Michael D. Moberly   June 22, 2010

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

A second, and equally important step in developing a risk intelligent company comes from recognizing that company value can be favorably affected by integrating - merging risk management and human resource management.  The rationale for doing this lies in the reality that a significant percentage of (company) risk actually evolves from - is inherently embedded in employee behavior and actions, which includes the management team and board.

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.  Is there no better reason to develop a risk intelligent company culture?

Effective risk management (and a risk intelligent company) Deloitte suggests, executes at the point in which the following converge:

1. Risk Governance - how a company treats risk and assumes responsibility for risk oversight and strategic decision making…

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

3. Risk Ownership - employees knowing what their risk responsibilities are, i.e., they assume (some)  responsibility (ownership) for identifying, measuring, monitoring, and reporting 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 very valuable (intangible) asset for a company, because one does not have to look far to see the adverse strategic consequences - affects on companies when they rely primarily on ’unwritten rules’ for how things get done and how, or if, risk is managed.

In a risk intelligent company (culture), management teams and boards assume an obligation to understand what those ‘unwritten company rules’ are and how they’re being interpreted-executed by employees.   A good starting point is (a.) to critically assess a company’s ‘unwritten rules’ by getting answers to the following  questions, and (b.) recognizing the questions’  relevance insofar as how they may serve to influence and perpetuate a company environment of unmanaged risk taking:

1. What (employee) behaviors are actually being rewarded?

2. Are company (employee) incentives (properly, effectively) aligned with the company’s risk management priorities?

3. Do all employees, including the management team and board, understand the companies risk management priorities, objectives, and the strategic reasons-rationales behind them?

Ultimately, becoming more intelligent (and objective) about company risk is an important and necessary prelude to creating a risk intelligent company culture wherein management teams and boards assume a responsibility for elevating and cultivating a company-wide awareness of risk that fosters risk intelligent behaviors at all levels.  It begins by:

1. Adopting a common definition of risk in accordance with national standards and best practices.

2. Clearly defining roles, responsibilities, and authority (for managing risk) with appropriate levels of transparency.

Lastly, it’s important to recognize, insofar as developing a ‘risk intelligent company culture’ that (a.) a change in (company) culture generally follows a (employee) behavior change, and (b.) culture and behavior changes are less a product of formal risk policies, controls, and pronouncements, than they are the result of effective 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.)

The ‘Business IP and Intangible Asset Blog’ is researched and written by Mr. Moberly to provide insights and additional views for company management teams, boards, and employees to aid in identifying, assessing, valuing, protecting, and profiting from their intangible assets.  I welcome and respect your comments and perspectives at m.moberly@kpstrat.com.

Michael D. Moberly   June 10, 2010

A company culture is a shared system of values and practices that become blended with other norms and beliefs that send very influential and strategic messages to employees and stakeholders about a company’s attitudes and behaviors, by defining what’s important.  

A company culture will emerge (be observed) as management teams, boards, and employees recognize the beneficial (economic, competitive advantage) outcomes that can accrue as they engage and solve problems through a ’company culture’ platform consisting of shared norms, values, beliefs, attitudes, and practices about intangible assets.  These can accrue in the form of achieving efficiencies, advancing competitive advantages, and elevating a companies reputation value, etc. (Adapted by Michael D. Moberly from the work of Dr. Edgar Shein)

A mature, well oriented, and nurtured company culture lays permanency and depth to collectively (a.) identifying and distinguishing the various types of intangible assets within a company and how and where they’re produced, (b.) recognizing how intangible assets are present in most every company process, initiative, and/or transaction, and (c.) acquiring confidence to engage, manage, and oversee intangibles to benefit and enhance particular projects, business units, or the company as a whole.  This can occur by, among other things, building, strengthening, and sustaining competitive advantages and customer and supplier relationships.

A company’s (strategic) growth plans rely not just on the ability to scale up numbers, but on maintaining things like quality, responsiveness, and product-service quality.  If growth occurs by acquisition or if non-core opportunities are to be spun off, then all intangible asset areas require special attention-consideration by management teams, boards, and employees. 

This is why an intangible asset focused company culture is not merely important, its essential to success!

Each ’Business IP and Intangible Asset Blog’ post is researched and written by Mr. Moberly to provide respectful and useful insights for companies, their management teams, boards, and employees to aid in identifying, assessing, valuing, protecting, and profiting from their intangible assets.  I welcome and respect your comments and perspectives at m.moberly@kpstrat.com.

Michael D. Moberly    April 16, 2010

What is a company culture?  Basically, a company culture is a shared system of values (within a company) that defines what is important.  Those values become blended with other norms and beliefs that convey (to employees) what the accepted (appropriate) attitudes and behaviors are. 

Schein, among others, suggests a company culture will emerge as management teams, boards, and employees collectively recognize the beneficial outcomces that accrue as each group successfully solves problems by applying those shared norms, values, and beliefs.  

What is a knowledged-based economy?    The phrase ‘knowledge-based economy’ was popularized, if not invented by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity.  A knowledge-based economy refers to the use of various knowledge technologies such as knowledge engineering and/or knowledge management to produce economic benefits for a company.  In a knowledge-based economy, knowledge essentially becomes a tool, not necessarily a product.

The center piece of the knowledge-based economy in my judgment, are the intangible assets companies produce.    Simply stated, developing a company culture to fit and reflect the knowledge-based economy means acquiring a level of familiarity with and an attitude toward intangible assets that permits management teams, boards, and employees to be able to identify, build, protect, and effectively utilize intangibles to for example, enhance a company’s value and competitive advantages, generate revenue, and/or lay a foundation for future growth.

Why is an intangible asset company culture necessary in a knowledge-based economy? - First of all, it’s an economic fact that 65+% of most companies value, sources of revenue, future wealth creation and sustainability lie in - are directly linked to intangible assets.  Unfortunately, but, all too frequently, the existance and/or contributory value of intangible assets simply does not appear on business radar screens, because, in large part, those screens still remain fixated on tangible-physical assets.  Also, in many instances, intangibles remain somewhat of a mystery to management teams and boards particularly in terms of how to extract value or competitive advantages from assets that are non-physical and are seldom, if ever, reported on company balance sheets.  Trust me, the ’coin of the realm’ for this knowledge-based economy is intangible assets!

The desired outcome is to build an enduring, yet flexible, company culture that collectively understands its internal value creation processes, i.e., how ideas and innovation (intangible assets) evolve and can be fostered to the point they deliver returns.  In the context of intangible assets, those outcomes may take the form of newly created efficiencies within the company, stronger competitive advantages and customer relationships, new knowledge, and/or greater reputational value.

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

Michael D. Moberly   March 18, 2010

In today’s globally competitive and predatorial business (transaction) environment, company management teams and boards should consistently ‘be in the hunt for’ innovative ways to create (additional) value, revenue, and competitive advantages through better identification, utilization, leveraging, and exploitation of their intangible assets.

A company’s intangible assets should first be examined individually, and secondly, to determine/assess if marketable commonalities and/or combinations exist that could be bundled to expand venues in which the assets can be utilized, and thereby add sources of revenue and opportunities for growth. That’s a good thing! 

To fully achieve this almost surely profitable exercise, in my judgment, and to do so consistently, requires an additional element beyond single training seminars.  That additional, but often overlooked element is to create a consistently alert, articulate, innovative, and supportive ‘company culture’ that’s operationally attuned to intangible assets, i.e., (a.) what they are, (b.) how they’re produced, and (c.) how they contribute to, underpin, build, and sustain a company’s value, sources of revenue, and growth opportunities.

A company culture is a shared system of values that defines what is important (to a company) and contains certain norms and beliefs that convey appropriate and accepted attitudes and behaviors (for a company).  In most instances, a ’culture’ will emerge - be exhibited and observable as management teams and employees (collectively) recognize the beneficial (economic) outcomes that can accrue as they engage and solve problems through those collectively shared norms, values, beliefs, and attitudes which accrue in the form of greater efficiencies, competitive advantages, and reputational value. (Adapted by Michael D. Moberly from Dr. Edgar Shein)

A well oriented company culture gives permancy and depth to (a.) recognizing the importance of intangible assets that exist in most all company activities and processes, (b.) helps employees recognize and distinguish those intangibles, and (c.) understanding and confidence in tweaking and nuancing those intangibles to benefit themselves and the company, e.g., building, strengthening, and sustaining competitive advantages and customer and supplier relationships.  

Michael D. Moberly   January 15, 2010

In a 2008, UK-based study titled ‘The Hidden Marketplace’ it was reported, to no particular surprise, that there’s quite strong agreement among company management teams that intellectual property  and probably intangible assets as well, are (1.) valuable assets, that, (2.) warrant protection.  

A reality though, as reported in the study, again, no surprise here, is that those dual perspectives of value and protection, are more reflective of managerial aspirations than reality.  That is, management teams seldom translate (execute) their espoused perspectives about IP into concrete actions such as (a.) registering their IP, (b.) engaging in employee IP awareness training, and/or (c.) pursuing - taking action against (internal, external) IP infringers.

Admittedly, this (study) research project focused predominatly on the demand side - consumptive aspects of the larger counterfeit market.  Specifically, the research sought to get a better picture of what is happening in those so-called ’hidden marketplaces’, i.e., places of employment wherein employees routinely purchase counterfeit and/or pirated goods.  A very worthy objective for the principle investigators of this study (as an outgrowth of the project as whole) was to develop relevant tools and assistance for employers and enforcement agencies to help address the (IP theft-infringement) problem from the inside.

This study also examined three (other) issues relevant to the principles of the Business IP and Intangible Asset blog, i.e.,

1. employee attitudes regarding the value of IP

2.  a company’s (management team) approach to protecting its own IP, and

3. what levels of awareness exist among employers - management teams about the problems associated with IP theft in their workplace. 

These issues, in my view, would be better framed in a normative context, i.e., (a.) what should management team attitudes be about protecting their company’s IP, and (b.) what is the necessary (appropriate) level of awareness management teams should possess regarding IP protection to effectively benefit their company?

The answer to these questions lie in management team recognition that it’s quite likely, 65+% of their company’s value, sources of revenue, and building blocks for future wealth creation and sustainability are directly related to (their) intangible assets and IP.  Underpinning that recognition is management teams’ ability and committment for sustaining (managing) control, use, ownership, and monitoring the value and materiality of its IP and intangible assets.  Absent those requisites, its unlikely progress will occur!

Michael D. Moberly    July 31, 2009

A company culture is a shared system of values that defines what is important (to a company).  Blended into a ‘company culture’ are certain norms and beliefs that convey appropriate - accepted attitudes and behaviors (for a company).  Dr. Edgar Schein suggests a company culture will emerge - be exhibited as management teams and employees recognize the beneficial (economic) outcomes that will accrue as they engage and solve problems through those shared norms, values, beliefs, and attitudes in the form of efficiencies, competitive advantages, new knowledge, and reputational value.

Positively linked to a company’s culture is it’s reputation which is the ’perceptual representations of past actions and future prospects that describe (drive) its overall appeal to key constituents, e.g., customers, clients, investors, employees, and the general public. A company’s reputation is often multi-dimensional however, because

constituent groups tend to use their own criteria to assess (a company’s) reputation vis-a-vis competitors.

Executive surveys and studies consistently report culture and reputation to be key factors and contributors to business success because they:

1. add value through differentiation and competitive advantages

2. are positively linked to enhanced (financial) performance

3, are difficult to imitate or replicate (by competitors).

Intuitively then, management teams should be (more) receptive, not reluctant or hesitant, to better understand how intangible assets such as culture and reputation favorably influence their company’s performance, success, and sustainability. 

One starting point to achieve this is for management teams to recognize that a strong company culture will favorably influence a company’s performance by attitudinally positioning a company to produce, sustain, exploit, and extract more value from those assets, e.g.,

1. performance is enhanced because the parties perceive their actions are ‘chosen by them’.

2. the parties have greater clarity about what the company’s goals are and how to attain them and thus, will make better (more facilitating) decisions.

3. the consensus of values, beliefs, and norms enables more social control within a company which is more effective and efficient than formal controls, especially when addressing deviations from the norms established through the company culture.

Ultimately, company’s with strong cultures produce equally strong reputations, both of which are intangible assets that can deliver strategic advantages and higher financial performance!

(Some insights for developing this post was gleaned from ‘Creating Competitive Advantage Through Intangible Assets: The Direct and Indirect Effects of Corporate Culture and Reputation’ by Sylvia J. Flatt and Stanley J. Kowalczyk)