Archive for 'Analysis & Commentary: Studies, Research, White Pap'

Safeguarding A Company’s IP and Intangible Assets: Awareness, Attitudes, and Enforcement

January 30th, 2012. Published under Analysis & Commentary: Studies, Research, White Pap, Board oversight, Enterprise risk management., Insider Threats, Intangible Asset Value. No Comments.

Michael D. Moberly   January 30, 2012

In a British Telecom study of intellectual property infringement in the workplace, i.e., awareness, employee attitudes and overall enforcement titled ‘The Hidden Marketplace’ (2008) it was reported, to no particular surprise, that there is growing agreement and appreciation among company management teams (in the UK) that intellectual property and other forms of intangible assets are indeed valuable and warrant not just protection, but regular monitoring as well. 

This still very relevant UK-based research focused primarily on the demand side, i.e., employee-consumer interest and demand for acquiring counterfeit goods while at workplace brought much needed clarity to the ’hidden marketplaces’.

A particular finding stood out in my view, but still, no surprise to professionals serving this arena, is that the parallel perspectives of IP value and protection are frequently more aspirational than reality.  That is, management teams are increasingly likely to find themselves:

  • distracted by other, seemingly more pressing issues
  • lacking experience to design and execute procedures and practices to safeguard valuable (intangible) assets that are not physical or tangible.

My many years of experience in this arena find the above to be a fairly broad managerial and oversight conundrum that in part, is reflective of the rapidity which companies in all sectors have become enmeshed in the global knowledge – intangible asset dominated business (transaction) economy.     

While increasing percentages of businesses possess significant portfolios of valuable knowledge-based assets, it’s still common to find many, if not most, to have only the minimum, if any, safeguards or monitoring capabilities in place for their intangible assets.  

A company or management team’s rationale for this oversight is often rooted in the unsustainable notion that instituting such (offensive – defensive) practices constitute operational luxuries vs. business necessities.  

Such positions are particularly revealing given the economic fact that today, 65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability evolve directly from intangible assets.  That’s a reality that must be factored into a company’s enterprise risk management equation.

Here are some key starting points for developing intangible asset safeguard and monitoring initiatives:

  • ensure conventional intangible assets, i.e., intellectual properties, are consistently and properly registered
  • broaden the focus of (intangible) asset protection practices to encompass sustaining control, use, ownership, and monitoring their value and materiality
  • initiate intangible asset awareness-recognition programs for management teams, c-suites, and boards that reflect their fiduciary responsibilities evolving from Stone v Ritter
  • develop capabilities to rapidly identify and assess (monitor) any changes in an assets’ contributory value and promptly take action to mitigate adverse economic – competitive advantage consequences.

An important outgrowth of the study was that it identified relevant tools and assistance for employers and enforcement agencies to address IP theft, infringement and the counterfeit goods problem from an inside (internal) perspective.

This study also examined three additional issues pertinent to the global universality of  ‘hidden marketplaces’, i.e.,

1. employee attitudes regarding the value of intangible assets, particularly intellectual property

2.  company management team approaches to safeguarding its valuable intangible assets including IP

3. the levels of awareness that exist among management teams about near and long term problems and adverse consequences (what I often refer to as cascading affects) associated with theft – misappropriation of IP (intangible assets) from the workplace. 

My experience suggests, management teams would likely find these issues more relevant and become more receptive to ‘tackling them’ if they were framed in normative contexts as conveyed below, to spark discussion and deliberation, i.e., as consistent action items on c-suite and board agendas.  For example:

  • what should management team attitudes be about safeguarding their company’s most valuable assets?
  • what is the necessary level of awareness management teams and employees should possess to sustain control, use, ownership and monitor the value and materiality of their intangible assets in order to bring the most benefit and return to their company?

The answer to these normatively phrased questions lie:

  • at the heart of: the knowledge – intangible asset based economy
  • with c-suites, boards, and management teams taking action that truly reflects their fiduciary responsibilities
    • in recognizing 65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability
    • with the ability to sustain control, use, ownership, and consistently monitor the value and materiality of those assets.  

Absent such recognition and the implementation of effective procedures and practices to achieve this state, it’s becoming increasingly unlikely a company will experience the levels of growth, competitive advantage, and profitability which most are capable!

(This post was inspired by a study titled ‘The Hidden Marketplace: Protecting Intellectual Property In The Workplace – Research Into IP Infringement in the Workplace – Awareness, Attitudes, and Enforcement’ produced by Patricia Lennon of BT Internet in December, 2008)

Intangible Assets: Still Not Easy To Explain or Define

December 2nd, 2011. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, Goodwill. No Comments.

 Michael D. Moberly    December 2, 2011

Intangible assets are not easy to explain or define, particularly for those unfamiliar with their existence or unaccustomed to recognizing, let alone, measuring their contribution and performance, i.e., to company value, revenue, and sustainability.  For some, intangible assets are likely to be interpreted more as theoretical business concepts best espoused in a university lecture hall absent ’real world’ applicability.  For these individuals, intangible assets are interpreted more as theoretical (esoteric) accounting or business concepts best espoused in  university lecture halls and absent ’real business world’ application. 

Part of the definitional challenge lies in the fact that intangibles lack physicality.  So, regardless whether they’re called assets or not, it often boils down to a question about how one identifies, manages, and measures things which lack a conventional sense (state) of physicality?  While an experienced business person can’t really see or hear intangibles, even the casual business observer can distinguish companies that effectively capture and exploit their intangibles.

The definitional and application challenges astute business persons routinely face about intangibles can largely be attributed to they’re…

  • lack physicality
  • seldom reported on balance sheets or other company financials
  • often being undistinguished as standalone assets, but merely lumped together as goodwill

Intangible asset specialists who conduct briefings and awareness training on intangibles should always be prepared to field an array of critical and skeptical questions about intangibles and their contribution and valuation.  How such questions are answered of course, affects, as it does in any profession, the overall credibility of intangible asset proponents insofar as articulating better, smarter, and more effective techniques to capture, utilize, manage, and monetize intangible assets.  This includes clearly articulating what intangible assets are, what they’re not, the various forms they take, how they originate, and equally important how and when they can be effectively and profitably applied as ‘building blocks’ to enhance a company’s value and create sources of revenue.

Ironically, in the midst of this extended economic downturn, conventional wisdom would suggest that company management teams and boards would be receptive to considering alternative and proven strategies to elevate and safeguard their company’s potential for successfully weathering this lingering recession.

Respectfully though, it’s often challenging for some management teams and boards to step outside their past practice comfort zones and disengage from what they believe has worked well in the past..  Successful companies ran by successful management teams are, for the most part realists and pragmatic risk takers and therefore understandably skeptical about intangibles for all the reasons cited above.  However, when such skepticism keeps companies tied to practices and strategies of a tangible (physical) asset based economy (world) instead of a knowledge-intangible asset based global economy, we’re not likely to experience the growth which we know we’re capable.

While visiting/reading my blog, you are encouraged to browse other topics/subjects (left column, below photograph) .  Should you find particular topics of interest or relevant to your circumstance,  I would welcome your inquiry at  314-440-3593 or m.moberly@kpstrat.com

The Value Of Corporate Secrets

April 26th, 2010. Published under Analysis & Commentary: Studies, Research, White Pap. No Comments.

Michael D. Moberly   April 26, 2010

Throughout my 25+ years of experience in the intellectual property – intangible asset arena, much of which remains focused on the protection side, seldom do I recall specific dollar values of stolen, infringed, or misappropriated corporate (trade) secrets and proprietary information being the subject of conversation.  However, I have been part of countless conversations when wide-ranging and subjective  ‘guesstimates’ would be offered about the value of missing information assets.

There were, and remain, various reasons why companies do not provide more detail about losses and/or compromises of corporate (trade) secrets.  One is, there is no objective methodology or formula in which to calculate/assign a precise, defensible, and un-challengable dollar value to losses of company (trade) secrets. 

Not in-frequently, I would find that when companies experienced a particularly significant loss or compromise of a trade secret, they would hurredly resurect a laundry list of resources used to produce that asset (from its inception to its execution) along with estimates of the associated cost of those resources.   The results would then be tallied to represent the value of the now missing asset. 

This approach would not account for or reveal however, the underlying and contributory (enterprise-wide) value of a compromised information asset.  In other words, if the secret/proprietary information was embedded in, for example, multiple processes or procedures that permitted a company to achieve (current, future) competitive advantages or an enhanced market position, it was unlikely those initial calculations revealed that additional, but very real, value. 

A second reason companies were, and generally remain reluctant to provide more precise information about a dollar value of lost and/or compromised (trade) secrets is that it may become problematic from a public relations, shareholder, or legal strategy perspective, particularly if litigation is pursued, by:

1. Undermining consumer – shareholder confidence.

2. Encouraging (leaving the door open to) unflattering challenges about the validity and replicability of how the value of the missing information asset was reached.

3. Prompting (legitimate) questions about the company’s overall information asset protection capabilities and practices, on a fiduciary responsibility level.

Relevant to all of this is a recently published (March, 2010) Forester Research study commissioned by Microsoft and RSA, titled ‘The Value of Corporate Secrets: How Compliance and Collaboration Affect Enterprise Perceptions of Risk’. 

Having read and studied numerous similar surveys and studies, this particular Forrester Research product is distinguishable because the principle investigators, in conducting the research, sought to incorporate their understanding of the following into the findings, i.e., the,

1. Value of sensitive information contained in corporate portfolios, as a whole.

2. Variety of security controls used to protect that information.

3. Drivers of information security programs, i.e., what influences companies (internally, externally) to impose security controls on its information assets.

4. Cost and impact of enterprise data security incidents, apart from corporate (trade) secrets and sensitive, proprietary information.

The key findings of Forrester Research’ ‘The Value of Corporate Secrets: How Compliance and Collaboration Affect Enterprise Perceptions of Risk’ study were:

1. Secrets comprise two-thirds of the value of most companies information portfolio.

2. Compliance, not security, is the primary driver of (information) security budgets.

3. Companies focus a great deal of time/resources on preventing accidents, but theft (of trade secrets) is actually more costly.

4. The more valuable a company’s trade secrets/proprietary information is, the more ‘incidents’ it will likely experience.

5. Chief Information Security Officers (CISO’s) typically do not know how effective, or perhaps conversely, how ineffective, their company’s information security controls really are.

And, let’s not overlook the fact that corporate trade secrets and proprietary information constitute intangible assets, and the economic fact that 65+% of most company’s value, sources of revenue, and foundations for future wealth creation and sustainability lie in – are directly related to intangible assets.

I welcome your comments and perspectives.

 

 

 

Categorizing Intangible Assets

April 7th, 2010. Published under Analysis & Commentary: Studies, Research, White Pap, intangible assets. No Comments.

Michael D. Moberly   April 7, 2010

Intangible assets are (a.) largely knowledge (know how) based assets, (b.) form increasingly larger percentages of a company’s reservoir of intellectual capital, and (c.) key tools for differentiating a company from its competitors in a market space.

The findings of a 2006 ACCA Research Report (#93) titled ‘SME Intangible Assets’ identified eight individual categories of intangible assets in companies:

1. Customer Capital Intangible Assets:  According the ACCA research there are three defining features of customer capital, i.e., (a.) the ways in which it evolves in the minds of existing and prospective buyers, (b.) the company is trusted, and (c.) the company’s products and services are appreciated.

2. Customer Relationship Intangible Assets: Represent the basis for (such things as) (a.) repeat customer sales that manifest as regular-assured sources of income, (b.) websites that provide easily navigated paths/routes for existing and prospective customers to generate enquiries, as well as (c.) a means to favorably influence existing and prospective customers thinking.

3. External Approval and Licensing Intangible Assets:  Represents the means for companies to sustain exclusivity of the intangible assets they produce, particularly the value evolving from (a.) brand name, (b.) reputation and image, and (c.) high quality endorsements.

4. Proprietary Product and Service Intangible Assets:  As management/leadership teams and boards assume stronger fiduciary positions relative to the management and oversight of intangible assets, there is a tendency for intangibles to be considered proprietary along with the underlying skills, know how, and relationships. 

5. Technical and Process Knowledge Intangible Assets:  Constitute special (proprietary) business processes, technologies, know how, and competencies that collectively contribute to companies (a.) extending the range of their competency, and (b.) consistently assess and make improvements.

6. Supplier and Input Relationship Intangible Assets: Serve as basis for differentiating companies and creating competitive advantages by providing special value-added services and privileges, i.e., access to relevant resources, and greater levels of supply chain security, etc.

7. People-Based Intangible Assets: Are employees’ collaborative demeanor, wherein their proprietary knowledge (know how and skill mixes) can be effectively incorporated to elevate value, revenue, sustainability, and growth potential while remaining difficult for competitors to replicate.

8. Learning and Growth As Intangible Assets:  Represent learning and growth capabilities within a company in terms of making substantive contributions to a companies ability to strengthen existing (intangible) assets and consistentl create new ones.

(This post was inspired by and adapted from the work of Chris Martin and Julie Hartley from a 2006 ACCA Research Report titled ‘SME Intangible Assets’)

 

Company Boards and Business Risks…

January 13th, 2010. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, Fiduciary Responsibility, Reputation risk.. No Comments.

Michael D. Moberly     January 13, 2010

It used to take years of dedicated bad management to destroy a company, now it can be done almost overnight, and it’s not just due to the range of hazards, e.g., fraud, financial calamities, terrorism, and/or failures in supply chains, etc., that can threaten a company, it is the speed which such risks can strike and how they can rapidly escalate and cascade throughout an enterprise internally and externally! (Adapted by Michael D. Moberly from remarks of Sir John Bond, Chairman of UK based HSBC)

Risks to business continuity and intangible assets such as intellectual property, brand, reputation, image, goodwill, supply chains, and competitive advantages are rising and asymmetric.  In many respects, they represent outgrowths and/or consequences of a hyper-competitive, predatorial, winner-take-all, go fast, go hard, go global business transaction environment functioning in knowledge-based economies. 

At least one favorable consequence though, in my view, is more attention is being drawn (normatively speaking) to the precise role and (fiduciary) responsibilities of corporate boards relative to including (addressing) business enterprise (business) risk as routine action items on their agendas, sometimes through ‘risk committees’.

An initial step toward achieving this essential addition, again, in my view, lies in ensuring boards receive professional, objective, and relevant briefings and awareness training absent any ‘agenda’ other than providing strategic and/or tactical insight, perspective, and guidance to benefit the company.

In 2005, Lloyds and The Economist Intelligence Unit collaborated to create a briefing paper (study) titled ‘Taking Risk On Board: How Business Leaders View Risk’.  The report (a.) explored the extent to which risk is now a board-level responsibility, (b.) described what boards see as their risk-related priorities, and (c.) identified what they do and don’t do to implement effective risk management strategies in their organizations.

The Lloyds – The Economist Intelligence Unit report concluded that yes, most boards are taking risk more seriously.  However, in most instances, a board’s rationale for doing so had been prompted more by the imposition of governance and regulatory mandates and not necessarily by a genuine recognition that their company’s business strategy would benefit from fully integrating (top down) risk management initiatives directly and consistently into board decision-making.

Somewhat more disconcerting however, was the finding that board’s frequently characterized the act of addressing risk in their boardrooms as constituting (a.) constraints, (b.) diversion of resources, and/or (c.) obstacles (impediments) to necessary – normal business risk-taking.

(Perspective and insight for this post was gleaned from – adapted by Mr. Moberly from a 2005 report produced by Lloyds and The Economist Intelligent Unit titled ‘Taking Risk On Board’.)

Intangible Assets At Risk: Foreign Economic Collection and Industrial Espionage

November 18th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Insider Theft of IP and Intangible Assets. No Comments.

Michael D. Moberly   November 18, 2009

Since 1995, the Office of the National Counterintelligence Executive (ONCIX), has been mandated to gather data and submit a report (annually) to Congress on the state of (a.) foreign economic intelligence collection, (b.) industrial espionage, and (c.) export control violations.  Data for the report is collected from government agencies that comprise the counterintelligence community. 

What’s new in ONICIX’s most recent report (unclassified version) are remarks regarding (1.) ‘the increasing new modes of communication and social netorking providing uncharted opportunities for (a.) transferring information, and (b.) spying by enterprising foreign intelligence services’, (2.) ‘companies encouraging (a.) outsourcing of (their) R&D, and (b.) establishing foreign bases of operation providing foreign entities with more opportunities to target U.S. information and technologies, and (c.) mask their collection activities’.  A consequence is that ONCIX’ report states it is ‘increasingly difficult to fully (accurately) measure the extent of espionage and illegal acquisitions (of U.S. trade secrets).

In contrast, the Department of Defense’ Personnel Security Research Center (PERSEREC) produced a 2005 study (report) titled ‘Technologicial, Social, and Economic Trends That Are Increasing U.S. Vulnerability To Insider Espionage’.  I am not suggesting that ‘insider’ (threats, risks) are synonymous with economic-industrial espionage or export control violations as a means to (illegally) acquire trade secrets.  What I am suggesting is that the PERSEREC study findings exacerbate – make significantly more complex the challenges most every company faces relative to its ability to sustain (indeterminate) control, use, ownership, and value of its most valuable assets, i.e., intellectual property, trade secrets, proprietary information, know how, and other intangible assets, e.g.,

1. Fewer employees are deterred by a traditional sense of (employer) loyalty.

2. Employees are more inclined to view espionage (theft of information assets) to be morally justifiable if sharing those assets will benefit the world community or prevent armed conflict.

3. For employees engaged in multi-national trade and transactions there is greater inclination to regard unauthorized transfer of information assets and technology as a business matter, rather than an act of betrayal or treason.

4. A growing allegiance exists among employees to the/a global community, i.e., an increasing acceptance of global as well as national values.

5. Tendency for employees to view human society as an evolving system of ethnically and ideologically diverse and inter-dependant people which makes illicit acts (i.e., theft of trade secrets) easier to rationalize.

As increasing percentages of most company’s value, sources of revenue, sustainability, and foundations for future wealth creation (in global, knowledge-based economies) lie in – are directly related to intangible (information-based) assets and intellectual property, to be sure, the challenges conveyed in ONCIX’s report are formidable and will persist!

Why Spy: Is There A Global Rationale To Economic Espionage?

October 13th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap. No Comments.

Michael D. Moberly   October 13, 2009

For 20+ years, I have been a consistent contributor to helping companies prevent and mitigate the adverse effects of economic espionage, trade secret theft, IP infringement, etc.  Recently however, I re-read a 1999 paper authored by (then) University of Calgary researchers’ Merrill Whitney and James Gaisford in which they consider how ‘economic espionage can yield desirable strategic effects as well as cost savings for firms in a spying country.  Duh!! 

A particularly unique argument offered by Whitney and Gaisford is that when two technology producing countries spy on each other it is possible that both will be better off because the technology transfer, implicit in economic espionage, makes the outcomes beneficial to consumers.  Professionally, I find any potential mutuality of the benefits (from economic espionage) elusive, especially, if your firm is the victim.  

More often, a consequence of economic espionage, when successfully executed, is that it produces (a.) a distinct winner; defined as the spying country and/or company gaining significant ‘time to market’ advantages without incurring the time and extraordinary cost of R&D, pilots, marketing, supply chaining, etc., and (b.) a distinct loser; defined as the target/victim company-innovator being unable to realize the full and rightful economic benefits (and recoup a return-on-investment) from their time, labor, and costs, etc.

Continual innovation (for a country and/or individual company) is a significant factor in economic growth. It requires substantial and consistent investments in time, money and resources.  If innovative – technology producing companies are consistently vulnerable to economic espionage, i.e.,  losing all or significant parts of their innovation and competitive advantages, etc., it becomes increasingly challenging, if not impossible, for them to achieve sustainability insofar as being able to fully utilize and exploit the intangible assets they produce.  In addition, if a company (victim of economic espionage) is unable to recoup their ‘investment’, its equally likely their motivation and/or receptivity to engage in more innovative initiatives will be depressed/curtailed. 

Other probable consequences to economic espionage are pollution of legitimate supply chains with inferior – counterfeited products, along with (personal, business) privacy being threatened when economic espionage is condoned, promoted, and ultimately becomes profitable as it is today. 

While some readers may interpret the Whitney and Gaisford premise as merely being ‘wacky’ and out-of-touch with (global) business realities, I am inclined to characterize it as perspective and insight for elevating understanding not solely about economic espionage, but, our globally predatorial economic – competitive advantage adversaries who consistently engage in it. 

(Adapted by Michael D. Moberly from the work of Merrill Whitney and James Gaisford,  ‘Why Spy? An Inquiry Into The Rationale For Economic Espionage’ published in the International Economic Journal, Vol.13, No.2, Summer, 1999)

Selling The Intangible Assets Produced By Security Products And Services

August 24th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, intangible assets. No Comments.

Michael D. Moberly   August 24, 2009          (Part One of Two Part Post)

Knowing how to identify and effectively explain ‘security intangibles’ should become integral to every vendors’ sales vocabulary and repertoire.  Vendors of security products, i.e., alarms, intrusion detection systems, CCTV, computer/IT security programs, etc., should ensure their ‘pitch’ and promotional materials effectively address the value added intangible assets that routinely accompany and/or become a positive by-product of their product or service.  Security intangibles however, are (a.) frequently overlooked, (b.) not translated effectively, or (c.) left to prospective clients’ imagination to recognize for themselves.  

Why should ‘security intangibles’ become integral to every vendors’ sales vocabulary and repertoire?  First, its an economic fact that 65+% most company’s (a.) value, (b.) sources of revenue, (c.) sustainability, and (d.) foundations for future growth and expansion lie in – are directly linked to intangible assets.  Second, security vendors encounter more enlightened management (procurement, risk, specification, etc.) teams that understand both the added value that intangibles bring to their company’s bottom line as well as the risks to those intangibles.  Third, dismissing ‘security intangibles’ as being irrelevant to either sales or client management practices will increasingly become a factor in the sale – no sale equation.  

Most security products/services are capable of delivering a much broader spectrum of measurable client benefits (i.e., intangible assets) aside from the conventional and subjective appeal to risk-threat mitigation.  Effectively integrating ‘security intangibles’ in sales repertoire and promotional materials can add a competitive advantage that truly distinguishes one security product/service company from another.

Why aren’t ‘security intangibles’ more routinely articulated components of sales presentations?  In part its due to the mistaken perception that intangibles are (a.) too challenging to explain to prospective clients or too esoteric to integrate into product/service promotion because they lack physicality, or (b.) synonymous with intellectual property or company goodwill and therefore presumed to fall outside the realm of (tangible only) benefits derived from security products and services.

Reducing Reputational Risk…

July 20th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, intangible assets, Reputation risk.. No Comments.

Michael D. Moberly      July 20, 2009

Company reputation, along with image and goodwill, are intangible assets!  An effective initial step toward reducing the probability that a company will be unduly exposed to or become a victim of ‘reputation risks’ that occur with increasing frequency and adversely affect, not only image and goodwill, but value and revenue as well, is to conduct an intangible asset assessment.  A well designed and executed assessment will produce three relevant and beneficial outcomes for a company, (1.) identify its key intangible assets, (2.) assess reputational risks to those assets, and (3.) determine strategies to prevent and/or mitigate those risks. 

The following are the much abbreviated findings of an actual intangible asset assessment for a U.S. headquartered company.  This company is the market leader (developer, manufacturer, and supplier) of a particular automotive services product and has multiple U.S. and international manufacturing, sales, training, and distribution sites with annual sales exceeding $300 million.

The assessment revealed four key areas which, in the assessor’s view, warranted attention by the company’s management team and board:

1. A presumptive (over) reliance on patents as constituting the sole means for safeguarding the company’s rights to it’s reputational – proprietary know how…

2. An under-appreciation for the intertwined relationship between the company’s reputation (image, goodwill, brand/product integrity, etc.), relative to the (reputational) know how embedded in employees at various levels and global locations…

3.  Company practices (polices, procedures, etc.) were largely absent (a.) acknowledgement of intangible assets, and (b.) understanding of the assets relationship to sustaining/building company reputation…

4.  The absence of a protective company culture that contributes to ensuring key reputational drivers are sustained, in this instance, (a.) a web-based customer/client training and trouble-shooting programs, and (b.) rapid turn-around (response) times for customer inquires, services, trouble-shooting, product delivery, and repair…

The reason the assessor identified these four areas as warranting management team and board attention are the convergence of (a.) the assets’ vulnerability, stability, and fragility, and (2.) the rapid cascading affects that adversely affect reputation, image, goodwill, value, and revenue should certain risks (to  those assets) materialize.

 

Intangible Assets: Building A Business Case For Their Use…

July 10th, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Business Applications, Intangible Asset Value. No Comments.

Michael D. Moberly     July 10, 2009     Part Two Of Two Part Post

Regardless of how well intentioned and designed a business case may be for utilizing intangible assets, there’s plenty of well deserved skepticism among company management teams about intangibles, particularly in the areas of monetization and value extraction.  It’s prudent then for ‘business cases’ to convey that intangibles are still occasionally perceived in the business community as being esoteric and theoretical concepts, which sometimes makes translating them to real business world applications suspect.  Too, management teams are, generally speaking, realists and therefore reluctant to embrace (accept) a business case that is overly optimistic in positive outcome projections and/or espouses too much simplicity in execution.

Equally important, its unacceptable for a ‘business case’ advocating the use of intangible assets to be framed or designed as merely a regurgitation of a warmed over or generic version of a conventional (tangible-physical asset oriented) business case.  Intangible assets are unique, but pervasive contributors to company value, revenue, sustainability, and future wealth creation and, as such, warrant independant, experienced, and forward thinking in the design of a ‘business case’.

The following are some key, but representative issues that should be addressed in the design and presentation of a ‘business case’ to company management teams for utilizing intangible assets…

1. Bring definitional clarity to intangible assets through a strong and relevant repertoire of examples applicable to a cross-section of industries applying understandable ‘economics 101’ techniques for valuation, revenue convertion, and measuring asset performance.

2. Avoid reliance on subjective – worst case (risk/threat) scenarios as a primary tactic to attract management team attention, but respectfully acknowledge that intangibles, left unrecognized and un-utilized, are vulnerable to exploitation-use by competitors and adversaries, and once gone, they’re not easily replaced or retrieved, and are extraordinarily costly and time consuming to re-build.

3. Demonstrate best practices for sustaining (protecting, preserving) control, use, ownership, and value of a company’s intangible assets and, why consistent stewardship, oversight, and management are essential.

4. Describe and explain conventional factors for determining (intangible) asset ‘suitability’, i.e., recognition, valuation, separability, transferability, life cycle, and risks.

5. Demonstrate connections, relationships, and linkages between a company’s intangible assets, i.e., their  production, acquisition, and use, and the contributions and multiplier-effects they bring to company value, revenue, sustainability, and future wealth creation.

6. Describe practical strategies to position and bundle intangible assets (when feasible) to achieve broader positioning, leveragability and/or value potential.