Archive for 'Intangibles as strategic assets'

Intangible Asset Roadmap

April 29th, 2013. Published under Intangibles as strategic assets, Managing intangible assets. No Comments.

Michael D. Moberly    April 29, 2013       ’A blog where attention span matters’.

It’s really quite straight forward, embedded in the economic fact – business reality that increasing percentages of company value and revenue lie in – evolve directly from  intangible assets, management teams, boards, and other business decision makers, regardless of a company’s size, the location of its headquarters’, its maturation, its receptivity to being innovative and forward looking, or industry sector(s) it serves, its quite likely that a practical and viable roadmap for (a.) putting intangible assets to work, and (b.) preserving their (contributory) value and competitive advantages will be beneficial.

Such a roadmap, particularly the type that I advocate which includes ’putting intangible assets to work’ for a company, starts, in my view, with (a.) the misnomer that intangible assets are synonymous with intellectual property, i.e., patents in particular, and (b.) re-framing the perception that the management, stewardship, and oversight of a company’s intangible assets fall exclusively to the legal and accounting domain.

Let’s be clear, most, if not all decisions and actions related to intangibles assets are and should be business decisions, preferably in collaborative concert with the c-suite, security, risk management, legal counsel, and accounting.   Too, as articulated by a Delaware court in Stone v Ritter, they can also assume a fiduciary responsibility that includes (a.) having consistent operational familiarity, and (b.) preserving their control, use, ownership and monitoring value, materiality, and risk.

Let there be no misunderstanding, the (effective) management, stewardship, and oversight of a company’s intangible assets has permanently shifted from merely being optional tasks and/or ‘nice to have’ processes, to, as noted above, something akin to fiduciary responsibilities that can no longer be dismissed or neglected, e.g., it will happen only when (a.) time permits, (b.) the resources become available, (c.) competitors are observed doing it, or (d.) a professional standard or a legislative mandate is adopted leaving businesses with few, if any options, other than compliance.

Too, the intangible asset ‘roadmap’ advocated here, dispels the really unfortunate assumption held by far too many management teams that intangible assets and their management are the sole province of large, multi-national, Fortune 1000 categories of corporations.  The reality is, intangible assets are firmly embedded in and being routinely produced by the 20+ million small, mid-size, and early-stage firms in the U.S. and no doubt, an equal number of international firms regardless of sector.  A key issue, in my view, in both circumstances, does either understand it, know it, and actually (a.) put their intangibles to work, and (b.) have processes and procedures in place to identify, unravel, assess, protect,  preserve, and monitor their intangibles’ contributory value and the competitive advantages and revenue they produce.

Most every company, with few, if any exceptions the author has had contact over the years, possesses what I refer to as ‘home grown’ (internally produced)  intangibles that are frequently highly specialized and  company specific irrespective of size, industry sector, or maturity.  In most instances, I find these assets, managerially speaking, are not well suited for one-size-fits-all or snap-shot-in-time (asset) management approaches.  Instead, they require nuanced handling aligned – commensurate with…

  • achieving the most effective and efficient use
  • maximizing their contributory-collaborative value, and
  • building and strengthening a company’s structural capital and competitive advantages throughout its supply-stakeholder value chain
  • particular types of (business) transactions.

For these reasons, I advocate practical, yet individualized intangible asset management approaches which I routinely refer to as my ’what fits best’ approach.  That is, at least my experience suggests that ’what fits best’ for a company will usually ‘work best’ for a company insofar as helping achieve business goals and objectives through its stewardship, oversight, and management of its intangible assets.

So, whether one conceives my ‘roadmap’ through a conventional sequential lens or more as a ‘big picture’ mosaic that reflects – encompasses a range of challenges fully integrated with practical insights for solving (intangible) asset management, stewardship, and oversight challenges, my message remains laser focused; business decision makers, regardless of their specialization, professional experiences, or title, need to acquire, if they haven’t already, a strong operational and managerial clarity – familiarity with intangible assets because these skill sets are essential requisites for successfully and effectively managing intangible asset dominated/intensive companies in the globally competitive, aggressive, and predatorial business transaction arena in which there are absolutely no indicators of reversal.

I respectfully recognize, just making sense of the knowledge (intangible asset) based economy and the increasingly intense business environment it has given birth to, is not sufficient unless readers can literally use and apply the information provided, that is, to frame and execute their own profitable and sustainable roadmap for their intangible assets.  That’s why the various chapters in our upcoming book will, individually and collectively, provide readers with relevant and current insights about, not just a starting point, but the practical steps that are necessary along the way to help management teams arrive at a successful, profitable, and strategically sustainable destination!

While I am a strong advocate of utilizing intangible assets as fully and completely as possible, it is not my intent to represent intangibles as constituting either a silver bullet or a one-size-fits-all template that will produce immediate financial – competitive advantage magic for a company.

I do know however, that it remains an irreversible economic fact that 80+% of most company’s value, sources of revenue, and growth potential lie in – evolve directly from intangible assets.  Thus, unless and until management teams, boards, investors, stakeholders, and other business decision makers begin demanding that (their) company’s intangible assets ‘be taken out for a ride’, those assets will likely remain idle, taken for granted, and otherwise left unused, under-valued, and vulnerable to global competitors to acquire and use at will.

Each blog post is researched and written by me with the genuine intent it serves as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community.   Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of  unsubstantiated commentary or information piggy-backed to other sources.

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

 

 

Intangible Assets The Rapid Maturation Of Ideas!

April 26th, 2013. Published under Intangible asset focused company culture., Intangible Asset Value, Intangibles as strategic assets. No Comments.

Michael D. Moberly     April 26, 2013    ‘A blog where attention span matters’.

As noted repeatedly in this blog and by numerous intangible asset strategist colleagues, there is no other time in business governance history when, globally speaking, larger percentages, i.e., 80+%, of most company’s value, sources of revenue, and ‘building blocks’ for growth and profitability are more rooted in – evolve directly from intangible assets, i.e., intellectual property, structural, relationship, intellectual/human, and strategic capital, proprietary know how, brand, and reputation, etc.

So, today it has become an indisputable economic fact – global business reality that the primary sources of most company’s value and revenue have shifted from tangible (physical) assets, e.g., property, equipment, inventory, etc., to intangible (non-physical) assets.  In other words, the global business landscape is being less shaped and influenced by the development, production, and/or flow of physical (tangible) goods and services than it is by the flow of ideas, information, and other forms of intangible assets.

One consequence is that in today’s tightly wound and increasingly compressed transnational R&D environments, product cycles, and business transactions,  ideas can mature very rapidly as ‘value add’ and revenue producing competitive advantages or intangible assets.  But, if those assets are ineffectively managed, i.e., protected, preserved, and monitored, etc., they can easily meld into open (public domain) sources or otherwise be vulnerable to myriad forms of compromise.  The reality then becomes, once such assets enter, inadvertently or otherwise, the public – global domain, conventional intellectual property (law) protections carry little, if any deterrent affects and becomes akin to ‘the genie getting out of its bottle prematurely’.  Trying to get ’the intangible asset genies’ back into their managerial and legal cocoon becomes a frustrating, time consuming, legally challenging, and costly experience.  Should such risks materialize, the rightful (intangible) asset holder (developer, owner) should be prepared to expect the assets to be, at best, only partially recoverable, and, at worse, irrevocably lost.

The long held American adage ‘talk is cheap’ no longer has relevance, at least in my view, in the current go fast, go hard, go global business transaction environment.  Unfortunately though, this adage remains somewhat indicative of a broader attitude which a significant percentage of business decision makers still hold regarding the value of information-based (intangible) assets.  That is, information is frequently considered to be valuable only if, or when, some specific action can be taken as a result.  In this context, it’s important to recognize that mere ‘ideas’ can mature very rapidly today, and, ‘in the right hands’ can be quickly converted to ‘contributory value and sources of revenue for a business.

Somewhat unfortunately, the consistently expanding and seemingly insatiable (nanosecond) demand for information and communication connectivity represents a growing influence about how large percentages of business decision makers conceive and use information-based assets, that is, in contexts that are primarily oriented toward short-term application versus a long term and/or strategic use and contributory value.

One result, often falling under business decision makers’ radar, influenced in part by the presumed speed in which we prefer ‘things to happen’, is that information-based assets, i.e., ideas and intellectual capital have become more than mere tools to manage other assets, they are now stand alone commodities with varying cycles of contributory value and relevance to the owners.  (Branscombe, Anne Wells. Who Owns Information? From Privacy to Public Access. Basic Books 1994)

The real ‘back story’ in my view, is that (ideas) intangible assets can advance an organization or company economically, competitively, and strategically only so long as the assets’ control, use, ownership, and contributory value is monitored and preserved.  In other words, there is effective stewardship, oversight, and management (of the assets) in place.  Similarly, it’s important to recognize that the contributory value of intangible assets and intellectual property seldom remain constant (static), rather it can change or fluctuate, sometimes quite rapidly for various reasons which is the rationale that value preservation, asset monitoring, and risk mitigation measure be sufficiently flexible to reflect the assets’ status, value cycle(s), defensibility, and sustainability.

Again, when risks to information-based intangible assets materialize, they can impact a company in many ways, e.g.,

  • undermine competitive advantages, strategic planning, new business/product rollouts, etc.
  • erode anticipated (profit) margins
  • create time consuming distractions that disrupt and/or impede a projects’ momentum,
  • entangle assets in costly and lengthy legal disputes
  • cause investors to change their exit strategies and/or deter future rounds of investment

A good thing is, more management teams are recognizing the importance, through blogs like this and those of my colleagues, of taking steps to safeguard and preserve the standalone and contributory value and competitive advantages their intangible assets produce, the more profitable and sustainable their decisions and transactions will be.  A downside is, there remain percentages of management teams who sometimes…

  • are too quick, in my view, to adopt a lawyer-law centric vs. a asset management, stewardship, and oversight approach for enforcing intangible asset rights, in part because they may be unfamiliar with their options, the broad nature of asset risks, and business – strategic needs, or
  • mistakenly assume computer/IT security is synonymous with intangible asset preservation, that is to say, all (valuable) intangible assets exist in electronic ‘bits and bytes’ formats and can be adequately protected by conventional firewalls and passwords.
  • mistakenly assume intangible asset safeguards will impede the flow and accessibility of intangible (information) assets necessary for business operation minimums.
  • mistakenly place too much trust and faith in all employees, business partners, and others who have knowledge and/or access to their company’s intangible assets or ‘crown operating – profit making jewels’.

It remains essential then, that decision makers have a clear understanding where the value of their firm, which they have fiduciary responsibilities, lie and the form and context which that value manifests itself, i.e., intangible assets, competitive advantages, intellectual capital, etc., and ultimately perhaps, as intellectual property.

Though frequently characterized as being cliché, the emergence of the still relatively new global business economy dominated by intangible, rather than tangible assets, is prompting increasing numbers of business decision makers and boards to rethink the way they make decisions, manage, and value their companies and the intangible assets they produce and/or acquire.

What’s exactly ‘new’ about the new (knowledge – intangible asset dominated global) economies remains somewhat debatable, say’s Dr. Baruch Lev of New York University. But, one important feature about the 21st century is crystal clear, he confirms, intangible assets are playing an increasingly important and integral role in most company’s value and wealth creation potential.

Lev goes on to say that economic activity today consists increasingly of exchanges of ideas, information, expertise, and know how, which are, of course, intangible assets.  Thus, company profitability is more often driven by its collective competencies and capabilities (again, intangible assets) than by control over or use of physical resources or tangible assets.

Each blog post is researched and written by me with the genuine intent it serves as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community.   Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of  unsubstantiated commentary or information piggy-backed to other sources.  Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

 

2013: Aquiring The Real Picture Of Company’s Financial Health…

January 2nd, 2013. Published under Intangibles as strategic assets, Investing in intangible assets.. No Comments.

Michael D. Moberly   January 2, 2013

An often overlooked or dismissed requisite to acquiring a complete picture of a company’s financial health is recognizing the intangible assets a company produces, possesses, and their contributory value.  As readers know, balance sheets are financial reports, steeped in tradition as being (perceived) as the primary, sometimes sole, descriptors of ‘the health’ of a business or company in terms of constituting a quick sound bite of the value of its (a.) assets, and (b.) liabilities, along with describing equity positions of owners or stockholders.

As an intangible asset advocate and strategist though, seldom do I become engaged in a discussion about the propriety or usefulness of disclosing – reporting intangibles on balance sheets or financial statements, that it’s not necessary, at some point, to respectfully introduce a challenger to three irreversible economic facts and business realities…

  1. intangible assets are just that, they’re intangible, i.e., non-physical.  Translated, this means intangibles are not necessarily subject to the five (physiological) senses of touch, smell, hearing, sight, or taste as tangible (physical) assets are, but, nevertheless are relevant and valuable properties and assets which take many forms, i.e., reputation, competitive advantages, intellectual property, brand, etc., for which there is no argument, nonetheless…
  2. a growing percentage of businesses, regardless of size or sector function – operate in a knowledge (intangible asset) based global economy in which, at minimum, 65+% of their value, sources of revenue, and ‘building blocks’ underpinning their growth, sustainability, and profitability evolve directly from intangible assets.  This represents an acknowledgment that…
  3. examining a company’s balance sheets and/or financial statements alone, particularly those that do not address (report) intangible assets, do not convey a sufficiently deep or comprehensive picture of a company’s real financial health which are critical components/factors to making sustainably lucrative (business) decisions!

Businesses/companies own different types of property or assets, a lesser portion of which are physical-tangible in nature, while a growing percentage are intangible – non-physical, the latter being seldom, if ever, distinguished by category and reported as such.  The reasons are numerous, with most rooted in accounting methodologies and regulatory agency rules.

Interestingly, Craig Woodman a writer for eHow, points out that, in practice, a balance sheet is usually presented in a list format, with assets at the top, then liabilities, followed by owners’ equity.

Conventionally speaking, Woodman reports, accounting rules stipulate that assets be differentiated into classes or categories, i.e.,

  • current assets are business assets that are the most liquid which means they can be reasonably and readily converted to cash in a relatively short amount of time, typically within one year. Examples of current assets are cash of course and accounts receivable, both of which are assets that fund the day-to-day operations of a business.
  • fixed assets, on the other hand, are such things as real estate or equipment. In other words, they’re physical or tangible assets and are typically less liquid, i.e., take longer to convert to cash.
  • interestingly, Woodman does not place intangible assets into a separate category, and instead, considers them to be fixed assets, because, Woodman claims, like ‘current assets’ they are more difficult to covert to cash.

To Woodman’s credit, and I agree fully, any member of a management team, c-suite, or board who genuinely wants to determine/assess the ‘real’ health and/or condition of a business or company, absolutely must identify, unravel, and assess the contributory value of the intangible assets (the company) has developed, nurtured, produced, and possesses.  But, here is where I disagree with Woodman, it does not have to be that difficult to establish/determine the value of intangible assets, providing one understands and can unravel their ‘contributory value’, and conclude intangibles do not routinely constitute an inaccurate or inflated valuation.

But, in business transaction circumstances in which my counsel is requested, I consistently argue that decision makers, relative to their buy-don’t buy, invest-don’t invest decision, are obligated, in a fiduciary context, to do much more than merely ‘kick the tires’, which through my admittedly biased lens, translates as looking deeper and more comprehensively beyond balance sheets and financial statements to determine a company’s real (financial) health.

That’s why, if I was inclined to purchase a pre-owned or otherwise used automobile, my buy – don’t buy decision would be only partially based on the presence of a service/maintenance record that indicated the previous owner had the motor oil changed at prescribed intervals.  A wiser buyer, in my view, should look for and investigate the countless ‘intangibles’ related to motor vehicle operation, care, and maintenance that can, and usually do, favorably or adversely impact a vehicle’s sustainability and reliability.

Again, intangible assets are ‘things’ which a business owns, but, of course, are neither tangible nor physical (property) as some still persist on framing them.  Nevertheless, these assets have value, and should be investigated and assessed, or otherwise accounted for in any business transaction.  In other words, intangible assets are, in one sense, comparable to the purchase of a pre-owned automobile, in which a buyer presumably calculates benefits will be realized because of the lower purchase price, but without a thorough and knowledgeable investigation may translate as frustration-based expensive repairs.

So, in my view, to purposely exclude intangible assets from a company’s – businesses’ net worth calculations, will not provide prospective investors or buyers with a ‘real or complete’ picture of a (a.) company’s value, (b.) it’s status among sector competitors, and equally important, (c.)  its ‘internal building blocks’ to achieve and sustain competitive advantages, sustainability, profitability, and foundations for future wealth creation, etc.

My blog posts are researched and written with the intent they serve as a worthy and respectful venue to elevate awareness and appreciation, throughout the global business community, regarding the identification, use, contributory value, and measuring the performance of intangible assets.  My blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraph-based platforms to reference other media. 

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

Intangible Assets: Better Explanations – Definitions Will Make Them Part Of Business Management Lexicon!

December 6th, 2012. Published under Intangible asset teaching and training., Intangible asset training for management teams., Intangibles as strategic assets. No Comments.

Michael D. Moberly   December 6, 2012

Readers, let there be no question, I am a strong and unapologetic advocate of intangible assets!

One of the more frustrating aspects to my and numerous colleagues various work, research, and professional association initiatives intended to elevate awareness and use of intangibles’ throughout, and at various levels within the business – financial services community as a whole is what I contend is the sometimes rather obscure and/or esoteric language used to actually define (describe, distinguish) intangibles, e.g., they

  • are the non-physical ‘things’ of value that a company owns.
  • have no set monetary value and little or no objective (consistent) means of measurement.
  • lack conventional sense of physical presence, i.e., they’re not necessarily subject to being seen or touched.

I am not suggesting my particular frustrations can, or necessarily should be extrapolated across-the-board, or fit the increasing number of ‘knowledge-based, knowledge intensive’ firms regardless of the dual realities they (a.) lack that conventional sense of (asset) physicality, and (b.) their performance and value is challenging to objectively monitor and measure.

I, like many of my colleagues, have encountered countless circumstances in which uninitiated management teams, boards, investors, and employees alike, whom we’re approaching, struggle to make sense of intangibles, or what the British often describe as the invisibles.  Respectfully, the Brit’s characterization of intangibles is quite realistic and understandable because, among other things, seldom, if ever, are intangible assets singularly, per se, reported on company balance sheets or financial statements. That is, unless they’ve been acquired or ‘lumped together’ as goodwill.

Still, business decision makers, i.e., management teams, c-suites, boards, etc., should be hard pressed to deny the reality that steadily rising numbers of companies have fewer tangible (physical) assets in their inventory. Instead, their ‘inventory’ is being replaced with intangible assets!

Nonetheless, intangible asset strategists routinely say, and I might add, quite correctly, the development and effective use of intangible assets is absolutely essential to most companies’ near and long term success, i.e., viability, sustainability, and profitability and form – serve as ‘building blocks’ for growth.  To the uninitiated, or those unfamiliar with intangibles however, as well as those who are suspect and/or dismissive about intangible’s contributory role and value, poorly conceived or challenging definitions of intangibles’ contribute little to achieving the much needed ’ah ah’ moments or, ‘I get it’, which are so essential to this irreversible, growing, and no doubt permanent knowledge-based global economy which I believe we’re only in the initial stages.

A glaring, but often overlooked or misunderstood reality is that most every company, not just the new, knowledge intensive ones,, through their management teams, c-suites, and employees, create substantial intellectual, relationship, and structural capital for example, most, if not all of which constitute intangible assets!  Unfortunately, such creativity tends to be less apt to be recognized or acted upon in conventional ‘brick and mortar’ that may appear, at first blush, to remain dominated by or largely dependent on physical – tangible assets as their perceived key sources for building value and developing sources revenue.

In my view, and my colleagues agree, there are infinite types – categories of intangible assets, many of which are knowledge-based or, more specifically, the intellectual capital held between our ears, stored on our CD’s, issued to our company as intellectual property, i.e., patents primarily, or merely the accumulation of experience and specialized (operational) know how.  When these ‘assets’ (or, know how) are prudently and optimally linked to understanding how and when to effectively, efficiently, and profitably use/apply them, that’s likely to produce enviable competitive advantages and an otherwise strategic win-win circumstance.

Whether we’re operating a successful business or conducting a scientific project, we tend to seek a comfort zone comprised of facts, figures, formulas, and ratios, etc. In other words, qualitative and quantitative components that with more regularity, constitute the framework for business decisions and strategic planning. Under these circumstances, most business decision makers’ comfort zone is fairly easy to sustain because the measurement tools we are accustom to using and relying on for decision making, strategic planning, and/or formulating prognostications tend to possess tangible characteristics wherein a high number or percentage is interpreted one way and a low number or percentage is interpreted differently.

But sometimes, that comfort zone of ‘hard (physical) numbers’ may be more obscure or fuzzy than we are accustomed, in other words, intangible. In such instances, management teams, boards, and employees alike, are challenged to push their conventional understanding and decision making criteria beyond the tangible to the intangible relative to the relationship and contributory value the latter consistently delivers to companies and organizations globally.

So, welcome to the specialized, but ever expanding corner of the information age and its outgrowth, the knowledge-based economy, wherein intangible assets now routinely play key roles as contributors – facilitators to most company’s value, sources of revenue, competitive advantages, sustainability, and ‘building blocks’ for growth and future wealth creation.

But, despite the rising importance of intangible assets and the contributions they consistently deliver to companies in all (industry) sectors, they unfortunately remain, for some management teams and boards, challenging to define, recognize, distinguish, and measure.

(Adapted by Michael D. Moberly from the work of Thomas A Stewart, ‘Trying To Grasp The Intangible’.)

In my view, an important and initial step to achieving a more intangible asset conscious business community, we need to bring more operational clarity and benefits derived by identifying and utilizing intangible assets. Unfortunately, there remain some challenges throughout much of the business community insofar as defining and explaining precisely what intangible assets are, how and by whom are they’re produced, and how they contribute to a company’s value, etc.

I find even with more experienced, astute, and successful business management teams the words ‘intangible assets’ are seldom part of their routine discourse or integrated in their business lexicon and frankly, often prompt their eyes to glaze over rather quickly.  The reasons respectfully vary, along a continuum of…

  • not fully understanding or appreciating what intangible assets actually are
  • being unaccustomed to identifying, assessing, or exploiting intangible assets
  • erroneously assuming intangible assets are the (exclusive) domain of accountants and/or intellectual property (legal) counsel
  • dismissing intangible assets because they’re not characterized as standalone assets, reported on company balance sheets or financial statements, instead they’re often ‘lumped together’ as goodwill.

Thus, recognizing the necessity to engage and exploit their intangible assets or determine – measure their contributory value and performance is unfortunately and frequently perceived as being unnecessary and/or not justifiable even though today 65+% of most company’s value, sources of revenue and building blocks to achieve growth, sustainability, and profitability lie in –  evolve directly from intangible assets, economic facts that absolutely should not be dismissed, overlooked, or disregarded as somehow not being relevant to them or their company.

Too, intangible assets are often mistakenly characterized as being more aligned with business accounting practices best espoused as mere theories in university lecture halls rather than actionable agenda items in boardrooms, c-suites, or even the new version of the proverbial ‘shop floor’.

The challenges associated with really explaining the relevance and importance of intangible assets to business decision makers also evolves, in part, from the reality that intangible assets are just that, they’re intangible!  As stated previously, they lack a conventional sense of physicality.  But, even though management teams are unable to necessarily see or touch these assets, intuitively they ‘feel or visualize’ their presence, absence, and/or changes, in, for example, declines and/or erosion of a company’s reputation, image, goodwill, intellectual capital, value, market space, competitive advantages, etc.

So, regardless whether they’re called assets or not, it often boils down to management teams’ inclination and ability to identify, unravel the origins, assess, manage, monitor, and measure these increasingly important, valuable, and strategic assets.

Interestingly, conversations with countless business owners and management team members, I find they can readily identify a variety of companies, across industry sectors, that have effectively captured and exploited their intangible assets compared to those who haven’t can’t of don’t, even though they seldom, if ever, use the term ‘intangible asset’ in their critique.

Thus, for all of the above reasons, intangible asset specialists-strategists who conduct briefings, awareness training, and consult with companies about their intangible assets should always be prepared to field an array of skeptical, dismissive, and critical questions, particularly with respect to asset valuation and/or contributory value.

A responsibility intangible asset specialists-strategists must assume with respect to defining and explaining what intangible asset are is articulating and demonstrating smarter and more effective techniques and rationales for companies to capture, utilize, manage, monitor, and monetize/commercialize their intangible assets.

This again, includes clearly distinguishing…

  • what intangible assets are
  • what they’re not
  • the various forms they take
  • how they originate, and equally important
  • how and when intangibles can be effectively and profitably applied as ‘building blocks’ to enhance a company’s value and create sources of revenue and competitive advantage.

Ironically, at least in my view, in the midst of this extended economic downturn, conventional wisdom would suggest that company management teams and boards would be seeking and be receptive to alternative and proven strategies to engage and exploit their company’s intangible assets particularly as they endeavor to weather this lingering recession.

The bottom line though is, some management teams, c-suites, and boards find it challenging to step outside their conventional comfort zones to engage concepts and strategies which…

  • they have not personally tested
  • appear to depart from past practice, and
  • are well under conventional ‘mba – b-school radar’.

Successful companies are typically ran by successful management teams. For the most part, those management teams are realists and pragmatic risk takers. Therefore, quite understandably, they may express some well-intended skepticism about intangible assets for all the reasons cited above.

However, when such skepticism translates into companies being restrictively tied to practices and strategies of a tangible (physical) asset based economy versus a knowledge-intangible asset based global economy, they’re not likely to experience the growth which they are probably capable!

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 the circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Please watch for Mike’s book ‘Intangible Assets: Security Managers Roadmap’ to be published soon!

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

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

Michael D. Moberly – September 25, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Michael D. Moberly    September 17, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Pre-Employment Personnel Screening Produces Valuable Intangible Assets!

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

Michael D. Moberly   September 13, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Intangible Assets: ‘Smart Cities’ Tools For Branding!

August 8th, 2012. Published under Intangibles as strategic assets, Investing in intangible assets., Managing intangible assets. No Comments.

Michael D. Moberly  August 8, 2012

Throughout my former residency in Memphis, I listened to a weekly program on the local NPR station titled ‘Smart Cities’, then hosted by Carol Coletta (CEO’s for Cities).

Of the many takeaways I consistently received from Coletta’s program and her varied guests were the not so subtle references to missed opportunities of various U.S. cities which I come to characterize as overlooked, neglected, deserted, abandoned, and otherwise ignored and undeveloped intangible assets.

In a ‘smart cities’ context, intangible assets are embedded in community’s often rich historical, cultural, architectural, and/or epicurean presence.

To demonstrate this, I engaged a gentleman at an outdoor high school sporting event in St. Louis (my current residence) last year because he was wearing a t-shirt emblazoned with the name of a small, non-descript bar-b-que restaurant located in mid-town Memphis which I had frequented many times.  I asked the gentleman, whom I learned had a son attending a Memphis university, if he had actually eaten at this restaurant. My question sparked a very spirited, albeit one-way exchange, in which he described this restaurant’s bar-b-que cuisine as the best Memphis had to offer and even compared it to other well-known Memphis competitors.  The gentleman went on to describe how he had come to personally know the owner, and that he and his family ate there each time they visited Memphis.  Our discussion concluded with him saying that he routinely had this restaurant’s bar-b-que FedEx’ to his St. Louis residence

An interesting twist to this is, having been a former resident of Memphis, I can say, quite objectively, there are easily 100+ good bar-b-que ‘joints’ throughout Memphis, some of course are the ‘weekend pop-up on a street corner’ variety where one can find very good bar-b-que if they willing to venture away from the mainstream and into the various neighborhoods of Memphis.

Many city’s intangible assets, even though they may be what I refer to as the ‘in your face, seen’em a thousand times’ variety, remain as conveyed above, neglected, deserted, abandoned, ignored and, perhaps worse, overlooked and unrecognized.  Regardless, those embedded assets may well have the potential for being re-captured, re-conceived, re-invested, re-incarnated, and ultimately re-branded to produce and deliver powerful, attractive, and broadly dispersed value to a city, providing, that is, when community leaders genuinely recognize, understand, and initiate viable strategies to effectively exploit existing intangible assets!

Of course, this entails, among other things, identifying them, unraveling them, investing in them, positioning them, leveraging them, managing them, and putting best practices in place to sustain them along with monitoring their contributory value.

All that said, there are, in my view, analogies to be drawn between the bar-b-que scenario and the development of ‘motivational umbrellas’ in cities to form so-called bio-tech corridors and/or re-vitalize commercial areas and art districts, etc.  Colleta may know different, but I have no knowledge of any such initiative being successful absent a foundational starting point in which certain recognizable intangible assets were already in place and embedded within a community’s culture.

When commencing such well-intended endeavors however, those charged with its leadership and execution must include strategies to sustain the foundational (intangible asset) underpinnings necessary for project vibrancy and sustainability.

So, in today’s increasingly competitive municipal governance environments, the viability and sustainability of city projects does not lie solely in the production of patents and other intellectual property centric practices that tend to be quite vertical.  In a ‘smart cities’ context, it’s the consistent production, exploitation, and delivery of competitive advantage driving intangible assets and their contributory value to a community. Intangible assets, when addressed early and managed effectively, can deliver long term strategic value in the form of multipliers and spillovers that spread throughout a community!

Intangible Assets and Frugal Innovation…

June 27th, 2012. Published under Frugal Innovation, Intangibles as strategic assets, Intellectual capital management.. 1 Comment.

Michael D. Moberly    June 26, 2012

Frugal innovation is, according to Navi Radjou, Dr. Jaideep Prabhu, and Dr. Simone Ahuja, authors of ‘Jugaad Innovation: Reigniting Innovation in the U.S. and Beyond’…

much more than merely stripping out cost, it essentially prompts individuals to re-think the entire production process as constituting a reversal of most contemporary product design approaches and/or methodologies!

In their, many say, revolutionary book, the word ‘frugal’ is replaced with the Hindi term ‘Jugaad’ which means an innovation, i.e., an improvised solution born from ingenuity and resourcefulness when faced with scarce resources.

As the authors point out, ‘Jugaad innovators’ are most notable for possessing mindsets that encompass multiple (and simultaneously held) attitudes, practices, and abilities, each of which is conducive  to seeking and developing opportunities under adversity by…

  • doing more with less (resource constrained circumstances)
  • thinking and acting flexibly
  • keeping things simple
  • always including the margin, and
  • following one’s heart.

But, let’s be clear, ‘frugal innovation’ commences, like most innovative endeavors, with an idea. The difference is, frugal innovation is conducted under frugal, and, some would say, adverse circumstances with little or no seed capital.  My experience suggests, frugal innovation will produce a compliment of intangible assets.  Those intangible assets will usually take the form of intellectual, structural, and relationship capital, which in many instances are proportionately comparable to the output of corporate and/or university sponsored R&D initiatives in which there are generally, sufficient resources committed and innovation development conditions are anything but frugal.

As is frequently typical with many new initiatives, some espouse the view that frugal innovation is a ‘tricky skill set for western innovators to emulate’.  That’s because, that argument goes, a requisite to being a successful and frugal innovator, is having grown up in an environment where frugality is the primary, if not the only, option available to hopefully bring one’s innovative idea to fruition.

Needless to say, I don’t fully agree with that perspective.  Instead, I am very confident, in fact I know a substantial number of ‘western creatives’ who would find frugal innovation an especially attractive concept and strategy, perhaps even more so during this extended economic downturn in which funding and sources of capital are tight, to say the least.

Regardless, wherever a creative initiates/conducts their ‘frugal innovation’, success will be varyingly dependent on having access to an operational platform in which the tenants of ‘frugal innovation’ are already integrated and linked to processes and structures whereby they  can develop, test, and assess their idea (innovation) in not just a frugal, but a well managed environment coupled with the right amount of stewardship and oversight.

So, in my search to find an existing and preferably already operational U.S.-based company, that applied ‘frugal innovation’ principles, I became acquainted with a firm in Atlanta called Qwerkstation.com.

As it turns out, Qwerkstation was developed by Latanya Washington as a social workstation for entrepreneurially oriented individuals to explore and develop their ‘creative side’ by turning ideas into actual innovation.  Querkstation is a web-based platform in which individuals can truly observe and engage in ‘frugal innovation’ practices. During Qwerkstation’s development phase, Washington’s expertise in software allowed her to capitalize on the open source movement in software production from which she selected particular web application components and distinctively reconfigured them to literally create Qwerkstation.

As readers know, open source software development has been a boon to entrepreneurs for turning ideas into robust applications and digital products without the necessity of hiring software engineers which would all but negate the tenants of frugal innovation. The operational practices Washington adheres to, coupled with the digital functionalities she has embedded in Qwerkstation, collectively work in her favor by (a.) minimizing overhead costs, and (b.) better meet the needs of her target consumer, all-the-while operating in a genuinely frugal innovation manner.

Washington recognizes that frugal innovation has had a significant effect on her overall business processes and perhaps most importantly, outcomes, which I find to be valuable and sustainable competitive advantages, i.e., intangible assets.  Frugal innovators and creatives’ who engage Qwerkstation Washington believes, need to be highly focused and efficient, probably more so than in comparative companies with large capital reserves and ample resources.

It’s certainly my sense, at this point, that Qwerkstation is very much a global version of ‘frugal innovation’ which is not only an attractive, but very worthy first step to the innovation process.

(This post was inspired by the book ’Jugaad Innovation’ authored by Navi Radjou, and Drs. Jaideep Prabhu and Simone Ahuja and the work of Latanya Wasington who founded Qwerkstation.com)

Social Networking Apps: Assurance of Privacy Is A Valuable Intangible Asset That Should Be Integrated Before Launch and Not Squandered

June 25th, 2012. Published under Intangible Asset Value, Intangibles as strategic assets, Personal Privacy. No Comments.

Michael D. Moberly   June 25, 2012

As an admitted intangible asset advocate and strategist, personal privacy, and, I mean real and consistent personal privacy, not just the sort conjured in legal ease as a ‘check the box’ prelude to joining a social networking platform, is an incalculably valuable intangible asset that unfortunately, some ‘app’ developers appear to be squandering in an effort to derive business models to achieve near term revenue streams.

Colleagues and readers of this blog may characterize what’s really being squandered are a company’s trust, reputation, and relationship capital.  Regardless, each is an intangible asset, each has significant value, and when erosion and/or undermining occurs, substantial financial losses and market space can materialize very rapidly.

Here’s just one example, probably among thousands, which I believe goes to the heart of the issue.  Parker Higgins highlighted a privacy problem in Electronic Frontier Foundations’ blog (March 8, 2012), i.e., how apps need to respect user privacy rights from the start.

In the post, Higgins’ describes a Texas born app that facilitates, ‘ambient social networking’.  Translated, that means the app runs in the background of one’s phone collecting and sharing location data, etc., and then notifies you when your friends and/or others with shared interests are in proximity, thus, enhancing serendipity!  

I am certainly not suggesting these types of apps are inherently wrong or necessarily violate the increasingly tenuous presumption of privacy.  After all, one must willingly purchase the app, therefore buyers presumably understand the apps features and its often requisite connection to other social networking sites. 

As Higgins quite correctly points out though, it certainly doesn’t require much imagination to foresee how sending a steady stream of data and information of all types to a third party, that may have not have a privacy or data retention policy in place, can, and inevitably will, give rise to a host of significant personal privacy issues.

At this point, let me respectfully refute any notion that this post constitutes an effort to advance some sort of conspiracy theory related to social networking media.  Should any reader of this post believe that to be the case, they are well off-the-mark!

So, I reiterate, personal privacy, presumed or not, is, in my view, an extremely valuable, yet very fragile form of intangible asset and should be treated as such. 

If I were a board member or shareholder of an app developing firm, I would make every effort to obligate management teams to consider ‘personal privacy’ as being integral, if not a fiduciary responsibility to app development and not ‘play fast and loose’ with the stewardship, oversight, and management of ‘privacy’ as a real (business) intangible asset!

The personal privacy issues Higgins claims are bringing to the forefront a larger problem in app development, which is, initially building and marketing a ‘minimum viable product’  only to see how it’s received by niche consumers, and then adding personal privacy features later.  But, cutting privacy corners that are likely to undermine the strategic value of personal privacy along with consumer trust and the reputation of app development firms are intangible assets that should not be taken lightly or squandered!

As aptly noted by Marissa Levin (Successful Culture blog) a lifetime that has become largely ‘app driven’, we also must consider safeguarding the humanity of our companies.