders and ultimately become embedded themselves in employee, business unit, and c-suite behavior, i.e., having relevant procedures, policies, and practices in place to provide consistent and effective stewardship, management, and oversight of the intangibles.

Matthew Bunn and Anthony Wier point out that a ‘good corporate culture is comprised of 20% equipment and 80% people’ which I’m in general agreement.  That said, it’s vitally important to recognize that even the best practices, policies, procedures, regulations, and standards cannot compensate for any apathy and/or dismissiveness regarding the relevance and contributory value of intangible assets insofar as successfully competing in this knowledge-based global economy.

Too, as thoughtfully 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 (and presumably asset buyers and sellers as well) with respect to determining the ‘suitability’ of an asset. One of those factors is an assets’ transferability.  For example, is a ‘company’s culture’ so specific that it cannot be replicated or sustained through a market change or significant economic downturn?

Now those are important questions to know and ask!

While visiting  my blog, you are respectfully encouraged to browse other topics/subjects (left column, below photograph) .  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

Intangible Asset Rich Companies: Building A Culture That Fits!

January 26th, 2012. Published under Company culture and reputation., Intangible asset strategy, Looking Forward. No Comments.

Michael D. Moberly    January 26, 2012

What is a company culture?  A company culture is a system of shared values and practices that define what is important to that company.  Frequently, these values and practices become blended – embedded with other (already existing) norms and beliefs that convey (to employees, as well as management teams)  acceptable attitudes, behaviors, and practices.

Schein, among others, points out that a company culture will frequently emerge as management teams, boards, and employees collectively recognize the beneficial outcomes that accrue to each group respectively, as they successfully solve problems by applying those shared norms, values, beliefs, and practices. 

What is a knowledge-based economy?    The phrase ‘knowledge-based economy’ was popularized, if not initially coined by Peter Drucker.  In fact it’s the title of Chapter 12 in his book titled ‘The Age of Discontinuity’.  

 A knowledge-based economy, according to Drucker, refers to the use of an array of technologies and practices such as knowledge engineering and knowledge management, etc., to produce economic benefits, competitive advantages, and efficiencies for a company.  In a knowledge-based economy, knowledge, Drucker says, becomes the tool to achieve and execute, not necessarily a product or a simple outcome.

 The center piece of today’s knowledge-based economy are the intangible assets companies develop-produce and/or acquire.  Simply stated, developing a company culture to effectively fit (reflect) an intangible asset rich business means acquiring a fairly high level of operational familiarity with intangibles.  This starts of course with the simple phrase ’know’em when you see’um’.  

Such familiarity also permits management teams, boards, and employees alike, to develop, position, bundle, safeguard, and profitably exploit intangibles to bolster a company’s value, competitive advantages, and revenue streams, and do it ’faster, better, cheaper’ than competitors.  It also lays a compelling foundation (building blocks) for growth and sustainability.

Why is a company culture focused on its intangible assets necessary in a knowledge-based economy?   First and foremost because it’s an irreversible economic fact that 65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability lie in – directly evolve from intangible assets.  

Far too frequently however, the existence and contributory value of intangible assets do not consistently appear on conventional mba oriented dashboards, in part because the dashboards remain tuned to tangible-physical assets vs. intangible (non-physical) assets.  

Still, for some management teams and boards, intangibles:

• remain as somewhat of a managerial, financial, and exploitation mystery in terms of how to best utilize them to extract value and build competitive advantages
• present a reporting-accounting conundrum because they’re seldom, if ever, reported on company balance sheets or financial statements, yet they literally form the competitive, value, and revenue backbone for most companies. 

The much desired objective is to build a resilient and self-perpetuating (company) culture that collectively understands intangibles’ value, revenue, and competitive advantage creation potential and processes, i.e., how ideas and innovation (intangible assets) evolve and can be fostered to the point they consistently deliver favorable returns for a company.  Again, such an objective can materialize in many forms, e.g., newly created efficiencies, stronger competitive advantages and customer relationships, new knowledge, and/or greater reputational value.

 (Some definitions contained in this post relating to knowledge-based economy were adapted by Mr. Moberly from Wikipedia.)

While visiting  my blog, you are respectfully encouraged to browse other topics/subjects (left column, below photograph) .  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

Company Cultures’ Focused On Intangible Assets Are More Efficient, Effective, and Profitable!

January 13th, 2012. Published under Company culture and reputation., Goodwill, Intangible asset focused company culture.. No Comments.

Michael D. Moberly   January 13, 2012

In today’s globally competitive and predatorial business (transaction) environment, company management teams and boards are consistently seeking ways to be innovative and create (additional) value, revenue, and competitive advantages.  One way this can be achieved is through the ‘executable inspiration’ that evolves from building a company culture that effectively and consistently identifies, utilizes, and exploits its intangible assets.

But, let’s make an important point first.  Intangibles are not the elusive or esoteric constructs as they’re frequently characterized merely because they lack a conventional sense of physicality or don’t appear on company balance sheets or financial statements other than when they’re lumped together as goodwill.

So, to achieve this almost surely profitable state, i.e., a company culture focused on intangibles, and to do so consistently, requires the internalization of:

• what intangible assets are
• the various forms and contexts in which they exist
• how they’re produced, and
• recognize (measure) they’re  contributory relevance and value to a company and/or business unit, i.e., underpin sources of revenue, competitive advantages, and growth opportunities.

With respect to the development of a culture, it will emerge and become observable as employees (collectively) recognize and begin to act on…

• a shared system of values
• that brings clarity to (defines) what is important,  and
• contains certain norms, values, beliefs and attitudes that manifest as acceptable means to solve problems
• which, in turn, leads to efficiencies, competitive advantages, and reputational value, etc., on behalf of a company and/or business unit.  (Adapted by Michael D. Moberly from the fine work of Dr. Edgar Shein)

It’s worthy to note also that building a company culture, particularly one focused on intangible assets is not, in my view, something which evolves exclusively in a top-down fashion, nor is it a characteristic owned and executed solely by a management team or c-suite. 

Ultimately, as employees (companies) acquire confidence and expertise in identifying intangible assets, they will be assessed for, among other attributes, their contributory value to company processes or procedures and if marketable commonalities or combinations exist that can be bundled and used/exploited to advance a company process, product, or service.

A well-grounded (embedded) intangible asset focused company culture provides permanence, depth, and confidence to employees relative to their abilityt to:

• understand and distinguish intangibles, recognize their importance, and how – where they exist and/or are in play in most all business processes and transactions
• tweak and/or nuance intangibles to benefit themselves, their position, and the company, e.g., building, strengthening, and sustaining competitive advantages and customer and supplier relationships, etc.

While visiting  my blog, you are respectfully encouraged to browse other topics/subjects (left column, below photograph) .  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

Risk Intelligent Company Culture: A Valuable Intangible Asset To Achieve

December 21st, 2011. Published under CFO's, Company culture and reputation., Enterprise risk management.. No Comments.

Michael D. Moberly     December 21, 2011

A first, and a very important step toward developing a ’risk intelligent company culture’ is recognizing that risk is not solely an external phenomena, i.e., all risk does not emanate from outside a company. 

A second, and equally important step in developing a risk intelligent company culture comes from recognizing that company value can be favorably affected by integrating certain aspects of risk management with human resource management.  The rationale for doing this lie’s in the reality that a significant percentage of (company) risk evolves from - is embedded in various employee behaviors and actions, including management teams and boards.

 In other words, according to Deloitte’s, The People Side Of Risk Intelligence: Aligning Talent And Risk Management, risk touches virtually every aspect of employee (HR) management, and employees touch virtually every aspect of risk management.   

A risk intelligent company, Deloitte’s report points out, executes at the point in which there is convergence of…

1. Risk Governance – how a company treats (identifies, assesses) risk and assumes responsibility for risk oversight and strategic decision making in a dynamic and global risk environment.

2.  Risk Infrastructure Management - how a company assumes responsibility for and understands how to design, implement, oversee, and sustain an effective risk management program.

3. Risk Ownership – how and when employees assume some degree of ownership (responsibility) for identifying, assessing, monitoring, reporting, and mitigating risk.

In light of the economic fact that U.S. businesses lose an estimated 7% of their annual revenue to various forms of occupational fraud, a risk intelligent workforce can be a valuable and useful intangible asset for any company.  One does not have to look far to see the range of adverse (long term) consequences on companies when they rely on poorly designed or executed risk management policies, practices.

In a risk intelligent company (culture), management teams and boards assume a fiduciary obligation to…

• understand the adverse consequences of unattended risks
• how existing risk management policies are being interpreted and practiced internally by employees

A starting point for achieving a risk intelligent company culture is to critically assess unwritten (risk management) practices by posing the following questions:

• do all employees, including the management team and board, understand the companies risk management priorities, objectives, and the strategic reasons-rationales behind them?
• what (employee) behaviors are actually being rewarded with respect to identifying and mitigating risk
• are company (employee) incentives aligned with the company’s risk management priorities and objectives

Recognizing each question’s relevance insofar as how it can serve to influence and/or perpetuate a company environment of unmanaged risk taking is a necessary step to becoming more intelligent (and objective) about company risk.  Too, it’s a prelude to creating a risk intelligent company culture wherein management teams, boards, and employees collectively assume responsibility for cultivating company-wide awareness about risks.

To do so  fosters risk intelligent behaviors at all levels which begins by…

• adopting a common definition of risk that specifically reflects the nuances of company operations
• clearly defining the roles, responsibilities, and authority (for managing risk) coupled with relevant levels of (enterprise wide) transparency.

 Lastly, and perhaps most importantly, it’s important to recognize two realities insofar as developing a ‘risk intelligent company culture’…

1. any change in (company) culture generally precedes changes in employee behavior
2. cultural and behavioral changes are less a product of formal risk policies, controls, and pronouncements, than they are the result of effective (employee) incentives and rewards.

(This post was inspired by a paper produced by Deloitte titled ‘The People Side Of Risk Intelligence: Aligning Talent And Risk Management and respectfully adapted by Michael D. Moberly)

While visiting  my blog, you are respectfully encouraged to browse other topics/subjects (left column, below photograph) .  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

Understanding Intangible Assets Leads To Better Business Decisions…

December 16th, 2011. Published under Business Applications, Business Transactions, CFO's, Company culture and reputation., Fiduciary Responsibility. No Comments.

 Michael D. Moberly    December 16, 2011

Without dispute, it’s an economic fact that today 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth lie in – directly evolve from intangible assets! 

But, it’s no longer sufficient for management teams to merely know what intangible assets are or which one’s their company produces and possesses or follow the conventional accounting path of lumping them altogether (indistinguishable) as goodwill.  It’s now essential, if not a fiduciary responsibility to:

• sustain control, use, and ownership of the assets
• know precisely how the (intangible) assets contribute to a company’s value, revenue, and sustainability
• understand how to leverage-position the assets to extract as much value and competitive advantage as possible
• exercise effective stewardship, oversight, and management of the assets and consistently monitor their value and materiality.

 By achieving this level of operational and financial familiarity with a company’s intangible assets, numerous and enterprise wide multipliers can follow, for example:

1.      Add predictability to business transactions when intangible assets and IP are in play by being able to assess the stability, fragility, defensibility, and sustainability of the assets (due diligence). 

 2.      Elevate probability that projected returns will be achieved, competitive advantages will be sustained, asset synergies/efficiencies will occur, and exit strategies affirmed.

 3.      Achieve effective convergence of accounting, reporting, and asset valuation by recognizing the linkages to:

           a.  knowledge management programs

          b.  intellectual property development and enforcement

         c.  Sarbanes-Oxley and FASB compliance

          d.  utilizing the balanced scorecard.

 4.      Reduce probability of costly, time consuming, and momentum stifling legal challenges and disputes regarding the assets by foreseeing circumstances that can ensnare and/or entangle (intangible) assets to impede, erode, or undermine a transaction’s value, competitive advantages, or projected performance. 

 5.       Build an ‘intangible asset’ company culture that contributes to:

            a.  recognizing, producing, and sustaining control, use, ownership, and value of intangibles

           b.  providing the necessary awareness to accelerate the pursuit of asset rights issues, i.e., ownership, value, infringement,  misappropriation, theft, etc.

 6.      Develop a comprehensive organizational resilience (continuity-contingency) plan that encompasses all forms/contexts of intangible assets in order to produce a stronger and quicker recovery following a significant business disruption or natural disaster.

While visiting  my blog, you are respectfully encouraged to browse other topics/subjects (left column, below photograph) .  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com