Michael D. Moberly   September 7, 2010

Here’s an interesting perspective once offered by Ashok Jain, a principal in the (IP) valuation services unit of Deloitte.  He suggests that (his) interactions with large U.S. companies lead him to the conclusion that while most profess a fairly high-minded level of IP prowess, relatively few can answer substantive questions about the management of their IP, e.g., does your company maintain an inventory of its patents?, which patents (IP in general) are core to business operations and strategic plan? and, is your company exploiting its IP and other intangible assets to generate the greatest possible value?

Other experts (in the IP and intangible asset arena) suggest that many business decision makers who have achieved strong (national, international) reputations for creating and using new ideas is not matched by their willingness or ability to actually accept (assume) a personal role in the  management (stewardship, oversight) of intellectual property and intangible asset matters.  Instead, it’s reported that many merely delegate such responsibilities to either the technical and/or legal side of their business. 

One possible explanation for this behavior is that technical - legal (business) units are typically portrayed as (assumed to be) cost centers, not profit centers which seemingly gives credence to the view that there is little interest among management teams and boards regarding the business (return on investment) aspects of utilizing IP and intangibles, i.e., to elevate company value, create sources of revenue, and serve as ‘building blocks’ for future (company) wealth creation. 

Still, other IP and intangible asset experts suggest that a large percentage of companies literally give away - inadvertently relinquish valuable IP and intangibles without realizing it, and don’t effectively use (their) IP and intangibles (offensively or defensively) to block competitors, generate new revenue streams, or even increase leverage points within their respective supply - value chain.

Do all these perspectives constitute a crisis in the management and oversight of IP - intangible assets?  While the term crisis may be too strong a term to explain current practices, it does, in my view, represent another example of management teams and boards not taking their (fiduciary) responsibilities for the oversight, stewardship, and management of (their) IP and intangible assets as seriously as they should, especially when looking at it through a business - return on investment lens.

Being a strong advocate of using intangibles; yes, I do believe companies (management teams, boards, etc.) need to take their intangible assets and intellectual property (IP) more seriously and not consider them to merely be ’sandboxes’ in which a little H2O can be periodically added to enable the erection of temporary ’castles’ that will quickly crumble or disolve into unrecognizable (non-value or revenue producing) lumps as the moisture evaporates.   

Particularly today, when most all businesses are on the front edge of the knowledge-based global economy, wherein intangibles factually comprise increasingly higher percentages of company value, revenue, and future wealth creation, management teams and boards need to recognize how intangibles can be applied.  This includes not overlooking the nuanced ways of using (leveraging, positioning, bundling) these assets as strategic weapons. 

What’s interesting is that this can occur, sometimes very simply, by ensuring the right parties, with the right expertise are ‘at the table’.  This means including specialists that hold, not merely legal - technical expertise about intangibles, but specialists with specific business acumen (sense) to make those assets literally execute, i.e., produce the value and revenue opportunities which, in most instances, they’re capable.  So to, should product development and design meetings include specialists on sustaining control, use, ownership, and monitoring the value and materiality of intellectual assets.

The end game, of course, is to ensure that a company’s investments in and/or acquisition of intangibles, IP, and R&D, blend effectively with a company’s strategic and marketing planning.  To be sure, there is a growing number of management teams and boards who not only ’get it’, but are ‘getting it right’.  Often though, ‘getting it right’ has been preceeded by mis-steps or missed opportunities rooted in the presumption that intangibles and IP are strictly legal-technical functions, i.e., patent, trademark, copyright, etc., absent recognition for the (business) fiduciary responsibilities related to asset management, stewardship, and oversight.  This, of course, underlies the reason why such large percentages of IP (and intangibles overall) are ‘non-practiced’.  In other words, the R&D, IP, and intangible assets a company produces often go one way, while the strategic marketing group goes another way, and never the ‘tween shall meet’.

One result of course, is that a significant percentage of companies leave IP and intangibles ‘on the table’, i.e., either under-utilized or unused.  There remain a lot of ‘Rembrandt’s, but they’re not all in a company’s attic, rather, they’re right in front of us.  They merely need to be identified, unraveled, assessed, and put to work!

(This post was inspired and adapted by Michael D. Moberly from article in Chief Executive.Net, titled ‘Taking Intellectual Property Seriously’.)  Reference to book authored by Kevin G. Rivetter and David Kline titled ‘Rembrandt’s In The Attic: Unlocking The Hidden Value of Patents’.

The ‘Business IP and Intangible Asset Blog’ is researched and written by Michael D. Moberly, president and founder of Knowledge Protection Strategies - http://kpstrat.com.  The intent of Mr. Moberly’s blog is to provide insights and perspective to aid in a cross-disciplinary approach for identifying, assessing, valuing, protecting, utilizing, and extracting value from intangible assets.  Your comments regarding my blog posts are welcome at m.moberly@kpstrat.com. 

While visiting my blog, you are 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 about consulting, conducting an assessment, training program, or speaking engagement to your company or professional association at 314-440-3593.

Michael D. Moberly   April 21, 2010

In my view, managing a company’s intellectual capital (IC), in its most simplistic form, consists of two key responsibilities:

1. Conducting/maintaining an inventory of a company’s IC.

2. Having the knowledge and skill sets to objectively assess and distinguish how much and what aspects of the IC inventory are:

     a.  In Use - and, determine if they can be used more effectively and profitably to add value to the company.

     b. Not In Use - and, determine if they remain relevant and/or useful to the company in some manner (or, perhaps to other entities) vs. remaining as stagnant assets and costs.

Interestingly, Davis and Harrison (authors of ‘Edison in the Boardroom’) estimate that only 30% of many company’s entire IC portfolio may actually be in use, with the remaining 70% likely found in various (other) forms, e.g., intellectual property that has become obsolete, and/or products or services that are no longer in the company’s inventory.  I would not advocate those estimates should be used to pre-judge the outcome of an IC inventory/audit because most companies have a variety of (IC) nuances that need to be investigated. But, the Davis and Harrison percentage estimates do catch one’s attention!

Let’s suggest for a moment that a company’s board and senior leadership would find it useful to resource an IC management (audit, use, inventory) team.  I am reasonably confident, that agreement to create such a role would include a requisite that team members be business centered, strategic in their outlook, and possess a strong profit orientation.  In other words, the team would be inclined to manage the company’s IC as genuine business assets.

Unfortunately, there remain far too many company management/leadership teams and boards who hold the mistaken perception that intellectual property registration is synonymous with IC management when in fact it is only through the managed exploitation of IP that value, revenue, and wealth can be generated.

Michael D. Moberly April 1, 2010

It is incumbent on leadership teams and boards today, regardless of company size, industry sector, or product/service lines, to consider managing and protecting their intellectual capital (IC) as both a fiduciary responsibility and economic necessity.  Why, because a company’s IC serves as one of several key underliers and enablers of company growth, profitability, and competitiveness, in other words, sustainability and success.

While intellectual capital is often characterized as a companies collective knowledge, know how, and skills that accumulate and/or accrue over years of operation, its also the understanding of how best to use/apply that knowledge.

Managing and protecting intellectual capital starts by recognizing the advantages, sources of revenue, and company value is increasingly dependant on - driven by IC and other intangible assets. In fact, 65+% of most company’s value, sources of revenue, growth potential, and sustainability are tied directly to intangible assets like IC.

A ’best practice’ IC management and protection regime should  (a.) not be operationally onerous, (b.) be relevant and applicable to organizationally/operationally diverse and complex companies, (c.) not impede necessary business processes and functions, (d.) be sufficiently flexible to accommodate each format which IC exists - manifests itself within a company, and (e.) be tailored to address (mitigate) the often nuanced and increasingly sophisticated vulnerabilities and risks to IC, e.g., where a firm conducts business, its industry sector, and product/service lines.

Managing and protecting a firm’s intellectual capital is necessary because one of the growing realities of today’s globally competitive, predatorial, and winner-take-all business environment is that IC is (a.) perishable, (b.) readily transferrable, and (c.) consistently vulnerable to theft, misappropriation, and/or compromise,

Michael D. Moberly March 29, 2010

Intellectual capital management is certainly not new.  Numerous colleagues have long been respected thought leaders, strong advocates, and practitioners in this arena, Mary Adams (I-Capital Advisors) among others.

In simple terms, intellectual capital (IC) includes ideas, innovation, know how, skills, and also I believe, the understanding how to best use (exploit) those ideas, knowledge and skills for commercialization, profit, and competitive advantage.  Unfortunately though, given the amount and rising levels of IC embedded in companies, there’s little evidence that management teams and boards consistently recognize or ensure systems are in place to effectively practice the latter on a broad scale to better serve their company’s interests.

My characterization of a company’s IC focuses on the aggregation of know how and skill sets that are embedded in the various processes and procedures used to produce, develop new, as well as improve existing, goods and/or services.  In today’s increasingly knowledge-based economy, while IC is one of three, it is, in my view, the more significant underlier to a company’s profitability, success, and certainly, its sustainability.

It is essential though, that management teams and boards recognize that IC is generally not a permanently embedded fixture, rather IC is quite perishable, often transferrable, and certainly vulnerable to a range of risks.  In other words, IC can best serve a company’s interests only if those specific elements that deliver value, revenue, and competitive advantage are distinguished and considered proprietary or possibly bundled for licensing or other profit-revenue delivering modes.

In most instances, at least initially, I advocate the prudence of putting specific practices in place to retain the proprietary status of designated IC to reduce the probability it would (purposefully, inadvertently, sureptitiously) enter the public domain that would cause or hasten its value being diminished or its competitive advantages be undermined.

Also, let’s be clear, IC is not synonymous with intellectual property, i.e., patents, trademarks, copyrights, etc.  IC is, to be sure, an intangible asset, like its intellectual property cousin.  Typically, most forms of IC are not eligible for conventional intellectual property protection.  Thus, having processes and procedures in place to ensure its proprietary nature is sustained becomes all the more important.

Be assured, conducting periodic inventories and/or audits of intellectual property is no substitute for, nor does it equate with what’s necessary for managing IC assets in today’s globally competitive business (transaction) environments.  And, with steadily rising percentages of company value, revenue, growth potential, and sustainability tied directly to the production and effective use of intangible assets, of which IC is one, the notion of dedicating an individual and/or team to be responsible for identifying, managing, using, and protecting (a company’s) IC is becoming a prudent business decision with a strong and defensible value proposition!

(Those interested in learning more about intellectual capital management are encouraged to visit the IC Knowledge Center.)

Michael D.  Moberly   March 25, 2010

Since the U.S. Court of Appeals for the Federal Circuit (In Re Bilski, 2008) affirmed the rejection of a business method patent claim and reiterated the machine-or-transformation test for patent eligibility, much has been written about (a.) how the the U.S. Supreme Court will rule, (b.) how that ruling will be interpreted, and (c.) how it will affect knowledge intensive industries.

Thus far, the pre-decision speculation has largely emanated from those who ‘have, or want to have a dog in this hunt’, e.g., professional entities who seek to position themselves to exploit the outcome, which ever way the Court decides.  In most circumstances, and this is no exception, that’s simply good business practice.

Like others, I look forward to learning how the Court will ultimately rule in Bilski.  However, my personal and professional anticipation of the Court’s decision is not foused solely on the patent eligibility of business process methods, rather on whether or how the collective affect of (1.) the pre-decision speculation, (2.) the Courts’ actual decision, and (3.) post-decision analysis and interpretation may serve to impede, stifle, dampen, undermine, or otherwise adversely change the course of the progress that’s been made to date with respect to management teams and boards recognizing the value propositions of and integrating intellectual capital and intangible assets in their strategic planning and decision making processes.

More specifically, will the Bilski decision adversely influence (a.) entrepreneur, investor, and R&D communities, and (b.) management teams and boards to push back from their heretofore growing interest and fiduciary responsibility focused interest in utilizing, maximizing, and exploiting intellectual capital and other forms of intangible assets?  

I don’t believe this perspective represents a stretch or is beyond the realm of possibilities.

Michael D. Moberly   September 9, 2009 

In today’s globally competitive and nanosecond business (transaction) environment, its important for decision makers to frame intellectual capital management within their company (and intangible assets and intellectual property) as collaborative exercises.  Above all, intellectual capital management should involve perspectives from functional and business unit leaders and senior (c-suite) officers that’s not packaged solely through a legal context or technology management lens.  

Intellectual capital management strategies carry long term implications and consequences, some of which are irreversible.  The probability that outcomes (to IC management) will be more effective and profitable occurs when it is conceived and framed, from the outset, as strategic business decisions in which legal and technology management are integral, but the ultimate (business) decision, may not defer to either.

Without being dismissive of company management teams’ other responsibilities, achieving a level of familiarity with intellectual capital (along with other intangible assets) sufficient to make sound, confident, and strategic (business) decisions, entails preparatory steps such as holding discussions, training, and/or seminars, etc., to respectfully elevate their awareness and familiarity.  

Experience suggests that management teams find the following to be particularly relevant and beneficial insofar as acquiring fundamental insights to aid them in making decisions about managing (their company’s) intellectual capital:

1. Distinguishing the various forms/contexts in which intellectual capital exists. 

2. Assessing intellectual capital performance (as an asset), i.e., its status, stability, fragility, defensibility, sustainability, and contributions to value, revenue, competitive advantage, market share, reputation, etc. 

3. Identifying where and how intellectual capital assets originate and evolve within the company.

4.  Designing and executing (company specific) strategies to effectively:

      a. utilize, bundle, leverage, and/or convert intellectual capital (assets) to value, revenue, and foundations for future  wealth, growth, and expansion.

    b. sustain control, use, ownership, and monitor the value of intellectual capital (assets) throughout their respective life, value, and functional cycles, as needed.