Archive for 'Analysis and commentary'

Intangible Assets and Design Thinking

July 17th, 2017. Published under Analysis and commentary, Design thinking.. No Comments.

Michael D. Moberly July 17, 2017 m.moberly@kpstrat.com ‘A business intangible asset blog where attention span really matters.’

Design-thinking is an ideology which emphasizes a practical, user-centric approach to problem resolution which, in turn, can lead to (potential) innovations which differentiate businesses, companies, products, and/or services through competitive advantages produced. In other words, design thinking represents an ideology to problem resolution that is supported by accompanying processes.

There is nothing particularly new about design thinking, in fact, it has been variously practiced for literally, hundreds of years. Design thinking was coined in the 1990’s by David Kelley and Tim Brown of IDEO, along with Roger Martin, and incorporated methods and ideas into a single unified concept.

On the business side, ‘product design’ has often manifested as afterthoughts, i.e., touch ups applied to create distinguishing aesthetic features, components and/or qualities to products as ‘topical design applications’ which not infrequently, fail to meet customers-users-clients’ real needs.

Good design thinkers are inclined to engage – approach their work through creative processes which are user-centric which elevate the probability that solutions (outcomes) will be more effective, in part because meaningful, and memorable intangibles have been inserted. Two early examples of design thinking include…

• Charles and Ray Eames who, in the early 1900’s, practiced “learning by doing” in which they explored a range of needs and constraints before designing the famous Eames chairs.

• 1960’s dressmaker Jean Muir was well known for her “common sense” approach to clothing design, placing as much emphasis on how her clothes felt to wear as they looked to others.

These designers were innovators of their time. Their approaches can be viewed as early examples of design thinking — as they each developed a deep understanding of their users’ lives and unmet needs.

As I have come to understand the evolution of design thinking, the words were coined in the 1990’s by David Kelley and Tim Brown of IDEO, along with Roger Martin, to encapsulate methods and ideas which they had individually and collectively been framing for years until they were unified in a standalone concept.

Today, it’s fair to say, companies which combine forward thinking – looking and user-centricity in the design of their products are clearly receptive to and recognize the relevance and importance of having designers immersed – engaged in each phase of a process. This often manifests as moving designers from the end of a product-development process where their input and contribution is obviously limited, to the beginning of a process, where there are opportunities to shape product development to reflect and accommodate user needs, i.e., incorporating the intangible with the tangible far better than conventional linear and/or milestone-based approaches. Design thinking does not follow a pre-defined series of sequenced and/or orderly steps. Thus, the notion that creative ideas suddenly enter and burst from one’s mind, already fully formed, is seldom the case. What new things one may learn from the iterative steps of design thinking, in my view, are various complimentary and contributory intangible assets.

Tim Brown cites Thomas Edison’s creation of the electric light bulb as a still relevant example of design thinking. As Brown describes it, Edison’s invention of the light bulb, served as one, albeit, relatively small, component of a much larger industry which he (Edison) envisioned. Edison’s genius, Brown says, does not lie merely in inventing a single, relatively discreet ‘parlor trick’ device, i.e., the electric light bulb. Rather his genius evolved from his ability to conceive an eventual fully developed marketplace surrounded by-the-use of the electric light bulb.

Another element of Edison’s genius evolved from his futuristic (horizonal) vision how people would come to want to possess and use the electric light bulb. Brown says the vision Edison espoused, and the approach he applied to achieve that vision, constituted an early example of ‘design thinking’. Edison’s visionary marketplace was a system of electric power, i.e., generation and transmission that would render the ‘light bulb’ useful and relevant on mass scale globally.

Of course, Apple, a contemporary and consistent leader in design thinking, where horizonal and user-centric (product, system, brand, support) functionalities are repeatedly applied (integrated) and effectively exploited to deliver differentiators, market advantages, and historically strong returns, many of which clearly manifest as intangible assets.

It’s not difficult to recognize that design thinking differs substantially from conventional linear and milestone-based business actions. Design thinking is the product of iterative intellectual work, the core of which is a human-centered process of discovery, coupled with prototyping, testing, and refining cycles. In other words, design thinking embodies a system of ‘spaces’ that distinguish various activities that ultimately come to form a ‘continuum of innovation’, i.e., inspiration, ideation, and implementation.

So, however it may be referred, design thinking is a methodology that encompasses a range of activities related to innovation, but with a very specific and important twist; that is, it has a people – user centered (design) focus, influenced, Brown says, by direct observation of what people, presumably prospective users and consumers…

• want and need in their lives, and
• what they like and/or dislike about the way that product is made, packaged, sold, and supported.

A special thanks to Tim Brown’s fine article titled ‘Design Thinking’, Harvard Business Review, June 2008 which Mr. Moberly has adapted for application to his ‘Business IP and Intangible Asset Blog’.

Vietnam War Veterans…Intangible Expectations Returning Home

April 8th, 2016. Published under Analysis and commentary, Vietnam War Combat Veterans. No Comments.

Michael D. Moberly April 8, 2016 ‘A blog where attention span really matters’!

First, an analogy for reader consideration…your brother, sister, son, or daughter just returned from a successful – injury free expedition that culminated in reaching the summit of Mt. Everest, the tallest mountain in the world. It’s likely many trepidations were expressed in advance of the expedition, by loved ones and others citing their perspectives of the associated risks and dangers. Upon the mountaineers’ safe and scheduled return home 3-4 weeks later, they could anticipate friends and loved ones who opted not to participate in the expedition will seek their presence to ask many questions on a range of minutia, e.g., the mountaineer’s preparation, the climb itself, and their thoughts upon reaching the summit that expound upon their consistent social media interactions with ‘friends’ throughout.

For the mountaineer, the barrage of questions would likely be conveyed with genuine eagerness and their responses replete with descriptive (mountaineering) terms which for most, there would be a commonality of interpretation and perhaps relatable personal experience to draw upon for clarity.

For many Vietnam War combat soldiers returning home to physical safety…perhaps understandably, held expectations there would be comparable displays of interest, or more correctly stated, what one perceived our fathers experienced returning home from WWII. I have learned, not surprisingly, some returning (Vietnam War) combat veterans held expectations their homecoming may include a celebratory tone embedded with a genuinely conveyed interest in what they had experienced, endured, and ultimately survived to talk about following a 52-week deployment with a personal departure date replete with ifs, ands, and buts.

If-when genuine inquiries did manifest for returning Vietnam War combat soldiers…the dialogue-narrative would likely be cautious initially interspersed with varying levels of soberness, solemnness, and unease. Just as frequently though, inquires could assume a presumptive tone, after all, the Vietnam War is frequently characterized as the U.S.’s first ‘televised war’, so many individuals elected to engage conversations with perspectives already formed – framed from 90 second snippets on evening news broadcasts, which at the time, there cable 24/7 news options.

A combat veteran’s response to any inquiry would likely be peppered with the distinctive vernacular of the Vietnam War and combat, i.e., descriptive words and language which at first blush may appear to be crude, callous, and perhaps insensitive to the circumstances they recently left, aside from the camaraderie within their unit. For a questioner – listener such descriptive language may be met with little commonality of interpretation or understanding wherein they would sense sufficient comfort to engage in follow-up questions or conversation to seek understanding and clarification.

Comparing the mountaineer to the Vietnam combat veteran is analogous…for the former, it would have been highly imprudent to put themselves and others at potentially grave risk to commence such an expedition absent substantial physical conditioning and mountaineering experience relevant to climbing the world’s highest mountain. Whereas, for the latter, the U.S. military presumed its infantry – combat arms trainees would learn quickly upon arrival in Vietnam, irrespective of having no direct combat experience. So, in a relatively brief period of time, 16 weeks, infantry trainees were presumed to acquire an ability to physically and emotionally transition (i.e., adjust, assimilate, etc.) to the inhospitable environs of war and combat in Vietnam.

Adding to some soldiers’ anxiety and wonderment about entering a theater of war, something which was rather routinely witnessed was that for a not insignificant percentage of replacements, the shuttle service from the U.S. to Vietnam was their first ever ‘plane ride’.

Admittedly, Vietnam War combat soldiers did not have the benefit or curse of real time, at will social media and photographic communication in which recipients could interpret as they wished, be it revisionistic to that seen on conventional broadcast news.

PTSD… Intangible Asset Variant!

January 8th, 2016. Published under Analysis and commentary. No Comments.

Michael D. Moberly  January 8, 2015  ‘A business blog where attention span really matters’.

I am confident that nowhere in the DSM (Diagnostic and Statistical Manual of Mental Disorders) is PTSD (post traumatic stress disorder) referred to as an intangible (asset), even though PTSD has numerous similarities.

In today’s business – organization economics, decision makers and management teams are obliged, akin to a fiduciary responsibility, to acquire sufficient operational familiarity with their IA’s insofar as determining when, where, and how their contributory value, sources of revenue, and competitiveness originate and materialize. After all, it is an economic fact that 80+% of most company’s value, etc., either lie in or evolve directly from IA’s, particularly mission centric variants-outgrowths of intellectual, structural, relationship, and competitive capital.

PTSD, on the other hand, not substantially unlike a company’s IA’s which are frequently so deeply embedded in business-organization culture that it’s difficult for management teams to recognize their existence and contributory role/value.. Similarly, evidence of behaviors which may be influenced, triggered, or produced by PTSD may take several years following one’s traumatic experience to surface, i.e., develop, mature, and materialize-exhibit behaviorally and/or emotionally. Too, as has been found to be the case, PTSD may manifest very individually, i.e., sparked by a myriad of circumstances, memories, situations, or conditions, to form equally diverse (sets of) behaviors.

If someone, perhaps a family member, spouse, close friend, or partner, etc., is actually ‘looking and listening’ with a modicum of care, PTSD markers, not unlike business IA’s, will be quite evident for which credentialed skill sets-training need not necessarily be a requisite aside from compassion, courage, and interest in the person.

I am respectfully doubtful that any Vietnam era combat veteran experiencing PTSD, whether it’s been officially diagnosed or not, would describe its impact – effect as an asset. Its lingering and persistent emotional destruction can lead to significant impairments to ones thoughts and perspectives, not unlike when business leaders are dismissive of their IA’s, much value, potential sources of revenue, and competitiveness are left on the proverbial table.

Mr. Moberly is an intangible asset strategist and risk specialist and author of ‘Safeguarding Intangible Assets’ published by Elsevier in 2014, m.moberly@kpstrat.com

Six Reasons Why Business Leaders Are Hesitant To Engage Their Intangible Assets?

May 7th, 2015. Published under Analysis and commentary, Managing intangible assets. No Comments.

Michael D. Moberly    May 7, 2015   ‘A blog where attention span really matters’!

We’re well into the 21st century and the contributory role IA’s (intangible assets) consistently play as value, revenue, and competitive advantage generators, is recognized at the 5,000 foot elevation among business communities globally, but, there is little corresponding evidence that business leaders are actually engaging their IA’s.

At the 5000 foot level, it’s a well known economic fact – business reality that steadily rising percentages, i.e., 80+%, of a most companies’ value and sources of revenue emerge directly from IA’s.

THE question is, what factors are being assumed by business leaders that influence substantial numbers to dismiss, disregard, and otherwise over ride this economic fact – business reality even though engaging their IA’s could benefit their company in numerous ways.

Frankly, I sense no particular urgency, among the leadership of the U.S., and perhaps global business communities to willingly engage their companies IA’s in strategies to maximize and extract as much value and revenue as possible.

Cutting to the chase! I, like other national – international voices advocating greater recognition and utilization of intangible assets, meet with astute, intelligent, and extraordinarily talented and successful business leaders who are apt to use sophisticated techniques to schedule employee work schedules to minimize overtime pay, but, mention the words intangibles or intangible assets and eyes glaze over!

Equally puzzling is, why aren’t these business decision makers acting on this factual, irrefutable information, whether it comes from blog posts like this or other ‘higher’ sources?  Why are these sources of – contributors to organization-wide value and revenue which are literally‘ within hands reach’ being overlooked, neglected, or, in some instances, dismissed outright?

In part, the lack of business leader enthusiasm for intangible assets can be attributed to…

  1. accountant’s governed by law and practice standards, have no particular motivation or obligation to delve too deeply in clients’ IA’s other than what is attributable to goodwill.
  2. faux strategic planning which is more akin to near term – quarterly-based projections that preclude discussions regarding IA utilization or monetization…
  3. ill-informed inclination to assume – characterize IA’s as being synonymous with IP (intellectual property), which serves as rationale for business leadership to attach little relevance because IP matters are contextually structured to be legal only.
  4. self-deprecating assumptions by some business leaders, irrespective of their success, that their company neither produces nor possesses any valuable – competitive advantage intangible assets, worthy of the time and expense to identify and assess.
  5. intangible assets absence of physicality, i.e., having no tangible or conventional physical presence.
  6. presumed consultants’ who inappropriately, and perhaps unwittingly, characterize the identification, unraveling, assessment, and extraction of value, revenue, and competitive advantages from intangible assets as being too complicated, time consuming and producing little ROI.

Understanding and taking affirmative steps to maximize and extract as much value and competitive advantages as possible from the IA’s a company develops, is not rocket science, it’s just good business!

Are Creative’s Conformist’s?

April 24th, 2015. Published under Analysis and commentary, Design thinking.. No Comments.

Michael D. Moberly    April 24, 2015   ‘A blog where attention span is important’!

Let’s digress.  For IP, the government or PTO (U.S. Patent and Trademark Office) issues a certificate to the holder-owner that says ‘this is your patent, trademark, or copyright’.  Deservedly and proudly those certificates are frequently displayed in areas which the recipient deems sufficiently prominent as a testament to their creative diligence.

Perhaps most importantly however, the certificate itself positions the holder to utter an affirmative response to the proverbially incessant question ‘what’s your IP position’, implying IP is the preeminent requisite. In this admittedly narrow context, the tangible – physical features of the PTO certificate serves as a creative’s conforming starting point to receive a modicum of affirmation from the likes of television’s ‘shark tank’ panelists.

A notably remarkable aspect to the patent seeking – securing phenomena is that ‘creatives’, by their nature, are seldom considered to be conformists. In fact, a quite strong argument could be made that creatives’ seemingly innate penchant for non-conformity serves as very strong underliers to sustaining their personal diligence toward a specific (strategic) end.

But yet, for the creatives’ who are diligently engaged in an arena in which their work product falls into a potentially patentable field, routinely defer to presumed experienced practitioners of the ‘shark tank’ ilk who unabashedly premise – link their flirtatious counsel to whether one’s work product has received a patent. Today such unrequited deference warrants discussion, don’t you think?

Managerial Introspection An Intangible Asset Positive!

December 18th, 2013. Published under Analysis and commentary, Business Applications. No Comments.

Michael D. Moberly    December 18, 2013     A blog where attention span matters!

Introspection is an intangible asset positive!  That is, a leader or management team member’s ability…no, make that, desire and recognition of the necessity to be introspective, is a valuable attribute or, in the context of this post, a positive, strategic, and personalized intangible asset!

Introspection is characterized by James Drogan, business professor at SUNY’s Maritime College as…

“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”…

To many readers, the above characterization attributed to Professor Drogan may sound eerily reminiscent of former Defense Secretary Rumsfeld’s response to a question posed to him in a Pentagon briefing regarding fighting in the Iraq and Afghanistan war.

It’s important to me personally and professionally that the context for both are distinguished, as history does not portray Mr. Rumsfeld as being introspective by nature, but perhaps he was and just hid it well when he was in the presence of media.

Martin Christopher, Emeritus Professor of Marketing & Logistics at Cranfield School of Business and author of Logistics and Supply Chain Management states that ‘introspection is valuable, important, and perhaps even critical to successful business operations’, a characterization which I am wholly in agreement.

During my 20+ years in academia, I routinely observed students quickly review my assignments, particularly essay questions, submit a rushed response, and then leave it to me to interpret what they wrote and what they meant.  This is not the kind of skill set and considered thought process I desired students to achieve and which I strongly believed is necessary to succeed in today’s global business (transaction) environment that grows increasingly competitive, aggressive, and predatorial.  In other words, even answering undergraduate and graduate level essay questions, there is a need for introspection.

Introspection is not self-doubt, nor is it personal insecurity.  Rather, introspection, as a business leader or management team member, is a desire to assure yourself, that you have done all that you can do to fulfill the various obligations which have been placed on you and presumably, those which you have willingly accepted.  That is, introspection involves the self-confidence to be intellectually 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, as Donald Clark puts it in ‘after action review’, introspection is about learning, i.e., what worked, what didn’t work, why it didn’t work,  what I need to do about it to make it better, and what will I do differently the next time’?  To achieve this, of course, requires personal and professional confidence, not arrogance.  I would be very hard pressed to cite one example of a leader – manager who exhibits characteristics of arrogance who would ask such questions.

Introspection is about making yourself more valuable, i.e., an intangible asset positive!

The consequences of lack of introspection in college can be significant, at least at the time, i.e., failure of a course.  My experiences in academia, suggest that unfortunately, in few instances do students perceive introspection to be an important skill that is necessary to personal and intellectual growth and a skill that will serve them well post-college.

But still, its importance needs to be demonstrated.  As ‘Monday morning quarterbacks’ most of us, in the case of business, can see, or, at least surmise the adverse consequences of leaders and managers who lack of introspection.  The consequences can be severe, leading to the failure of a new business initiative, transaction, or an entire company.

Obviously, a better environment for business executives, decision makers, and managers to learn the art and benefits of introspection are in circumstances where the consequences for not being introspective or the continuation of arrogance, are less severe.  That is through training and/or seminars, and of course, an excellent subject to kick start such an initiative is intangible assets.

People, be they under-graduate or graduate students, or busy business executives will develop and/or gravitate to the skills that either…

  • interest them,
  • or that they see as necessary to achieve success.

For example, the Brookings Institute, and numerous other economics expertise entities globally, state, matter-of-factly, that 80+% of  most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today either lie in or evolve directly from intangible assets.

The above economic fact – business reality should surely prompt business leaders and management teams to not leave to or wait for its interpretation by competitors, but instead, ask, introspectively, ‘what should I and my company be doing about it today’?

Thanks to my good friend and colleague Dale Furtwengler for suggesting the appropriateness of this topic.

This blog post has been researched and written by me with the genuine intent it serve as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community.   My blog posts focus on a wide range of issues related to intangible assets and intellectual property.   Respectfully, each post is not intended to be quick bites of  unsubstantiated commentary or information piggy-backed to other sources.

Comments regarding my blog posts are encouraged and respected.  Should any reader elect to utilize all or a portion of my posts, attribution is expected. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

 

 

Oakland A’s Moneyball Draft of 2002…Intangible Assets?

September 11th, 2013. Published under Analysis and commentary. No Comments.

 Michael D. Moberly   September 11, 2013    ‘A blog where attention span matters’.

The frequently overlooked, under-used, and under-valued 900 pound elephants always present in conference rooms…

Unfortunately, for many companies, their intangible assets remain the overlooked, under-used, and under-valued ‘900 pound’ economic and competitive advantage elephant’ sitting un-noticed, unattended, and unclearly defined in conference rooms globally.

Below reflects  a perspective gleaned from an interaction between Oakland A’s General Manager Billy Beane and his player scouts and development staff extracted from the film Moneyball regarding the famed “Moneyball” draft of 2002.

Beane:  We’re trying to solve a problem here, but you are trying to solve the problem as you still see it, which is the same way Major League Baseball has approached it for the past 120 years by finding ballplayers to replace ballplayers!  You want to find another Jason Giambi and Johnny Damon, but both are gone, their history!

Scouts:  I think we all know what the problem is.  There is a lot of experience in this room and you need to let us do our job of replacing two key players, Jason Giambi and Johnny Damon.

Beane: But, you are not looking at the real problem!

Scouts: No, we are very aware of the problem!

Beane: OK, so what’s the problem?

Scouts:  We have to replace two star players.

Beane:  NO!  The problem we are trying to solve is that you scouts are sitting around talking the same old ‘body’ non-sense, like you’re selling blue jeans and looking for another Fabio!  We’ve got to think differently about how we find ballplayers, assemble a team, and put a team on the field!

Scouts:  Sounds like fortune cookie wisdom to me.

Beane:  NO!  It’s just logic!

Beane:  There is epidemic failure in the game of baseball. Baseball is medieval.  Teams are asking the wrong questions because they don’t understand what is really happening. This leads the people who run MLB teams to misjudge their players. People who run ball clubs think in terms of buying players!

Beane:  Their goal should not be to buy players, their goal should be to buy wins, and in order to buy wins a team needs to buy runs, and what I see is an imperfect understanding of where runs come from or how runs are generated!

Scouts:  But baseball is not just about numbers. Google boy here just doesn’t know what we know.  He doesn’t have our experience or our intuition.  There are ‘intangibles’ that only baseball people like us who know and understand.  You are simply discounting what baseball scouts and player development staff have done for the past 120 years.  So, we don’t care what you think, because MLB thinks the way we think with our evaluative experience and our intuition.  This is not a game about statistics it’s a game about people!

Beane:  We will find value in players which no one else sees!  Good players are routinely overlooked or dismissed for a variety of biased reasons, mostly because this is the way we’ve always done it! Are there really other players out there like Giambi and Damon?  No!  So, what we can do is recreate Giambi and Damon in the aggregate!

Scouts:  Yes, but will they get on base?

Beane:  Do I really care how a ballplayer gets on base, whether it’s by a hit or a walk?  On-base percentage is what we’re looking for now!  This is the new direction of the Oakland A’s.  We are now card counters!

Beane:  The truth is, we can find 25 winning players because everyone else in baseball under values them.  So, if we try to approach the game the same way it’s been done for the past 120 years, then we will lose on the field!  MLB teams must adapt or die!

Beane:  It’s a process…it’s a process…it’s a process!

Similar to Billy Beane’s perspectives, intangible asset strategists  have an attitude about…

  • the way many management teams and companies conduct business and engage in transactions often without regard for the intangible assets they are producing and will inevitably be in play, and
  • the economic fact 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. (Brookings Institution, Intangibles Project) 

It’s simply no longer business as usual, regardless of management teams’ wishes or past practice!

 

Each blog post is researched and written by me with the genuine intent it serves as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community.   Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of  unsubstantiated commentary or information piggy-backed to other sources.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

Russian Companies and Value Creation: The Role of Intangible Assets

January 24th, 2013. Published under Analysis and commentary, Business Applications. No Comments.

Michael D. Moberly   January 24, 2012

I believe it’s necessary, if not essential that c-suites, boards, and management teams of U.S. based companies periodically take the time to look beyond the confines of their firm and personal-professional business experiences to seek out and study not merely what other countries, and their businesses/companiesare doing in the intangible asset arena, but also learn what and how those firms and their leadership are accommodating, interacting with, and otherwise engaging the global knowledge-based economy, that is unmistakably dominated by intangible (non-physical) assets versus tangible (physical) assets, where the former serves as the overwhelmingly dominant sources of value, revenue, and competitive advantage.

One such fine paper, I encourage others to ready and study is one co-authored by Drs. Tatiana Garanina and Dmitry Volkov, (both faculty members in the School of Management at St. Petersburg University) appropriately titled ‘Value Creation in Russian Companies: the Role of Intangible Assets’.  It is a timely paper!

In today’s vacillating and changing economy, the authors repeatedly make the point that management teams of leading companies are more apt to acknowledge and understand that the key sources for a company’s value creation are irreversibly rooted in its intangible assets.  Certainly, no argument here!

Quite interestingly, the manner in which the authors offer up this perspective is that….

  • as much as one third of all the effected investment solutions (in Russia) are based on a company’s existing intangible assets, and that
  • business decisions made on the basis of intangible assets allow management teams to make a more accurate prediction of income and profitability regarding their company in the future, and thus, projecting the company’s value for shareholders.

Equally relevant and timely elements of their paper, which the authors address, from a definitional perspective, are intangible asset composition and structure in which, through their analysis of 43 (sampled) companies, they distinguish intangibles into five aggregated fields, i.e.,

  1. mechanical engineering
  2. extractive industry
  3. power engineering
  4. communication services, and
  5. metallurgy.

Admittedly, this is a little different from western perspectives.  But, value creation through intangible assets, particularly in the previous decades, the authors state, represent new conditions for business development, but, which have not led to success for those companies which continue to rely on traditional/conventional tangible (physical) assets such as properties, labour, financial capital and other physical resources.

Such companies, the author’s note, are less able to cope with the aggressive and highly competitive market ‘rules’ which they advocate, further represents the importance and relevance of intangible assets by recognizing them as drivers of value and sources of competitive advantage.

Logic, they say, related to business in the knowledge-based (global) economy is advanced primarily by consistently achieving more…

  • favorable (business, transaction) outcomes, and
  • longer term (strategic) successes
  • through better value-creation through intangible assets.

Now, the authors submit that leading companies are trying to achieve not just cost reductions but value creation, which translates, in the author’s view, as reductions in the value of tangible assets, which, not-so-coincidentally advances another trend, which is the production of mostly intangible assets such as knowledge, know-how, and creativity, etc.

Another very astute point expressed by the authors is that, in their view, a key challenge for management teams and c-suites now is to create and develop the conditions that will allow them to increase the value of (their) intangible assets and therefore the value of the entire company!  That’s certainly true globally.

The intangible character of a growing percentage of (company, business) assets, the authors contend, is that not all intangibles are reflected on company balance sheets and/or financial statements, thus, they are not visible in a traditional (physical) sense. Sveiby, (1998) reportedly said that intellectual capital is “knowledge that can be converted into value”. Hence, the authors argue, only “intangible” value provides companies with opportunities to differentiate themselves from their competitors, thus, only managing a company’s intellectual capital properly will allow a company to achieve and preferably sustain competitive advantages over their rivals.

Perhaps, one of the more profound and thought provoking statements the authors make, is related to the composition and structure of intangible assets, i.e., intellectual capital. In many other research papers I have read, authors describe the ‘structure’ of intangible assets and try to define the primary component that (most) affects its market value. The authors claim there is no known uniformity, i.e., means, mechanisms, etc., to address this problem, at least in these researchers’ environment.

The paper is certainly not without its provocative perspectives put forth by its authors.  One example are their views on market capitalization value over periods of time. Even though, a number of theoretical works have stressed the strategic importance as well as the role of intangible resources as key value drivers for company’s competitiveness (Edvinsson, Malone, 1997; Sullivan, 2000; Wenner, LeBer, 1989); there remains, the authors believe, a lack of approaches that evaluate the mechanism by which these (intangible) resources actually contribute to create value (Carlucci, Schiuma, 2007). This is, they say, because of the idiosyncratic nature of these (intangible) assets (Hoskisson et al., 1999; Lippman, Rumelt, 1982).

As a result, the authors conclude more studies are needed in order to better understand…

  • the relationship between intangible assets,
  • the way these assets are clustered, and
  • their role in value creation.

Note:  This post represents a respectful adaptation of part of Drs. Tatiana Garanina and Dmitry Volkov’s paper titled ‘Value Creation in Russian Companies: The Role of Intangible Assets’. Both authors are members of the faculty at St. Petersburg University, in Russia.

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community.  Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk.  As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media. 

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

Safeguarding Knowledge-Based Assets In Businesses: Don’t Overlook These Issues!

May 22nd, 2012. Published under Analysis and commentary, Intangible asset protection. No Comments.

Michael D. Moberly   May 22, 2012

1.  Information asset safeguards must be designed for rapid maneuverability to reflect changes in asset value and/or risk!  Most information asset safeguards and risk mitigation initiatives are one dimensional.  That is they tend to remain constant or static throughout the life, value, and functionality cycle of the specific asset(s) being protected regardless of changes in those assets’ contributory value to current or future company projects or risk.

Exacerbating this, is today’s aggressively competitive and predatorial global business (transaction) environment, in which the value and relevance (useful life cycle) of information-based (intangible) assets are becoming increasingly compressed relative to their linkage and/or contribution to specific (company) tasks, processes, or operations.

It’s prudent then, for the design and implementation of business information (intangible) asset safeguards to incorporate the capability of being maneuverable, i.e., to increase or decrease the level of protection to reflect fluctuations in, not only an assets’ value and relevance, but asset risks, threats, and vulnerabilities.

2.  Avoid ‘pushing the future off the table’!  Each day companies are presented with an assortment of urgent, near term risks, threats, and challenges which are often translated as pressure to push the future off the table. One consequence of ‘pushing the future off the table’ is that if a company lacks a strong culture of strategic thinking and planning, disproportionate attention will likely be directed to the inevitable chorus of sources, both internal and external, who offer, in my view, largely speculative, worst-case scenario, and/or snap-shots-in-time assessments of risks and threats to business information assets and/or systems.

While the potentially devastating consequences of these pronouncements should never be dismissed, seldom should they serve as the primary rationale or driver for the design and execution of business information asset safeguards without additional and thorough research.  Instead, adopting capability and value-based strategies represents a more forward looking, efficient, and holistic approach for safeguarding ‘company critical’ information assets than narrowly focused, time-bound, and anecdotal assessments of risks and threats.

3.  Foster relationships!  Any initiative to safeguard a company’s information assets, in my view, must include capabilities to sustain control, use, ownership, and monitor value and materiality (of the assets). To achieve the desired level of success, any such initiative must also include fostering collaborative (internal and stakeholder) relationships.  This can occur by ensuring the assets’ originators, developers, users, and owners have been properly and effectively engaged at the outset as the impetus for assuming some level of ownership for the initiatives success.

Unfortunately however, one reason some company’s tend not to be this inclusive insofar as fostering collaborative relationships for safeguarding information assets, evolves from the misperception that computer/IT system security equates with, or worse, overshadows information asset security.  This is often rooted in the misconception that all valuable (company) information exists solely in electronic ‘bits and bytes’ and is safely stored in stationary servers, back-up sites, or ‘clouds’.

Make no mistake, computer/IT security is absolutely critical to every company, particularly as target specific and/or large scale cyber-attack risks are rapidly becoming a much dreaded and potentially devastating norm. But still, in my view, computer/IT security would be better understood as complimenting, rather than dominating, company strategies and initiatives to safeguard valuable and proprietary knowhow-based (intangible) assets.

While visiting  my blog, you are respectfully 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

Business Plans: Will They Remain Relevant In Intangible Asset Driven Companies?

May 18th, 2012. Published under Analysis and commentary, Business plans and mission statements., Managing intangible assets. 1 Comment.

Michael D. Moberly    May 18, 2012

We all know about the increasingly competitive business terrain in which intangible assets, e.g., intellectual, structural, and relationship capital have become the dominant drivers (producers) of most company’s value and sources of revenue.  This economic reality is influencing, as well it should in my view, entrepreneurially-minded management teams to re-examine the relevance and applicability of a conventionally structured business plan.

Let’s be clear, I am not suggesting business plans are irrelevant because they can serve as useful and descriptive (projective) roadmaps of what one wants a business to eventually look like and how to get there!

The issue, in my judgment, is that there is an inclination on the part of many management teams, c-suites, boards, and other stakeholders to symbolize a business plan in somewhat of a constitutional law context as if Justice Scalia was debating whether it is a living document that’s malleable and flexible as circumstances warrant or a more static (stationary) document that should only be interpreted relative to its original intent.

Personally, I am finding more management teams, at least those which I have the pleasure of engaging, exhibiting a greater sense of responsiveness, adaptivity, and preparedness to rapidly execute to accommodate the immediacy which business opportunities are, with more regularity, being framed.   Put simply, there appears to be less interest in – necessity for being bound to the rigidity associated with a conventional business plan.  In other words, there appears to be more emphasis on the tactical, while not overlooking or neglecting the strategic!

Let me be clear though, most of my engagements, by choice, are with small, mid-size, and early stage companies where assembling a structured and strategically focused business plan may be subordinate to merely trying to remain viable in this this extended economic downturn (recession).

Respectfully, business plan development and construction is still portrayed in many college (business) textbooks and curricula, as being the very first step one should take toward starting a business. Interestingly, in an MBA (business management) course I’ve taught numerous times, this somewhat alternative view about business plans was purposefully presented to classes in which there were numerous ‘entrepreneurial spirited’ students who aspired to start their own business, with some already in the early stages.

For many, my (alternative) view prompted numerous, but generally opposing reactions, particularly from individuals who had already toiled over writing a business plan and now felt wedded to it.  Such reactions are understandable and respected.  Some types of businesses, whether large, midsize, or small may require more structure than others, thus a strong and detailed business plan may be necessary.

But again, it’s simply not uncommon to find myself visiting companies which, at first blush, appear to be, for lack of a better term, somewhat ‘rudderless’ in that they are continually evolving, emerging, and even, what appears to some I’m sure, as being in a perpetual state of ’re-inventing themselves’. The reason or rationale for this still, rather un-conventional management style is that it works for some firms, pure and simple!  This translates to the necessity to retain sufficient flexibility and maneuverability internally to accommodate their particular transaction – business space as quickly and effectively as circumstances warrant.

Of course, I attribute much of this change to company management teams that have achieved confidence in identifying and using their intangible assets which don’t always mesh well, in my view, with conventional, highly structured, and inflexible ‘roadmap’ perspectives found in a business plan. Admittedly too, a substantial portion of the lending community finds little, if anything, to be enamored with this alternative view.  For them, a well-developed and practical business plan serves as the starting (focal) point for most any lending discussion.

All that said, this alternative view does require, in most instances, much more attention and oversight from a management team and board. That is, they need to literally epitomize (embrace) flexibility, intellectually and conceptually, by being prepared to adapt, change, and have the necessary information, at the ready, to make sound decisions as rapidly as a new deal, proposal, or circumstance warrants.

There should be little question now that intangible assets have become the key and irreversible underlier to the success and profitability of most companies, that is, if the intangible assets being produced are recognized, developed, and used (exploited) effectively.   An important marker for demonstrating the effective use of intangible assets, in my view, occurs when management teams…

  • recognize intangibles as being very maneuverable, flexible, adaptable, and ‘bundable’ to accommodate the development and execution of a new product, service, or transaction.
  • know when, where, and how to use them best to achieve particular objectives, i.e., the wisdom, timing, and sense of foreseeability.

In other words, there should be a ‘company culture’ in place that, among other things, includes consistent stewardship, oversight, and management of intangible assets!

While visiting  my blog, you are respectfully 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