Introspection, A Valuable Intangible Asset!

January 12th, 2015. Published under Managing intangible assets. No Comments.

Michael D. Moberly    January 12, 2015     A blog where attention really span matters!

A managerial resolution for 2015…Should you still be looking for a 2015 resolution, try engaging in more ‘introspection’!

Peering inward…Introspection means taking time to recognize the prudence of, at least periodically, directing ones thoughts inward, that is, to think about our actions, reactions, and responsibilities and how they relate outside our respective circles of professional specializations.

Professionally, I am convinced the managerial responsibility to be introspective is a valuable and positive intangible asset!  That is, a leader or management team’s recognition that introspection is a necessary and quite valuable attribute to possess, and, in the context of this post, a positive, strategic, and personalized intangible asset!

Knowing what you know and what you don’t know…Introspection as characterized by James Drogan, business professor at SUNY’s Maritime College is…

“…knowing what you know, knowing what you don’t know, and knowing who knows what you don’t know and  knowing, when things are going really well, you’ve probably missed something”.

For some readers I suspect, the language Professor Drogan used to characterize introspection, may sound eerily reminiscent of former U.S. Defense Secretary Rumsfeld’s response to a question posed to him during a Pentagon briefing regarding fighting in Iraq and Afghanistan, which to date, remains frequently characterized as being smug, arrogant, or perhaps somewhat dismissive, at the 30,000 foot altitude anyway, of the increasingly challenging events the U.S. military were experiencing in both countries.

Intangible value of introspection…On a more relevant note, Martin Christopher, Emeritus Professor of Marketing & Logistics at Cranfield’s School of Business (UK) and author of Logistics and Supply Chain Management, states that…

 “introspection is valuable, important, and perhaps even critical to successful business operations”.

I am wholly in agreement with Professor Drogan’s important characterization of introspection as well as the value which Professor Christopher attaches to introspection.

Introspection among colleagues, co-workers, superiors, and decision makers…It’s important to not go astray from my intended premise, which is, effective and consistent introspection by management teams and decision makers is a strategically valuable asset, albeit intangible, which most any organization and their management teams should aspire.

One example, during my 20+ years in academia is that I routinely observed students, both graduate and undergraduate, rapidly review and presumably assess written assignments in a manner similar to their approach to essay exam questions. In both circumstances, I sensed students had a felt need to speedily regurgitate all they assumed they knew about a topic, then leaving it to my interpretation, which I presume they hoped would track their intent.

I am confident many management teams and business decision makers have observed similar behaviors exhibited by colleagues. I am confident such habits, to be kind, have minimal introspective thought processes at work. Through my lens, introspection is absolutely necessary for effective, profitable, and sustainable business operation, particularly in today’s aggressively competitive, predatorial, and global business (transaction) environment.  So, introspection, should it become a respected attribute to a company’s overall management can also be a very positive and valuable intangible asset that favorably contributes to most any decision maker and/or managerial role.

Introspection is not self-doubt…Managerial introspection is not merely an exercise to confirm what one already believes to be true, rather introspection is a tool for self evaluation and review of pending activities or strategies. Introspection can be rooted in one’s desire to identify and assess a particular, usually strategic, path that provide a means to achieve an objective inner assurance, given the ever increasing array of potential variables, that a particular course of action is appropriate and that relevant obligations have been acknowledged.  In other words, introspection encompasses a strong sense of personal self-confidence which allows a manager – decision maker to be intellectually and operationally receptive to…

“knowing what you know, knowing what you don’t know, and knowing who knows what you don’t know and  knowing, when things are going really well you’ve probably missed something”

More specifically, Donald Clark raises other relevant issues about managerial introspection  in ‘After Action Review’, as he correlates introspection to learning…

“…what worked, what didn’t work, why it didn’t work,  what one needs to do about it to make it work and work better, and what one should do differently the next time’? 

Introspection is managerial self-confidence…I believe most management team members and business decision makers can practice introspection providing there is an environment in which self-confidence is appreciated and respected not confrontational arrogance  Unfortunately, I am short on examples of business leaders or managers who have successfully crossed the chasm of arrogance to introspection.

But, introspection is not solely about adding individual contributory value to their organization, rather, by extension, making a company more valuable, thus, an intangible asset positive!

What happens when managerial introspection is absent…When the elements of introspection are absent from a company’s routine strategic – tactical deliberative processes, i.e., ‘after action reports’. Through my lens, the absence of managerial – leadership introspection can be significant, particularly when it becomes a precursor for reputation risks to materialize.

Too, my experience suggests that in far too few instances do those in leadership roles recognize introspection to be an important skill set integral to personal, professional, and intellectual growth that will serve them and their company well.

Most readers are adept at projecting potential adverse outcomes for projects and transactions when leaders and managers lack of introspection.  The consequences can be severe, leading to the failure of a new business initiative, transaction, or an entire company.

It’s far from being a secret that people, as well as business managers and leaders possess an innate proclivity for gravitating and endeavoring to replicate tasks – behaviors which resonate as being…

  • relevant to a current challenge or problem, or they sense are
  • strategically necessary, i.e., personally, professionally, to achieve success.

But, through all of this, let us not overlook two things…

  • the economic fact that 80+% of  most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability globally lie in or evolve directly from intangible assets, and
  • a manager or leaders’ desire and ability to be introspective is a respected and valuable intangible asset.

As always, reader comments are welcome!

Reputation Risk Management Using OPSEC

January 7th, 2015. Published under Reputation risk.. No Comments.

Michael D. Moberly    January 7, 2013    ‘A blog where attention span really matters’!

What is OPSEC…

As a methodology, OPSEC (operations security) emerged in 1967, during the Viet Nam war, when a small group representing relevant branches of the U.S. military were tasked to determine how adversaries, i.e., Viet Cong and the North Vietnamese Army, were obtaining information about forthcoming combat (air, ground) missions and able to use that intelligence to mitigate risk (damage) to their assets and personnel.

Among other things, the group learned in most numerous instances, there were ‘indicators’, i.e., routine and readily observable preparatory activities that signaled a pending military operation as well as its target. As adversary proficiency in identifying ‘indicators’ grew, they were able to distinguish indicators further on the basis of their relevancy to mission planning and preparation in addition the capabilities, intentions, and probable targets of the U.S. combat unit in which the indicators originated.

OPSEC’s purpose…

The original purpose for employing OPSEC in U.S. military and intelligence communities respectively, still today, is to deny the much larger number of adversaries advance notice of pending operations and their targets by exercising caution insofar as altering and/or disguising heretofore routine preparatory information, processes, and communications related to mission planning. This includes occasionally introducing subterfuges.

OPSEC’s relevance to reputation risk…

The principles of OPSEC, not unlike their Viet Nam era origins, but with some obvious adaptations, are very relevant to revealing company reputation – brand risks, particularly those which are festering under the surface, but when they rupture, often with the aid of communication mediums can instantaneously materialize with such sufficiency to…

influence rapid adverse reactions from investors, consumers, and other stakeholders throughout companies’ respective supply and production chains to rapidly place a project, product, or business initiative at financial, reputational, and competitive advantage risk and/or peril.

OPSEC principles are readily translatable to the private sector…

The principles of OPSEC remain widely practiced today primarily in the world’s intelligence communities, military mission planning, and have not gone unnoticed by most terrorist organizations. Respectfully, but fortunately, OPSEC’s very effective simplicity is resonating in the private sector, particularly in circumstances where secrecy and confidentiality for such transactions as R&D, product launches, and M&A’s, etc., are critical to execution and achieving projected revenues, efficiencies, and competitive advantages

Well practiced – executed OPSEC is not reliant on any particular IT application or system. In point of fact, its principles are the operational antithesis of the technical rigidity associated with computer/IT security (software) programs as well as overly presumptive deterrents and enforcement associated with intellectual property law.

Instead, OPSEC is dependent on project – enterprise wide internalization of its principles at each relevant level to consistently examine relevant activities, behaviors, and communications ‘through the eyes of global economic and competitive advantage adversaries’

Experience suggests, once the principles of OPSEC are articulated with timely examples of application specific (business) circumstances, management team reluctance for trying OPSEC on a project basis, dissipates and with further training, becomes intuitively practiced as self-evident assessment and analysis.

The distinguishing factors are, traditional practices, processes, and preparatory activities are framed through the eyes of global economic and competitive advantage adversaries. This means management teams and employees alike, are obliged to consider how the various steps, processes, and procedures they engage traditionally associated with executing a transaction or new business initiative in which the elements of secrecy and surprise are essential, will be translated when known by economic and competitive advantage adversaries.

Business rationale for incorporating OPSEC in your company…

For me, the most compelling rationale for integrating the principles of OPSEC to any business initiative, operation, or transaction insofar as mitigating, if not eliminating, reputation – brand risk lies in this economic fact…

80+% of most company’s value, sources of revenue, and ‘building blocks’ for achieving competitive advantages, profitability, growth, and sustainability evolve directly from intangible assets, i.e., intellectual, structural, and relationship capital, reputation, brand, image, and goodwill.

OPSEC is a practical, discreet, and intuitive process…

Having been consistently engaged in the information asset safeguard arena for 25+ years, I can say with considerable assuredness that global economic and competitive advantage adversaries have honed, to near perfection, their skills in business information (asset) analysis and compromise at their very earliest stages of development.

For example, it is possible today, often with the aid of specialized (competitive intelligence) software, to distinguish minutia of subtle and indirect indicators, i.e., information and processes that alert competitors to imminent business initiatives or transactions prior to any actual ‘go – no go’ decision has been made. What’s of equal value to competitors is the knowledge that an initiative or transaction is being considered and/or planned as compared to its actual execution.

By having this analysis, economic – competitive advantage adversaries can be better positioned to compromise, counter, or otherwise undermine the coveted and critical elements of secrecy and surprise.

State, corporate sponsored, and legacy free players engaged in economic-competitive advantage intelligence…

Understandably, state and corporate sponsored, as well as independent (legacy free) players globally, are predatorily persistent and aggressively engaged in competitive intelligence activities. Again, the objectives, for the most part are consistent, i.e.,

  • to reveal the plans, intentions, and capabilities which, if executed, would allow a competitor or client to achieve an economic and/or competitive advantage.
  • serve as the basis for competitors to mount various strategic actions specifically intended to at least moderate, if not wholly undermine any advantage a competitor believed they would achieve.

Aides to achieving those objectives lie in an array of off-the-shelf scanning technologies which can keep information acquisition and analysis at ‘arms length’ and within the parameters of legality and business ethics, yet available for prompt and effective analysis. Aside from these scanning technologies, some conventional competitive intelligence methodologies remain unethical at best, if not illegal depending in part the country they are being executed.

That said, I have heard management teams variously rationalize competitive intelligence activities as…

  • being the world’s second oldest profession.
  • every company – nation is doing it, why shouldn’t I.
  • the stakes of business initiatives and transactions have become so high that achieving ‘second place’ is neither an admirable nor profitable consolation.
  • my stockholders and stakeholders compel me to do it.
  • there is a consistent global market for business and competitive intelligence and analysis.

The term OPSEC is not routinely uttered in many c-suites or board rooms…

Admittedly, the term OPSEC is not routinely uttered in many c-suites or board rooms. My experience however has allowed me opportunities to effectively integrate OPSEC principles in several (private sector) engagements. Admittedly, some business management teams convey a dismissive attitude toward OPSEC by…

  • by questioning its cross-over (military to private sector) relevance, or
  • because it conjures off-putting connotations based on its Viet Nam war era origins.

Neither should deter exploring it further or incorporating it as an action item on either agenda.

But, let’s be clear, OPSEC is not a subterfuge for companies to conceal materialized reputation risks from public – regulatory scrutiny regardless of their causation. In other words, the principles of OPSEC are not a modus operandi for silence

OPSEC objectives to mitigate-eliminate risk to reputation and brand…

Instead, the principles of OPSEC are very proactive and call for consistent, thorough, and objective examination and unraveling of ways companies may be inadvertently or indirectly exhibiting indicators of pending business activities/transactions which are best executed if secrecy and surprise remain present without premature disclosure, e.g., the

  • initial objective then for companies practicing OPSEC are determining whether any exhibited indicators could, upon analysis, manifest as reputation risks,
  • second objective is to modify and/or eliminate the indicators, and the
  • third objective is to recognize that deploying OPSEC is not intended to wholly displace conventional (reputation) risk management initiatives, rather to compliment them!

I’m confident few management teams, c-suites, and boards would disagree with the view that a financially favorable (company) reputation plays an increasingly significant role toward achieving – meeting projected desirable outcomes to business initiatives and/or transactions, the probability of which elevates when the principles and practices of OPSEC are accepted, consistently applied, and appropriately practiced.

Ultimately, company management teams need to recognize the ever increasing array of techniques and circumstances in which specific risks – threats can materialize to temporarily or irreversibly dilute the (contributory) value of a company’s reputation and brand simultaneously.

Some proprietary intangible assets will not fit requisites of trade secrecy…

Management teams are obliged to recognize there are contributory and underlying intangible assets in play to a company’s brand and its reputation, some of which do not fit the requisites of trade secrecy. Those assets can however retain proprietary status and remain out of the public domain through effective use of OPSEC, e.g., for sufficient periods of time to allow companies to ensure their R&D is complete, new product launches are prepared, and other (contributory) intangible assets are positioned to achieve maximum surprise, projected revenues and competitive advantages before sector competitors (globally) can mount distractive counter move(s) to undermine all or a portion of those anticipated benefits.

OPSEC is a dynamic methodology for addressing risks to reputation and brand…

Management teams of intangible asset intensive and dependant organizations are obliged to recognize that reliance on conventional (stationary) safeguards, particularly trademarks, copyrights, and patents are, while presumptively required, generally insufficient insofar as a standalone safeguard methodology in today’s simultaneously aggressively, globally predatorial, and instantaneously competitive business, R&D, and transaction environments. That is, the strength of the onetime deterrent effects and presumed self-enforcement of conventional intellectual properties, i.e., patents particularly, are, through my lens anyway, approaching irrelevance aside from their providing reactive (legal) standing for litigation when, not if, infringement and/or theft occurs

Somewhat unlike conventional IP, OPSEC’s guiding principles remain very much intact, relevant, malleable, and bolstered by continued employee awareness and interest in…

  • examining – scrutinizing their preparatory behaviors, processes, communications, and activities through the eyes of their economic and competitive advantage adversaries.
  • continually fine tuning and making relevant adjustments to keep pace with new twists and variations of risks to intangible assets, i.e., reputation and brand.
  • risks/threats emanating from variously sophisticated state sponsored entities, legacy free players, corporate (business/competitive) intelligence programs, insiders, and the proliferation of independent ‘desk top’ competitive intelligence and information brokering operations.

OPSEC in practice…

As readers will find in the example below, a company’s ability to sustain the elements of secrecy and surprise, against the ever present reality of persistent reputational and brand risks lurking and probing for vulnerable targets, serves to enhance a company’s stature and become valuable and respected signals that will resonate throughout a market sector. Collectively, this contributes to a company’s reputational value and strengthens its relationship capital.

Too, as readers know, there are several industry sectors where enterprise wide – project secrecy and integrity with respect to R&D planning, marketing, and launch execution are sacrosanct. That is, they are mission critical underliers to achieve profitability and enhance reputation and brand.   The warp operating speed of the tech sector in particular, is a good illustration wherein safeguarding intellectual, structural, and relationship capital is related to most every projects ultimate success, and, by extension, a company’s reputation and brand.

As the world knows, the U.S, not unlike numerous other (G-8) countries, there are multiple ‘silicon valleys’, perhaps one of the more notable is California’s San Jose area where there are also untold numbers of sophisticated and globally predatorial competitor – business intelligence operations ongoing and have been since the Valley’s inception. That, coupled with a somewhat incestuous employee hire – downsize – fire – layoff – rehire environment, maintaining comprehensive project – product R&D and launch secrecy for a substantial period of time is, to be sure, a routine, but highly significant undertaking encompassing countless variables.

A colleague of mine, Mr. Greg Acton, CPP, CISM, is very deservedly, a highly sought after security executive throughout California’s Silicon Valley. Several years ago while Greg served as Global Chief Security Officer for a leading technology communications firm, he and his team were tasked with the responsibility for enterprise wide security – secrecy for a developing product and its projected launch at the annual ‘consumer electronics’ show, which is one of tech sector’s most desired and coveted product launch and showcase venues. As expected, Mr. Acton’s two year effort proved completely successful.

That is, there was no evidence of unauthorized – premature disclosures, adverse leakages to the tech ‘underground’ or media anyone of which, had they occurred, would have invariably and rapidly led to unmanageable speculation, little or no consumer – sector surprise, probable product piracy, significantly diminished competitive advantage in the products’ market space, and most certainly a much sullied and perhaps irreversible downward spiral to its reputation and brand as well as undermining – deflating the 300% increase in stock price Acton’s company enjoyed immediately following the products’ public unveiling at the show.  In addition to the company’s rapid stock spike, the VP of marketing informed Greg, in a congratulatory manner, the company had spent $1M on marketing the products’ lead up’ to the consumer electronics show.

In return for sustaining secrecy of the project for the two years prior, the VP also estimated the company received fifty times that amount in free advertising during and immediately following the show.  Collectively the efforts of Mr. Acton and his team solidified the product’s price point premium and the company/s brand and reputation. A strategy relied on to accomplish this feat was, in large part rooted in Greg and his teams operational familiarity with and application of the principles of OPSEC.

OPSEC’s key to success…

As noted previously, there are numerous ‘off-the-shelf’ tools and firms today which variously purport to mitigate reputation and brand risk. Respectfully, some firms and individuals offering such services, through my lens, constitute do-overs of previous, now less lucrative careers that (a.) emphasize tactically reactive approaches, versus (b.) strategically proactive processes, often emanating from the principles and practices of OPSEC.

Understandably, experience points to numerous management teams which have already staked out their company’s position about how to address – respond to materialized reputation and brand risk(s). For the most part, I find those positions are more closely resemble the former, i.e., ‘a’, vs. the latter, i.e., ‘b’.

When ‘a’ prevails, regardless of management team rationale, I encourage them to separately ask legal counsel, marketing, and accounting how much it will cost to try to retrieve their companies’ compromised or substantially diminished reputation and/or brand once risks have materialized and begin taking their financial and reputational toll.

Again, for companies to be consistently successful in today’s increasingly aggressive, competitive, and predatorial global business (transaction) environment, it’s important to routinely, systematically, and critically examine processes, activities, behaviors, and communications associated with company R&D, strategic planning, and product – service launch etc., through the eyes’ of economic and competitive advantage adversaries, to…

  • assess the adversary’s motivations, intentions, and capabilities to actually detect and exploit relevant intangible assets, and
  • eliminate, or substantially mitigate projects’ routine – accustomed preparatory activities, behaviors, processes, and communications that individually or collectively constitute ‘indicators’.

Correctly assessing both of the above can measurably decrease the respective ‘foot prints’ which most business initiatives unwittingly, but inevitably leave.

Stone v. Ritter, does it make OPSEC a fiduciary responsibility…?

Again, I respectfully, but strongly encourage management teams representing intangible asset intensive and dependant companies in which reputation and brand play valuable and integral roles, to objectively examine the principles of OPSEC for their suitability, regardless whether the firm is mature, maturing, Fortune ranked, early stage, a promising start-up, or small-medium size.

With fewer exceptions, any company’s actions and processes, i.e., indicators related to new products, services, or technologies will expose the underlying intellectual, structural, and relationship capital, and by extension, reputation and brand to an array of increasingly irreversible and certainly costly risks. Having processes and practices in place to mitigate, deny, and/or eliminate such risk is now akin to a fiduciary responsibilities that management teams, c-suites, and boards bear, i.e., See Stone v. Ritter,  911 A.2d 362, Del. Supr. 2006

An objective reading of the Stone v. Ritter concludes sustaining control, use, ownership, and monitoring value, materiality, and risk to intangible assets throughout their respective life, value, and functionality cycles is a responsibility management teams and c-suites should not dismiss or overlook.

OPSEC advocate and intangible asset strategist and risk specialist…

Taken further, through my lens as an OPSEC advocate, intangible asset strategist, and risk specialist, the fiduciary responsibilities emanating from Stone v. Ritter, also entails initiatives to discover, disguise, counter, and/or change even the most subtle of ‘indicators’ which, if they were recognized and used by an economic – competitive advantage adversaries, are all but sure to deny, or at least undermine and dilute the financial, reputational, and competitive advantages a company projected.

I am sure there are circumstances in which some organization may conclude it’s in their marketing – launch playbook to discreetly leak information about pending projects to spark consumer interest and elevate anticipation. For those companies that find such strategies are productive, I encourage them, before execution, to ensure their backside is duly covered.

But still, to allow ‘indicators’ to be externally observed and acquired either inadvertently or through negligence, will, with confidence, end up in the hands of competitors, providing them with ample time to mount counter initiatives. In large part this is due to the absolute proliferation of entities, organizations, and individuals globally engaged in the acquisition, analysis, and trading-brokering of business – competitive intelligence.

OPSEC, more art than science…

Deployed OPSEC can fit any company or managerial metric requirement even though its principles and benefits are largely intangible they can still be objectively measured.

Attempting to assign a contributory value to OPSEC (for a particular business operation or transaction) in traditional return-on-security-investment terms often becomes an exercise in trying to ‘quantify the negative’. For example, prior to a company implementing OPSEC its management team would prudently ask…

  • what risks will be prevented, eliminated, or mitigated?
  • how will those benefits manifest and be subject to measurement?

Instead, I encourage clients to reframe our initial engagement discussion and incorporate questions for ‘quantifying the positive’, e.g., what contributory value – competitive advantage enhancements will emerge following OPSEC’s implementation that otherwise would not have occurred? This, I believe is a more insightful and strategic methodology for assessing – measuring the impact of OPSEC.

OPSEC, increasing receptivity and confidence…

There remain a significant percentage of management teams, who have yet to be initiated to the asymmetric and extraordinarily rapid materialization (fire) of reputation-brand risks. That said, with more regularity, I find management teams who respectfully display a sort of vicarious intrigue with the principles of OPSEC which I attribute, at least in part, to the reality that OPSEC’s origins are rooted in secretive military operation planning and mission execution.

But also, I attribute management team receptivity to OPSEC due to its…

  • understandable and instinctive, but often overlooked obviousness, and
  • peoples base desire to address and sustain secrecy absent condescending reliance on non-disclosure and/or and confidentiality agreements.

The term (acronym) OPSEC has consistently been in the language action repertoire of the military and intelligence communities for 40+ years. But, as noted previously, the term OPSEC is seldom uttered in c-suites or boardrooms in favor of ‘mba light’, sometimes cryptic, and ever changing ‘buzzword’ language and phrasing.

One phrase that won’t change however, is the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in or emerge directly from intangible assets’.

True, some millennial entrepreneurs, business owners, and decision makers find OPSEC’s 40+ year existence and its origins in military and intelligence circles as rationale for its obsolescence and irrelevance in somewhat of a context of contrasting cyber warfare to‘boots-on-the-ground (conventional) warfare.

Again, considering 80+% of most companies value and sources of revenue and competitive advantages today lie in intangible assets, it only seems prudent, in light of the increasingly sophisticated, surreptitious, aggressive, predatorial and global nature of economic-business competitive intelligence activities that company policy makers and action oriented management teams have an intellectual curiosity, coupled with fiduciary responsibilities, to sufficiently and consistently safeguard their company’s key, and in some instances, most valuable intangible assets, i.e., reputation and brand.

Sony Pictures, Is This The Type of Reputation Risk We Can Now Expect?

December 18th, 2014. Published under Reputation risk.. No Comments.

Michael D. Moberly   December 18, 2014    ‘A blog where attention span really matters’!

I am frustrated about how to describe the adverse events – acts that have been perpetrated against Sony Pictures of late. To be sure, reputation risks materialize daily and will likely remain, in this instance, indeterminately active for months to come insofar as publicly releasing additional documents that produce titillating economic – competitive advantage harm. The bad actors in this instance, presumably North Korean or a confederate, are responsible for perpetrating this calamity are certainly not exhibiting the conventional, ‘smash, grab, and disappear’ MO we have become somewhat accustom.

It’s clear the extent which these events constitute a massive and criticality filled (reputation) risk and irreparable economic – competitive advantage harm at various levels, not just to Sony Pictures, but also to Sony’s personnel and management teams whose private information and communications have been exposed.

But this event has also produced substantial spillover to the film industry in general in terms of exposing the inner workings of various film studios as a whole, i.e., exposing proprietary – competitive advantage (operational) information and communications for anyone so inclined or titillated to read, interpret, and disseminate at will.

Through my lens however, the Sony Pictures’ event has far exceeded the conventional boundaries (of reputation risk) that typically affect one company at a time, to being on par with the sector wide revelations and reputation risks incurred by the financial services sector in 2006 – 2008.

It should now be evident, even for management teams unaccustomed to the operational realities of intangible assets insofar as their contributory value to company reputation, regardless how, why, where, or by whom the risks originate and their adverse affects. There is little question, these companies should be reaching out to genuine reputation risk management specialists, not merely repurposed public relations professionals.

Aside from the long assumed and now widely reported connection of the Sony Pictures’ event to the North Korean government or a surrogate, at least one aspect that distinguishes this from others before it, is it is one of the initial, if not the first large scale attack perpetrated against an enterprise in the ‘creative sector’ which unlike financial services, has some legitimate and perhaps even Constitutional grounds for doing what it did, i.e., produce a comedic motion picture that about one of the most image conscious and sensitive countries in the world with whom an expected and aggressive response exceeds a mere probability to perhaps an inevitability.

Creatively, I suspect Sony Pictures, unlike Robert Oglethorpe photographs in the 1990’s, can expect it’s response to be measured somewhat because, after all, ‘the interview’ was conceived and produced as a comedy and movie goers generally enjoy comedies often irrespective of how their laughter is designed to be achieved.

The Question VC’s Should Stop Asking, Why, and What Questions Should Be Asked!

December 12th, 2014. Published under 'Safeguarding Intangible Assets', Early stage companies., Venture capital.. No Comments.

Michael D. Moberly   December 12, 2014   ‘A blog where attention span really matters’!

Venture forums…

Venture forums are typically fast paced and highly charged events where management teams of intangible asset intensive startups, university-based spinoffs, and early stage companies give impassioned ‘elevator pitches’ to prospective investors.

Most pitches are purposefully limited to 3-5 minutes wherein the spokesperson explains their companies’ mission, the innovation, further research that’s necessary, fiscal projections, business model, why investment is warranted, and how the investment will be used should an investor deem it a worthy risk. Following the ‘pitch’, prospective investors may ask the company questions, one invariably is, ‘what’s your IP position’?

What’s your IP position…

Of the numerous venture forums I have attended the most consistent answer to this albeit over-rated, misunderstood, yet seemingly obligatory question is, a patent…

  • application has been filed (provisional),
  • is pending, or
  • has been issued.

The attention startup company’s attach to achieving IP status for their innovation, coupled with the consistency which prospective investors ask the IP position question, suggest each party believes that conventional IP, patents particularly are influential requisites to securing investment capital. Of course there are other factors considered in ‘invest – don’t invest’ decisions.

Legal symbolism…

True, IP status does provide investors with the necessary legal standing and recourse options should the invested enterprise fail, not meet its projections, or its IP is infringed or challenged within the 3 – 5 year exit strategy plan investors typically demand. And, yes, patents and other forms of intellectual property are obligatory for WTO and TRIPS signatories.

But, the global business transaction environment is becoming increasingly aggressive, predatorial, competitive, and legacy free. That coupled with the persistent challenges and vulnerability to intangible asset (IP) infringement, theft, and/or counterfeiting make a startups’ IP position little more than legal symbolism. Should companies elect to pursue other strategies to safeguard their proprietary – competitive advantage intangible assets, i.e., trade secrecy for example, those legal portals for bringing action against the inevitable infringers, thieves, and counterfeiters in locales where a company’s most valuable assets are in play also carries some ambiguity.

Legal – economic safety nets…

Through my lens, conventional IP has less relevance as a legal – economic safety net than startup management teams should be assume.  Too, the costs associated with mounting an IP infringement – misappropriation suit are significant, if not cost and time prohibitive for resource conscious startups to pursue regardless of case credibility.

It’s prudent for investors and IP holders alike to acknowledge patents and most other forms of IP, no longer serve as…

  • stand alone deterrents, or
  • reliable prognostications of innovation value.

More relevant venture forum questions…

I urge prospective investors – venture capitalists to re-phrase their venture forum questions. For example, rather than merely asking ‘what’s your IP position’ assuming that is an important criterion to ‘invest-don’t invest’ decisions, perhaps a more relevant and telling question would be…has the proprietary know how, i.e., intellectual, structural, and relationship capital that underlie the startups’ innovation and serve as the cornerstone to the IP on which an investment would be premised, been adequately safeguarded from its inception?

Patents start life as trade secrets…

It’s a well acknowledged adage in the information asset protection arena that patents typically start life as trade secrets and proprietary know how.  Therefore, if the know how underlying a prospective investment has been treated in a cavalier manner absent the

  • requisite minimums of trade secrecy or other best information asset protection practices
  • prior to filing a patent application,
  • it’s only prudent for prospective investors to ascertain
  • the status, i.e., fragility, stability, and sustainability of the assets being considered for investment.

Asset vulnerability, probability, criticality, and speed…

Today, the vulnerability, probability, criticality, and speed which know how, i.e., intellectual and structural capital assets particularly, can be compromised, infringed, misappropriated, or stolen are issues that should be fully explored as being integral to any ‘invest – don’t invest’ decision.

Follow-up questions…

Before making an investment in intangible asset rich and dependant startup companies, it’s important to direct probing follow-up questions to company management teams. Doing so will allow prospective investors to more objectively assess whether control, use, ownership, and value of the underlying intangible assets are…

  • sustainable relative to an intended exit strategy, and
  • reflective of the assets’ functionality and value cycle.

Today, with increasing certainty, ineffectively safeguarded intangible assets (IP) will quickly hemorrhage in value, competitive advantage, and elevate investor’s vulnerability to costly, time consuming, and momentum stifling challenges and exit strategy headaches!

As always, reader comments are respected and welcome.

Managerial Arrogance = Intangible Asset – Relationship Capital Negative!

December 9th, 2014. Published under Measuring Performance. No Comments.

Michael D. Moberly   December 9, 2014   ‘A blog where attention span really matters’!

Some of you may hold a similar view. In circumstances in which I find myself dealing with arrogance, either managerially or through a larger business culture, in most instances I find it unnecessary and equating with an intangible asset (relationship capital) negative, irrespective of whom, where, how, when, or why it manifests.

Expressions of conceit, egotism, self-importance, and condescension are some of the more common descriptors of arrogance, while they may relevant to military aviators engaged in training at the ‘top gun’ school at Miramar Naval Air Station, I find few other circumstances in which brandishing managerial arrogance can be useful. Admittedly, there is a distinction between expressions of arrogance and an experientially earned sense of total self confidence as portrayed in the film ‘Lone Survivor’

Too, I find, such expressions are frequently attached to an unreceptive and quickly dismissive (shoot from the hip) demeanor inclined to trivialize other, especially new voices, which articulate clearly plausible alternatives to the one’s they hold, assuming ‘the way it’s always been done’ has elevated to a managerial right which only they can amend. In other words, ‘if it ain’t broke, why try to fix it’? Everything seems to be functioning well as is.

In environments where managerial arrogance is dominant, it is challenging to develop favorable intangible assets with strong contributory value, e.g., reputation, brand, image, and goodwill. Most respectfully, should there be doubters to this premise, it’s important to recognize this globally universal economic – competitive advantage fact; 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, competitive advantage, profitability, and sustainability today lie in – emerge directly from intangible assets! It does not quite rise to the level of ‘rocket science’ to suggest when a company either projects or dismisses any intangible asset which conflicts with or ‘cancels out’ even a portion of that 80+%, receptivity to change is warranted because a dominant projection of arrogance will weaken and/or undermine the contributory value of other intangible assets, particularly intellectual, structural, and relationship capital as well as stakeholder and consumer perspectives.

A company’s culture and employee demeanor, whether dominated by arrogance or humility and respect, are never-the-less, intangible assets, broadly defined as…

  • the economic benefits anchored – embedded in companies’ distinctive and often times proprietary know how, i.e., intellectual capital, along with similar processes, procedures, and practices, i.e., structural capital, which, when used effectively, can set a company apart from its competitors by creating various efficiencies and other circumstances that enhance internal and external relationships and communication, i.e., relationship capital.. (Michael D. Moberly)

It is true, intangible assets are seldom, if ever, reported on (company) financial statements or balance sheets insofar as acknowledging their contributions to business operation success or measuring their contributory value and the economic – competitive advantages they produce.

So, whether managerial arrogance is exhibited as demeanor that emerges from individuals or collectively materializes as part of a company’s culture, one seldom has to look far to find evidence of its adverse effects be it in the form of employee attrition, stakeholder hesitation, brand, or reputation. Unfortunately, in numerous instances, managerial arrogance has become so thoroughly embedded in a company’s culture that it manifests and replicates involuntarily, that is until a substantial reputation risk materializes which prompts wholesale changes in leadership as a company endeavors to regain its economic – competitive composure, should that be possible.

Anecdotally though, I find managerial arrogance is often rationalized, not as an intangible asset or relationship capital negative as I am proposing here, rather as a necessary and justifiable expectation associated with a particular job, profession, or mission, i.e., perhaps as a deep seated extension of McGregor’s Theory X.

If truth be told, as an intangible asset strategist and risk specialist, I may respectfully bow out of an engagement when I sense managerial arrogance will inhibit or preclude my charge to effectively bring a company, its management teams, employees, and culture to the intangible asset table.

As always, reader comments are most welcome.

Safeguarding Intangible Assets: Responsibilities for Security and Company Management Teams!

December 5th, 2014. Published under 'Safeguarding Intangible Assets', Fiduciary Responsibility. No Comments.

Michael D. Moberly    December 5, 2014    ‘A blog where attention span really matters’!

“Intangible assets take years to build and a second to lose”! That’s a statement attributed to Gerald Ratner, a former UK retail magnate following the demise of his £500M jewelry business. As unfortunate as that circumstance was for Mr. Ratner, his company, its employees, and stakeholders, as an intangible asset strategist and risk specialist, the statement speaks volumes when it’s understood that…

  • 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today lie in – evolve directly from intangible assets!
  • unlike conventional forms of intellectual property, i.e., patents, copyrights, and trademarks, etc., each of which, by the way, are categories of intangible assets, governments’ issue no certificate that tells company’s what their intangible assets are. So, identifying, assessing, and safeguarding the contributory value of a company’s intangible assets are (fiduciary) responsibilities of management teams’ regardless of a company’s sector, size, or headquarters.
  • growing percentages of companies operate in aggressive, hyper-competitive, and predatorial business transaction environments wherein intangible assets are at risk to an ever expanding array of asymmetric events, acts, and behaviors which can rapidly cascade to adversely affect asset value, sources of revenue, competitive advantages and otherwise entangle assets in costly, momentum stifling, and often irreversible circumstances.

Why? Because regrettably, intangible assets are frequently not identified as value-revenue contributors, therefore they go unrecognized, under-utilized, under-valued, and un-protected. In large part, this is related to intangible assets’…

  • lacking physicality.
  • falling under conventional ‘MBA light’ radar.
  • mistakenly presumed to be the sole/primary function of legal and/or accounting.
  • seldom, if ever being reported on balance sheets or financial statements.

So, is Mr. Ratner’s statement relevant to global businesses, and should companies’ begin engaging intangible assets they produce, possess, and become embedded as value laden intellectual, structural, and relationship capital? Absolutely!

As always, reader comments are respected and welcome!

Frugal Innovation: Changing the Center of Innovation Gravity From West to East…

December 4th, 2014. Published under Frugal Innovation. No Comments.

Michael D. Moberly   December 4, 2014   ‘A blog where attention span really matters’!

Has frugal innovation been oversold? If so, should the west’s conventional entrepreneurial community and its stakeholders, often portrayed as consisting of university research, biotech, incubators, venture capitalists, SBIR’s, and quick witted management teams now relax?  These two, much paraphrased, questions were posed to readers in an article in The Economist (March 24, 2012) aptly titled ‘Asian Innovation: Frugal Ideas Are Spreading From East to West’.

Oh contraire! Those inclined to characterize frugal innovation as merely representing a new ‘flash-in-the-pan’ simplistic business model that will likely never gain sufficient traction in western economies to become viable, are encouraged to re-think that position. Frankly, I do not sense frugal innovation, conceptually or practically, will become subordinate to business start-up convention and fade from western business lexicon. Those who convey it will may not have taken the time to understand it or perhaps are themselves stakeholders in retaining existing conventions.

It’s short-sighted to characterize frugal innovation as merely a business start-up model which befits (a.) simplified products or services, (b.) work force demographics frequently associated with developing countries, (c.) limited availability of or access to start-up capital, (d.) investor returns in single vs. double or triple digits, and (e.) subordinate to western conventions.

Interestingly, in The Economist’s Schumpeter column (March 24, 2012) titled ‘Asian Innovation’ it’s noted that numerous universities are in somewhat of a ‘scramble mode’ to design and integrate in academia, courses focusing on frugal innovation. This suggests the fundamental principles and concepts of frugal innovation are variously resonating in the west insofar as accommodating the dual visions and/or requisites of (a.) do-ability and work ability, and (b.) attracting – reaching a broader range of prospective entrepreneurs whose innovation does not require substantial and immediate infusions of investment.

To be sure, frugal innovation represents a principled, but less structured path for developing and hopefully commercializing practical innovations that initially target consumers at the so-called ‘bottom of the pyramid’.  Not infrequently, initial frugal innovations can be ratcheted up to attract consumers in successively higher brackets of the global pyramid.

Numerous advocates and practitioners of frugal innovation in the East, as The Economist’ article points out, imagine a time when particular Western products, upon removal of gratuitous frills, will lead to such substantial cost savings that frugal ideas will (eventually) come to dominate the innovation process.  While car seat warming western consumers have clearly not arrived at that point, the interest embedded in prospective entrepreneurs to pursue alternative paths to innovation commercialization, absent many of the conventional hurdles and/or constraints, particularly those having to do with securing substantial investment are attracting some well deserved interest.

“Reverse Innovation” a book written by Vijay Govindarajan and Chris Trimble, and “Jugaad Innovation” by Navi Radjou, Jaideep Prabhu and Simone Ahuja are seminal guides to frugal innovation.  And, as a demonstration that the concept of frugal innovation is not wholly dismissed by the multi-nationals, Mr Govindarajan (Dartmouth’s Tuck Business School) is known to have advised General Electric on frugal innovation and co-authored a very worthy article with its CEO, Jeffrey Immelt.

Intangible Assets: What Management Teams Need To Know?

December 2nd, 2014. Published under Intangible asset training for management teams., Managing intangible assets. No Comments.

Michael D. Moberly   December 2, 2014   ‘A blog where attention span really matters’!

During initial engagement conversations it’s instructive when clients convey indifference to or underestimate intangibles’ various contributory roles as sources of value, revenue, competitiveness, reputation, etc. Since I began researching, publishing, and consulting in the intangibles’ arena, I have encountered clients and company management teams who…

  • are unfamiliar how to identify, unravel, assess, and exploit intangibles’ to fit their company, its circumstances, and various transactions it engages.
  • find it challenging to distinguish how certain intangibles’, e.g., intellectual, structural, and relationship/social capital are embedded in routine (company) processes, procedures, and/or practices.
  • are inclined to characterize activities related to the management, development, value preservation, and exploitation of intangible assets as…
  • being too difficult or time consuming to do.
  • unappealing because intangibles are not reported on company balance sheets or financial statements.
  • an uncompetitive activity until competitors are observed doing it.

Of course, the opposite sentiments are what management teams should be expressing because it’s an economic fact today that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets!

And, intangible assets are not exclusive to early stage or newly launched companies’ nor are they subordinate synonyms for intellectual properties, rather they are relevant to any company regardless of size, sector, product/service offerings, revenue, or transactions.

Early Stage Companies: Mitigate Risks To Intangibles Assets

December 1st, 2014. Published under 'Safeguarding Intangible Assets', Early stage companies.. No Comments.

Michael D. Moberly     December 1, 2014    ‘A blog where attention span really matters’!

There are four (typical) ways in which early-stage companies’ proprietary intangible assets, i.e., IP and its underlying intellectual, structural, and social/relationship capital become ensnared in time consuming, costly, momentum stifling, and sometimes irreversible personal disputes and/or legal challenges. That is, they are frequently a consequence and/or combination of…

  1. misplaced (or violation) of trust in business partners, research collaborators, employees, colleagues, and/or professional service providers, etc.
  2. operational or procedural miscues, etc., i.e., poorly executed manufacturing and/or design and delivery of product/services, market entry planning and launch, being dismissive about sustaining control and use of key assets, or monitoring their value, materiality, and risk.
  3. unethical or illegal conduct of others (internally, externally), etc., i.e., theft, misappropriation, infringement, intentional leakage, etc.
  4. key intangible assets acquired through competitor/business intelligence, data mining initiatives, and/or economic espionage, etc.

Entrepreneurs and early stage company management teams who are inclined to mistakenly characterize or dismiss any of the above as merely constituting a necessary risk of doing business, do so at their peril. That’s particularly evident in today’s instantaneously competitive, globally predatorial, and winner-take-all business (transaction) environments.

For even what may be ostensibly well managed early stage companies, asset monitoring and safeguard practices must go beyond ‘mba light’ takeaways because absent such attention, asset vulnerability and criticality will rise beyond being a mere probability to inevitability!  In other words, the probability an early stage company, especially those embedded with particularly innovative, commercializable, and possibly dual-use intangible asset rooted technologies will have one or more of the above risks materialize, elevates.

Understandably, it’s often tempting for early stage company decision makers, to focus their time, attention, and limited resources on what may appear, at the time, to be more immediate concerns such operations, management, raising capital, marketing, and commercialization issues. The reason, the latter largely represents the conventional, sole, and time-honored path to successful startup, while the stewardship, oversight, and management of key, foundational intangible assets beyond patent filings or trade secrecy requisites frequently remain mis-portrayed as unrecoverable costs and elusive initiatives versus on-going fiduciary responsibilities.

Equally unfortunate, some early stage company management teams presume a patent application, provisional, or issuance are sufficient (stand alone) forms of protection and/or deterrence, something which I refer to as the ‘patent and walk away’ syndrome.

This contributes to making most any delay in or reluctance to execute relatively simple, yet absolutely necessary asset value – competitive advantage preservation safeguards as risks which elevate the probability that economic – competitive advantage risk will materialize.  Too, absent the presence of value and competitive advantage safeguards, options for legal recourse will be limited. Collectively, this positions early stage companies to lose everything their principals have worked so hard to achieve, particularly in this ‘winner-take-all’ global business – market entry environment.

As always, reader comments are welcome and respected.

Reputations’ risk of risks, the holiday retail season!

November 28th, 2014. Published under Reputation risk.. No Comments.

Michael D. Moberly    November 28, 2014    ‘A blog where attention span really matters’!

I suspect the economic fact (business reality) that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, competitiveness, and sustainability lie in or evolve directly from intangible assets may have been, at least, one factor to influence The Economist’s Intelligence Unit (EIU) to produce a ‘global risk briefing’ paper titled Reputation: Risk of Risks. www.eiu.com/report_dl.asp?mode=fi&fi

Obviously, reputation is a highly prized and increasingly acknowledged as a valuable (intangible) asset which, not so coincidentally, a high percentage of respondents to the EIU survey conveyed, i.e., ‘sustaining a positive company reputation is a main concern for risk managers’, exceeding, for example…

  • regulatory risk
  • human capital risk
  • IT network risk
  • market risk, and
  • credit risk.

In the U.S., ‘risk to reputation’ is akin to a fiduciary responsibility that prudently extends beyond conventional risk management, ala Stone v Ritter, 911 A.2d 362 (Del. Supr. 2006).

Unfortunately, there are far too many examples that suggest a holiday retail season will elevate probability that (reputation) risks will materialize because vulnerabilities will be probed, exploited, and manifest as costly and potentially irreversible reminders of reputations’ fragility and the overnight gestation period for risk materialization.

As always, reader comments are encouraged and respected.