Archive for July, 2008
July 30th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, intangible assets. No Comments.
Michael D. Moberly July 30, 2008
Decisions related to an organization’s intangible assets, intellectual property, proprietary know how, and competitive advantages are, first and foremost, business decisions, not solely legal processes.
In today’s tightly wound and highly compressed business environment, if those assets are neglected, overlooked, unrecognized, or merely handed-off to legal counsel as potential IP with the assumption conventional (IP) protections, i.e., a patent, a copyright, or a trademark is sufficient to sustain control, use, ownership, and value, then please read further!
Ideas (assets) can mature very rapidly within an organization, and, if not effectively managed, that is, protected and preserved to sustain control, use, ownership, and value, they will, with all too much frequency, meld into open (public/global domain) sources or become unduly vulnerable to compromise or misappropriation. In other words, competitors (locally, nationally, globally) will acquire and use them. And, once an organization’s ideas (assets) enter the public – global domain, either inadvertently, unethically, or illegally, most all conventional IP (law) protections are of little, if any, benefit insofar as (a.) recovering the idea (asset) itself, or (b.) fully re-capturing its value.
Fundamentally, IP rights represent a basic social contract between society (government) and the person or organization that creates-develops the idea wherein the public (government) then grants the creator the right to exclude others from using that idea for a specified period of time, in exchange, of course, for the disclosure of its details and ultimately, the surrender of that (property) right, upon expiration of the time period, by allowing it to enter the public domain. (Modified by Michael D. Moberly from ‘Stealing of Ideas In An Age Of Globalization’ by Pat Choate, 2005).
Of course, the hope is, that by giving the rightful originator/owner, of the idea, a property right for a limited time, while also making public, the ideas’ most intimate details, the general state of knowledge (within society) will be advanced.
Importantly, but often unrecognized, those rights flow directly from a clause in Article I, Section 8 of the U.S. Constitution, ‘to promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries’. This is the legal basis for all patents, copyrights, and trademarks ever issued in the U.S.
Unlike patents, trademarks, and copyrights though, there is no certificate issued by the government to an organization’s idea developers or its decision makers that says, these ideas also constitute your intangible assets, proprietary know how and competitive advantages. Instead, the responsibility for identifying, assessing, protecting, and preserving the value of those assets (ideas) are fiduciary, that is, they’re solely up to the decision makers in each organization.
Fiduciary Starting Points – What follows are key starting points for understanding an organization’s fiduciary responsibility to protect and preserve those potentially valuable, revenue producing, and future wealth creating assets, i.e., by recognizing:
1. how potentially valuable ideas and intangible assets actually evolve within an organization…
2. what intellectual property and intangible assets are, and equally important, what they’re not…
3. why it’s necessary to protect, preserve, and monitor an organization’s IP (and intangible assets) even if a patent has already been filed or issued…
4. conventional IP enforcements (i.e., patents, trademarks, copyrights) are reactive, not proactive, and carry little, if any, detterent affects today…
5. how to put in place practices to sustain control, use, ownership, and value (of all ideas and assets) that reach beyond those conventional legal protections!
Company’s Should Seek A Fresh, Objective Look At The Intangible Assets, Competitive Advantages and Know How They’re Producing…
July 28th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, intangible assets. No Comments.
Michael D. Moberly July 28, 2008
“An idea”, says Jack Welch, former Chairman of General Electric, “is not necessarily a biotech idea. That’s the wrong view of what an idea is. An idea is an error-free billing system. An idea is taking a process that used to require six days to do and getting it done in one day. We get 6 to 7 percent productivity increases routinely now, mostly because of ideas like that. Everyone can contribute”.
My conceptual starting point for commencing any – every engagement, whether it’s a small, medium-size firm, a startup, a venture capital investment, an R&D project, a university research unit, a mature firm, or conducting market entry due diligence, is to bring clarity, credibility, and relevance to the indisputable economic fact – business reality that 75+% of most companies’ value, sources of revenue, and future wealth creation lie in intangible assets, IP, competitive advantages, and know how! In other words, ideas that can and do bare fruit, but still routinely go unrecognized, un-or under-valued, or even dismissed.
I then work collaboratively with principles’ and decision makers’ to identify, assess, bundle if possible, and most certainly, align those assets with the company’s core business objectives and strategic plan. This coincides with the important component of putting in place appropriate (relevant) practices to sustain (protect, preserve monitor,) control, use, ownership, and the revenue – value producing elements of those assets, or, ideas, as Jack Welch characterizes them.
Respecting the reality that business operations and transactions are often conducted in extraordinarily competitive, aggressive, nanosecond, and winner-take-all arenas, some decision makers and principles express skepticism about the practicality of my conceptual framework which often translates as (a.) a reluctance to acknowledge the intangible assets their firm produces and possesses, (b.) an absence of confidence in ways to better utilize, exploit, and extract value from their ideas, i.e., intangible assets, know how, competitive advantages, (c.) unfounded concerns or misconceptions about the cost or process necessary to bring those assets to the forefront of their company, and/or (d.) embarrassment about having not already done so!
If a company’s (normally risk taking) decision makers are unconvinced about these fiduciary necessities (responsibilities) they must be prepared to experience sometimes costly, time consuming, and momentum stifling circumstances. Translated, they will likely lose, forego, or more politely, inadvertently relinquish most, if not all of the prospective value, revenue, and strategic (wealth creating) opportunities those assets may (could) have produced.
If decision makers, D&O’s, business unit managers and other principles still remain unconvinced about the importance and relevance of engaging a fresh and objective look at their intangibles, competitive advantages, and know how, please reconsider this post!
July 23rd, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, intangible assets. No Comments.
Michael D. Moberly July 23, 2008
It’s all about sustaining competitive advantages, revenue streams, relationship capital, brand integrity, and value during and following significant disruptions or catastrophic events a business and/or company is likely to experience at some point.
When 75+% of a companies’ value, sources of revenue, and future wealth creation lie in intangible assets and intellectual property it’s absolutely essential that business continuity-contingency plans today, fully incorporate-reflect those assets.
Which intangibles, IP, know how, and competitive advantages represent the keys?, well, they’re those assets that are ‘mission critical’ (essential) to achieving a speedy, efficient, complete, and uncontested recovery. When most companies analyze their ‘mission critical’ assets, even though they may perceive themselves as being a ’business dominated by a single asset’, they often learn there are multiple collaborative, intertwined, and complimentary assets that are embedded in various processes or activities that assume heretofore overlooked importance and relevance.
Key objectives of a well conceived and forward looking business continuity-contingency plan are to have the appropriate processes, procedures, technologies, and intellectual capital in place to sustain (protect, preserve):
a. control, use, ownership, and value of those assets necessary to achieve
b. a prompt recovery, i.e., revenue streams, relationship capital, image, goodwill, and brand integrity, etc., including
c. proprietary status – trade secrecy requisites of key know how
d. to drive the recovery.
It’s especially important for business continuity-contingency planners themselves, to recognize and address countermeasures (in the plan) regarding the persistent probability and asymmetric activities that competitors’ and adversaries’ globally can, and with increasing frequency will, engage to exploit (take advantage of) a distruption and/or catastrophic event to cause additional economic hemorrhaging (to the victim company) e.g.
a. undermine (erode) any existing competitive advantages
b. stifle the companies’ momentum
c. engage in misappropriation, infringement, counterfeiting
This is why business continuity-contingency planning for intangible assets and intellectual property is so essential today and must reach well beyond conventional gaming scenarios!
July 22nd, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Due Diligence and Risk Assessments, intangible assets. 1 Comment.
Michael D. Moberly July 22, 2008
First, it’s important to recognize that the initiative a company and its decision makers undertake to engage in exporting are first, and foremost, ‘business transactions’ that happen to be governed by a labyrinth of, mostly well intended, trade laws, processes, and procedures on both ends. We all remember the quip attributed to James Carvell during President Clintons’ first campaign, ‘it’s the economy stupid’! Well, company decision makers would be well served to not lose sight of the reality that, even while mired in the various processes, procedures, and anxieties necessary to execute exports, the act of exporting is a ‘business transaction’ and not merely regulatory (agency, department) compliance.
Second, even as it has become an undisputed economic fact – business reality that 75+% of most companies’ value, sources of revenue, and future wealth creation lie in intangible assets, IP, know how and competitive advantages, exporting is still routinely mis-characterized as (someimes presumed to be solely) an exchange of a companies’ tangible – physical goods and products. Whereas, in most instances, IP, intangibles, know how and competitive advantages are integral to – deeply embedded in the (tangible, physical) goods and products being exported. To not recognize this reality can, an frequently does, pave the way for companies to inadvertently relinquish or altogether lose their ‘real’ sources of value, revenue, and global competitive advantage. Engaging in thorough – comprehensive ‘market entry planning due diligence’ can mitigate these types of risk.
Third, while a company engaged in exporting may regard compliance with relevant (U.S.) laws, processes, and procedures and the presumed agency-department oversight as being serious and worthy matters, it’s important to recognize that an international trading partner (company) may not hold their countries’ export laws and/or processes in a comparable light. That is not stated to cast dispersion or disrespect on (a.) other countries’ export-import law regimes, or (b.) prospective trading partners. Rather, it is offered to suggest some companies have found prospective trading partners or governmet trade representatives with utilitarian, egalitarian, or purely profit motives – interests in portraying compliance (with their import-export laws) conducive to each deal that comes before them.
Fourth, it’s essential that company decision makers literally and fully understand the products-goods they intend to export and ask the all important question, ‘are there any components, elements, or aspects of the product/goods that could conceivably constitute and/or be converted to ’dual use’, that is, commercial and defense purposes. Obviously, U.S. export laws (procedures, processes) fully address the concept of dual use. But, in today’s go fast, go hard, go global nanosecond business transaction environment and ‘user friendly’ export compliance process, decision makers may not always fully grasp, recognize, or anticipate how their products – goods could be converted, by those so inclined, to nefarious uses, and if so, would cause irreparable and costly harm to a companies’ reputation, goodwill, image, and brand!
July 19th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications. 1 Comment.
Michael D. Moberly July 19, 2008
Information asset protection systems, policies, and practices should be flexible and maneuverable to reflect value changes, functional cycles, relevance, and/or obsolescence (of information assets) which are common in today’s nanosecond, go fast, go hard, go global business (information, data) transaction environments.
Delivering the same-constant level(s) of protection to information assets regardless of changes in their value or contribution to a companies’ competitive advantages, brand, reputation, R&D project, etc., can be very inefficient. Today, information asset protection should be gradational (e.g., maneuverable, flexible) to provide the level of (asset) control, use, ownership, and value necessary to ensure companies’ can sustain unchallenged access to and the ability to fully utilize and extract value from their assets at will.
Maneuverability and flexibility (when applied to information asset protection) also means that systems and policies should be designed with the capability – capacity (intertwined with relevant employee attitude, awareness, alertness, and overall company culture) to make rapid, almost thermostatic types of adjustments, i.e., more – less protection as the value, relevance, function cycle, and/oor obsolescence climate warrants.
Respecting state and federal laws that mandate constant levels of protection to ensure privacy of personal data, many companies would be well served to periodically assess particular information assets’ contribution to (company) value, revenue, competitive advantages, reputation, brand integrity, etc., to determine if the same or an adjusted (higher, lower) level of protection resources are warranted? If-when adjustments are justified (based on value changes, functional cycles, relevance or obsolescence, etc.) newly freed up protection resources could be shifted to other information assets that are currently delivering greater value to the company and therefore warrant greater levels of (asset) protection.
It’s the interaction of value, demand, utilization, and to a lesser extent, risks and threats (to a companies’ information, knowledge-based assets) that should become the primary drivers for designing and allocating protection resources!
July 17th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap. No Comments.
Michael D. Moberly July 19, 2008
A ‘research liaison’ should contribute to corporate – university (sponsored) research projects by: sustaining (protecting and preserving) unecumbered control, use, ownership and monitoring the value of both parties’ investments, i.e., the projected stream of intangible assets, IP, competitive advantages, and (proprietary) know how evolving from the research.
Unfortunately, there’s a fairly long trail of melodramtic intrusions in academic research - scientific processes with an equally long trail of scientists and universities interpreting those initiatives as unwarranted and disrespectful attempts at oversight and management of university-based research. When handled poorly or heavy-handedly such initiatives:
1. routinely collide with the time honored principles of open scientific communication and academic freedom, and
2. are quick to spark emotional, polarizing, and project stifling debates in academic units and research labs, especially those unaccustomed to the necessity and realities of properly safeguarding information (research work products).
An unfortunate, but very true reality is however, those principles (academic freedom, open scientific communication) are routinely being exploited, outpaced, circumvented, and undermined today by:
1. very determined and extraordinarily sophisticated and predatorial data mining and global business-competitor intelligence operations, and
2. the inevitable challenges posed by ’trusted insiders’.
When either taint a research process, an unwelcomed outcome for both the university and corporate sponsor is that time, resources, and investment in research and its valuable products’, in the form of intangible assets, know how and competitive advantages, are compromised, relinquished, or lost. These, in turn, will usually prompt an array of costly, time consuming, and embarrassing challenges and disputes, any one of which can adversely affect:
1. the corporate sponsor in terms of not receiving the projected benefits and competitive advantages initially conceived when the research partnership was formed, and certainly
2. the universities’ image, reputation, and goodwill as a prospective ’research partner’.
Necessarily then, the role-responsibility for a ‘research liaison’ (among other things) is to:
1. serve as an enabler and facilitator to research collaborations, partnerships, and processes
2. provide momentum to the administrative processes associated with executing university-corporate research partnerships, and
3. build and strengthen bridges between researchers, scientists and corporate research sponsors through respectful and knowledgable dialogue to elevate receptivity of research units’ culture to safeguarding and preserving the value of intangible-information based assets and intellectual capital in ways that simultaneously respect academic research traditions and the principles of the Bayh-Dole Act.
Today, in the nanosecond world of at will global communication and collaboration, decisions about when, where, and the circumstances in which research work products are disseminated have become more blurred and certainly, more risky!
July 16th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, Due Diligence and Risk Assessments, intangible assets. 1 Comment.
Michael D. Moberly July 16, 2008
The purpose of M&A due diligence is to provide buyers and investment sources with sufficient, forward looking/sensing risk identification and mitigation weaponry to effectively protect and preserve the value (sustain control, use, ownership) of about-to-be-purchased intangible assets and IP post transaction.
In today’s aggressive, nanosecond, predatorial, and winner-take-all business transaction environments, its essential to determine if the about-to-be-purchased assets can sustain a deal’s objectives. That’s why it is necessary to design-negotiate-execute pre and post transaction (due diligence) covenants to monitor vulnerabilities and risks (to those assets) that can adversely affect-impair their stability and sustainability insofar as value, revenue, and future wealth creation are concerned.
A sellers’ or acquisition targets’ intangible assets carry a readily and globally exploitable liquidity that outpaces-disregards conventional IPR’s enforcements, i.e., patents, copyrights, trademarks. This elevates their vulnerability to many different forms of internal-external compromises that are often preludes to (asset) value losses and/or erosion that can literally sabotage M&A deals. Examples include (a.) abnormally high levels of misappropriation, infringement, product counterfeiting-piracy, (b.) poorly monitored (employee) non-compete and non-disclosure agreements, and (c.) under-the-radar forms of entanglements that contribute to deal frictions, challenges, and disputes that stifle and/or undermine deal trust, momentum, and finalization.
When these occur (singularly, or in multiples) prior to deal finalization, the value of the about-to-be-purchased assets (intangibles, IP) can quickly hemorrhage. However, if these risks (circumstances) are brought to the attention of deal teams (ala the covenants) in real time the terms of a transaction can be renegotiated to ensure the buyers’ objectives are achieved.
To effectively mitigate such risks, it’s important for buyers and investment sources to have in place highly proactive deal impact analysis processes, i.e., monitoring covenants. When negotiated - integrated properly (up front) in a transactions’ due diligence phase, these covenants literally permit the monitoring of key (value, revenue producing) intangibles and IP so deal management teams can be alerted to any previous or on-going circumstances that adversely influence the assets’ value and/or materiality.
Again, when circumstances adverse to a deals’ objectives are encountered (revealed) the deals’ terms can be re-negotiated (e.g., risks shifted, leveraged) without losing deal momentum, timing, or resorting to costly and time consuming dispute resolution options, or worse, possibly killing an otherwise good deal.
Traditional templates (one size fits all) methods of transaction due diligence (particularly those that don’t address or underestimate the contributions of intangibles) are really snap-shots-in-time and do not provide sufficient or necessary (on-going) monitoring to address the nanosecond liquidity (value erosion) vulnerabilities now common to any transaction in which intangible assets and IP are in play!
July 10th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, intangible assets. No Comments.
Michael D. Moberly July 10, 2008
A company’s strategy for extracting value from its intangible assets and IP has little, if anything to do with its size! Afterall, numerous respected studies consistently find that 75+% of most companies’ value, sources of revenue and future wealth creation lie in intangibles, IP, competitive advantages, and know how and none, to my knowledge, distinguish that percentage (of value) by a companies’ size, e.g.,
1. intangible assets, IP, competitive advantages, and know how are not concepts or terms applicable only to larger, Fortune 500 types of companies. Instead, they have special relevance to small and medium size firms that literally comprise the backbone of most every Chamber of Commerce and Rotary Club in the U.S.
2. the stewardship, oversight, and management of those assets are no longer discretionary functions, rather fiduciary responsibilities which must translate into routine action items on D&O agendas for every size firm from start-up to maturing companies.
3. the manner in which those assets are handled and treated have both tactical as well as strategic business (decision) applications which means they’re not solely a legal process that’s often mis-characterized as being much more complex that it really is (see previous July post titled ‘What Are Intangible Assets’).
I find with greater frequency, business decison makers are more receptive to acknowledging their intangible assets. I also find that, with minimal orientation, (i.e., training, coaching, etc.) they quickly arrive at ‘uh ah’ moments on behalf of their company. This is especially true in terms of the returns they find from devoting time to identifying, unraveling, and assessing the intangibles that their firm has (a.) already amassed and/or (b.) still routinely produces in the form of (proprietary) know how and competitive advantages.
Who knows their firm better and what it ‘produces’ than its own managers and decision makers? It merely requires a slightly different orientation for looking beyond merely tangible (physical) outputs to the outputs of intangibles.
Such receptivity and acknowledgement can quickly evolve into the next stage for utilizing, maximizing, and extracting value from intangibles which entails aligning a company’s intangible assets and IP strategy with its business strategy.
Alignment, in this instance, does not mean a one-shot-occurrence, rather it must constitute:
1. a consistent, and preferably, permanent practice of ensuring intangibles, IP, know how, and competitive advantages, etc., are routine and enterprise wide considerations, not afterthoughts. The alignment process also involves:
2. describing real and practical paths, options, and strategies (that fit best for their firm, their culture, their circumstances, their strategic plan, and their capitalization etc.) to better utilize and extract as much value as possible from their assets.
However, an important ’bottom line’ to decisions makers’ receptivity, and this exercise is those companies that lack either the willingness or ability to:
1. sustain (protect, preserve) control, use, ownership, and monitor the value of those (their) assets, and
2. consistently practice effective stewardship, oversight, and management of those assets
…will not likely experience the outcomes or returns that are so frequently at ‘arms reach’!
The Rapidly Accelerating Interactions Between Intangibles, Economics, Technologies, and Globalization Leads To Voids In Safeguarding Information Assets
July 9th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, intangible assets. No Comments.
Michael D. Moberly July 9, 2008
There are many new and yet to emerge challenges and vulnerabilities to information assets, some of which evolve from the rapidly accelerating interactions between (a.) intangibles, (b.) economics, (c.) technologies, and (d.) the fact that more business transactions have global impacts. One consequence of this is, significant voids are often left in enterprise information asset protection and value preservation programs. For example:
1. A significant percentage of information asset protection initiatives remain based on threat – theft scenarios rather than value dilution – loss scenarios…
2. The persistent adverse affects of predatorial and global competitor-business intelligence, information brokering, and data mining operations are routinely omitted from information asset protection – value preservation equations…
3. Computer/IT security still remains, in many respects, one dimensional, that is, it primarily protects stored and/or transmitted data and information. Characterizing computer/IT security and information asset protection as being synonymous constitutes a serious mis-calculation and misunderstanding about the content, format, value and most all, vulnerability of knowledge-based (intangible) assets.
4. Legal mechanisms to enforce – protect economic benefits – competitive advantages, innovators, holders, owners can rightfully expect from the commercialization, licensing, etc., of their intellectual property and/or intangible assets are generally reactive, not proactive. That is, they apply after losses, compromises, infringements, and/or counterfeiting has occurred, assuming of course, it becomes known in a timely manner!
July 8th, 2008. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, intangible assets. No Comments.
Michael D. Moberly July 8, 2008
Investment in a start-up, early stage company, or an R&D project is really about intangible assets!
All innovation, R&D, patents, etc., essentially start life as intangibles in the form of proprietary know how, trade secrets, etc. Treating those key, innovative intangible assets in a cavalier manner and neglecting good trade secret – proprietary information protection practices borders on fiduciary irresponsibility today.
In today’s highly compressed R&D environments, ideas and innovation (research, science, etc.) can mature very rapidly and, if effective stewardship, oversight, and management are not practiced, they can easily meld into open (public domain) sources through neglect or illegal/unethical acts and, once there, protections end and worse, value (of the innovation) will likely be significantly reduced, if not go to zero!
Also today, there is a growing probability that most cutting edge innovation is already the subject-target of broad (global) competitor-business intelligence and data mining initiatives. One consequence of which is that a portion of the value and potential market, if commercialized, may already be diluted (weakened) something which I refer to as ‘silent hemorrhaging’.
Solutions and Strategies
Stewardship, oversight, and management of innovation and R&D must provide much more to investors and IP holders than mere snap-shot-in-time reference points by respectfully:
1. Peeling back overconfident and/or naive representations by innovators and (IP) holders about the sufficiency of their information asset protection practices with respect to sustaining (preserving) control, ownership, and value of the innovation.
2. Assessing the extent to which an R&D project (innovation) may have already been diluted relative to being able to fully exploit (commercialize, maximize, extract) its projected value.
3. Scrutinizing the intellectual capital underlying the innovation (R&D) by examining its origins (historically, sequentially) from ‘idea-concept through its current stage of development’.
4. Assessing ‘attractivity and demand’ factors for key – at risk components of the innovation from a competitor-business intelligence and data mining perspective.
Again, all patents, whether provisional or issued, should start life as proprietary know how in which effective stewardship, oversight, and management are not only warranted, but essential!