Michael D. Moberly   November 9, 2009

I have yet to find a company that does not want to survive this recession.  While that statement is self-evident and may sound literally obsurd to most, similarly, I’ve come across countless companies and management teams who have yet to fully realize that perhaps the key, to sustaining, even strengthening their business in this recession, is to understand their cheese has been moved. 

For those unfamiliar with this notion, a very brief, but reflective book by Spencer Johnson titled ‘Who Moved My Cheese’ may be worthy of the 30 minutes it requires to read.  

The ’cheese that’s been moved’ in this instance, are company’s tangible assets!  That is, for a vast majority of company’s (their) tangible (physical) assets, i.e., property, buildings, equipment, inventory, etc., have been permanantly moved.  Tangible assets no longer, as they did in previous decades, represent the dominant drivers or sources of most company’s value, revenue, and/or foundations (building blocks) for future growth, wealth creation, and sustainability. 

Instead, for most company’s, their primary sources of value and revenue have irreversibly transitioned, in the increasingly ‘knowledge-based’ economy, to intangible assets.  Intangible assets include such (intangible) things as brand, reputation, image, intellectual property, employee intellectual-human capital, and internal/external relationships, etc.  (For a comprehensive list of intangible assets see http://kpstrat.com and ‘click on’ brochure and scroll to ‘what are intangible assets’.) 

If you elect to read Johnson’s book, one suggestion to make the concept of ’who moved my cheese’ more palatable and relevant to business decision makers and management teams, is to substitute the words ‘tangible’ or ‘intangible assets’ every time the word ‘cheese’ appears in the (book’s) narrative.  This will help the reader identify with intangible assets and the importance of recognizing their (individual, collective) role and contribution to company value, revenue, and sustainability.

To bring further clarity to this point, I recently I attended a gathering of entrepreneurs. The keynote speaker was a well known and highly successful area restauranteer.  For those listening carefully to the 30 minute presentation, at least 20 minutes included the speakers’ obviously heart felt and experienced sense of the internal culture that underpins the sustained success of this 35+ restaurant enterprise.  Without exception, each of the factors the speaker addressed (including the internal culture) as contributing to building and maintaining this company’s success (even during the current recession, and the ever broadening competitive dine out market space) were, in fact, intangible assets!

Interestingly however, the words ‘intangible assets’ were never uttered during the presentation, nor in the Q&A that followed, to contexualize this restauranteer’s success.  Clearly, another instance of c-suites’ genuinely needing to know how they and their company should best react ’when their cheese is moved’.  That is, its an economic fact - business reality that 65+% of most company’s value, sources of revenue, and foundations for future wealth creation today lie in - are directly related to their intangible assets, not their tangible assets.  To be sure, that is the case for restaurants.

For those dedicated to elevating awareness, alertness, and accountability for intangible assets throughout the business and financial community, the process often starts with management teams literally acknowledging (verbalizing their) success and profitability is routinely attributed to, in large measure, by the effective and sustained utilization of intangible assets, i.e., development, execution, delivery, quality assurance, etc. 

Michael D. Moberly     June 15, 2009

Information asset safeguards must be flexible and maneuverable!  Most information asset safeguard initiatives are one dimensional.  They tend to remain constant throughout the life - value cycles of the assets being protected and do not fluctuate with gradational (routine, periodic) changes in their value, relevance and/or currency to on-going or future company programs or projects.  Exacerbating this, in today’s hyper-competitive and nanosecond global business environments, is the reality that the value and relevance of information assets, in general, is becoming increasingly compressed and short-lived relative to their support for and/or linkage-contribution to specific (company) tasks, processes, or operations.  Therefore, business information asset safeguards must be sufficiently flexible and maneuverable to reflect fluctuations in, not only value and relevance, but also, risks, threats, and vulnerabilities as well.

Avoid ‘pushing the future off the table’!  Each day company’s are presented with urgent, near term challenges that create pressure to push the future off the table.  One consequence is that, lacking effective strategic planning, disproportionate weight is given to the persistant chorus of sources offering largely speculative and worst-case scenario snap shots about particular risks and threats to business information assets and/or information systems.   While the potentially devastating consequences of these pronouncements should not be dismissed, neither should they serve as the exclusive rationale for the design and execution of business information asset safeguards.  Instead, adopting capability and value-based strategies represents more forward looking, efficient, and holistic approaches for safeguarding valuable and (company) critical information than those sometimes narrowly focused and time-bound mini-risk/threat assessments.

Safeguarding business information assets should also be about fostering relationships!  Any company initiative to sustain control, use, ownership and value of their business information assets must include efforts to foster positive relationships by engaging the originators, developers, users, and owners of that information.  One reason for a company’s lack of emphasis on fostering such relationships is the perception that computer/IT system security equates with information asset security when, in fact, it does not!  Computer/IT security, while critical to most every company, would best be characterized as complimenting, rather than dominating, strategies to safeguard company information assets.  

Michael D. Moberly   March 24, 2009

All too frequently contributions’ intangible assets make to a company are overlooked, neglected, or outright dismissed, and sometimes obscured by the assets’ (a.) absence of physicality, and (b.) not knowing precisely where and how intangibles ‘fit’ on balance sheets.  With equal frequency, their proprietary and competitive advantage features go unrecognized and certainly undervalued, or not valued at all. 

In most company’s, intangible assets are akin to the proverbial ‘hand in front of our face’. That is, they’re often embedded in (a company’s) routine operations, processes, and functions that, in many instances, tend to fall under the conventional ‘mba - tangible (physical) asset oriented radar’.  Just as frequently, company’s engage in HR and/or othe types of business transactions in which the intangible asset components of those transactions go unnoticed and may never be effectively exploited.

So, why is it beneficial for company c-suite’s, board’s, D&O’s, business unit manager’s, etc., to acquire a familiarity with intangible assets and how will that familiarity produce (translate as) multiplier effects and risk mitigators?  The objective, of course, is to position - exploit a company’s intangible assets in order to extract as much value as possible by:

1. Adding predictabiliy to transaction outcomes by being able to recognize and assess the stability, fragility, sustainability, and defensibility of the assets and their relevance to achieving (a.) projected returns, (b.) competitive market position, (c.) anticipated synergies and efficiencies, and (d.) exit strategies, etc…

2. Elevating the insightful quality of transaction due diligence by recognizing how to rapidly identify and unravel (potentially) valuable - revenue producing assets…

3. Reducing the probability that intangible assets (and IP) will become entangled and/or ensnared in costly time consuming, and momentum stifling legal challenges that can erode and/or undermine asset value, performance, or competitive advantages…

4.  Contributing to building a ‘company culture’ that recognizes - is more attuned to intangible assets, their value, and contributions to sustainability and profitability by treating them as business decisions rather than solely legal processes…

5. Providing a foundation for more effective application of (a.) knowledge management initiatives, and (b.) balanced-scorecard approaches…

6. Providing a strong foundation for aligning continuity-contingency and risk management planning with strategic business objectives…

7. Strengthening the convergence of computer/IT security and intellectual property (protection) enforcements to achieve more timely awareness/pursuit of IP rights violations!

Michael D. Moberly   December 17, 2008

Why would it be a good idea now for companies to seriously consider devoting (minimal) time, resources, and committment to developing a culture that recognizes, produces, and sustains control, use, ownership, and value of (their) intangible assets?  Perhaps the biggest reason is because today, its an economic fact that 75+% of most company’s value, sources of revenue, and future wealth creation lie in  - are directly linked to intangible assets!

Why then, given this ‘business reality’, would there be decision maker resistance to putting forth that time, those resources, and the committment to building an internal (company) culture to achieve this end?  For starters, here are four truthful, but increasingly less prudent reasons, i.e., intangible assets (1.) lack physicality, (2.) don’t appear on balance sheets, (3.) tend to fall outside conventional ‘mba’ precepts, and (4.) require ‘outside-the-box’ strategies to monetize and extract value!

One of my goals-objectives when serving clients is to, among other things, lay a foundation for building a company culture that builds upon Dr. Edgar Schein’s work in which he suggests a company culture begins with ’shared assumptions that employee’s learn while solving (internal) problems’.  Standing alone, Dr. Shein’s point sounds very academic for the real world of globally operating companies and business transactions.  But, when decision makers factor 75+% of (their) company value, revenue, and future sustainability likely lie in intangibles, one could rightfully conclude that devoting that minimal time, resources, and committment to building such a culture would be an exercise that would not only deliver favorable results, but, equally important, likely produce additional intangible assets that would, in turn, contribute to (company) value, revenue, and sustainability.

But, how would decision makers know when their efforts for building such a culture would actually produce the intended results, i.e., a fully functioning (intangible asset) company culture?  According to Dr. Schein’s work it would be evident at the point in which ‘employees (are observed) expressing (manifesting) it as being valid and worthy enough to be taught to new employees as the correct way to perceive, think, and feel in relation to (addressing) persistent challenges and problems they and the company face’.  So, when 75+% of most company’s value and revenue evolve from intangible assets, it would be prudent - make good business sense to assume that a significant percentage of those ‘persistent challenges and problems companies face’ are, in fact, variously related to their intangible assets.

So, what’s a bottom line to building a company culture that recognizes, produces, and sustains control, use, ownership, and value of intangible assets?  It’s a shared and linked (enterprise wide) set of characteristics, beliefs, assumptions, and behaviors about intangible assets, i.e., (1.) they’re real, credible, and convertible sources of value, revenue, and future sustainability, and (2.) should guide - underlie decisions, actions, and strategic planning!

Michael D. Moberly   May 25, 2008

There are two (and, probably more) parallel trends shaping the future of information asset protection, particularly with respect to companies’ vulnerability to theft, misappropriation, and infringement of (their) proprietary know how, trade secrets, and intellectual property by insiders (primarily employees).

The first trend is that numerous studies consistently find that 75+% of most companies’ value, sources of revenue and future wealth creation lie in knowledge-based intangible assets and intellectual property.  As this economic fact - business reality (trend) becomes more recognized and understood it will likely have significant influence on companies’ re-orienting their strategies, policies, and processes with respect to how they safeguard revenue generating - value creating knowledge-based (information) assets.  This trend will require ‘corporate information suites’ to shift (their) attitudes and some of their resources away from conceiving information protection solely in physical (tangible) asset and IT security contexts. 

Already, Sarbanes-Oxley (302, 404) and FASB (141, 142) mandate publicly traded companies account - report the value and materiality changes of their intangible assets.  This has elevated overall awareness (about intangibles) and prompted some forward looking companies to adjust their information asset protection programs to accommodate and reflect intangibles.

The second trend reflects the additional threats and risks to corporate proprietary information and trade secrets as conveyed in the findings of a study produced by DoD’s Personnel Security Research Center (PERSEREC) in May, 2005:

1. Fewer employees are deterred (from engaging in insider theft of information assets) by a traditional sense of loyalty…

2. Employees are less inclined to view espionage - theft of information assets as morally wrong and (they) may view such as acts as being morally justifiable if they feel that sharing (that) information will benefit the world community or prevent armed conflict…

3. There is an inclination of those engaged in multi-national trade and transactions to regard unauthorized transfer of information assets or technology as a business matter rather than an act of betrayal or treason…

4. There is a growing allegiance to a global community, i.e., increasing acceptance of global as well as national values.  Tendency to view human society as an evolving system of ethnically and ideologically diverse and interdependent persons and groups in which illicit acts (such as theft of trade secrets, etc.) are easier to rationalize…

Framing the above as parallel trends is intended draw attention to the reality that as intangible assets and intellectual property become the overwhelmingly dominant economic - competitive advantage drivers of companies globally, it is essential that fiduciary responsibilities fully encompass the art and science of ’sustaining (protecting, preserving) control, use, ownership, and value of those assets because, if neither is effectively monitored and sustained, value will be diluted, eroded, and circumvented!

Michael D. Moberly

The condescending adage ‘talk is cheap’, unfortunately remains indicative of some attitudes held by decision makers about their companies’ most valuable knowledge-based assets.

It is only in the past twenty years that we have come to realize that information has taken on a new character, that is, it has passed from (merely) being an instrument through which we acquire and manage other assets, to being a primary asset itself and the emergence of information as a commodity which requires protection and definition of ownership rights. (Branscombe, Anne Wells, Who Owns Information? From Privacy to Public Access)

Today, companies increasingly find themselves producing knowledge - intellectual capittal, which has become an overwhelmingly dominant form of economic - competitive advantage muscle that can be leveraged. Nearly all of the world’s most innovative and successful companies are those that wield, manage, and effectively safeguard their knowledge-based assets and intellectual capital.

But, Michael Dertouzos offers a different view about the value of information when he suggests that most people believe (assume) (1.) information can be easily replicated or replaced, therefore it has little, if any value, and (2.) information is passive and exists in abundance, therefore little value is attached other than to its owner or originator.  (Dertouzos, Michael.  What Will Be, How The New World of Information Will Change Our Lives)

The perspectives expressed by Dertouzos may often manifest itself in business management teams’ rationale for applying only the most cursory (minimal) measures and/or resources to protect and preserve the value of their information assets.

Another perspective readily found in both public and private sectors’ is the assumption that there is a correlation in how certain information is classified and its value, i.e., top secret, secret, confidential, proprietary, sensitive, etc.  Presumably, the higher the classification level, the greaters its value.  But, give today’s extraordinarily sophisticated and globally predatorial data mining, open source business intelligence and analysis capabilities, any presumed relationship between classification and value has largely diminished because the ‘targeting’ of ideas and innovation occurs long before most government or corporate classification schemes are in place.