Archive for 'Measuring Performance'

Lodging/Hospitality Sector Measuring Security In Intangible Asset Outcomes

August 19th, 2016. Published under Intangible Asset Value, Measuring Performance. No Comments.

Michael D. Moberly August 19, 2016 ‘A blog intersecting intangible assets and business.’

Through my lens, it is quite clear, if security initiatives – systems are not designed to safeguard or advance an environment’s key – relevant IA’s (intangible assets), those with the fiduciary responsibility for their purchase, deployment, and support, are obliged to recognize substantial value – competitive advantage will go unnoticed.

An often overlooked, under-appreciated, and perhaps even wholly unrecognized, but, never-the-less, essential aspect to marketing, selling, and assessing outcomes of security (loss prevention, asset protection, monitoring) products and/or systems, is recognizing the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible (non-physical) assets, i.e., know how, relationship, and structural capital, brand, and reputation, etc., not tangible (physical) assets, i.e., property, equipment, inventory, buildings, etc.

When security related products are effectively deployed and integrated into an environment and aligned with supportive policies, practices, and organizational – business unit culture, their contributory value and competitive advantage to an enterprise can be substantial, even more so when the party recognizes what and how to measure the deliverables, i.e. effects on users and outcomes. For example, when applied…

• to the lodging – hospitality sector, security products/systems can measurably enhance existing and/or produce new IA’s (intangible assets) in the form of users’ sense – feeling of being (more) safe, secure, and productive, which in turn favorably affects the hotel’s (company) reputation, image, and guest goodwill, etc., by

Perhaps this is self-evident. On the one hand, my experience clearly notes this example, among countless others…
• serves as an important starting point for framing promotional pitches related to security products because most buyers seek – desire these outcomes, i.e., represent what’s needed – necessary, however…
• are unfamiliar (un-schooled) in the measuring – assessing the contributory values and/or functionality of security products, systems, or services and mitigating risks with their own sector – environment.

It is essential, in my view, to incorporate the correct descriptor in ‘the pitch’, i.e.,

• elevate awareness of the assortment of IA’s that are commonly embedded in every environment and industry sector.

• ensure the functionality – deliverables of security products are distinguished relative to the environment they are deployed and how they enhance relevant IA’s.

For example, when users of a lodging/hospitality environment sense that environment respects their patronage or productivity by introducing sector specific security measures to make it as safe, secure, productive, and efficient as possible, they will be inclined to return that respect by

• being a repeat guest, as well as,
• elevate employee retention, loyalty, and productivity.

Security product developers, producers, and vendors would be well served by adapting and incorporating variants of this language, sector specific, of course, in their marketing/promotional materials and/or sales pitches. Again, the rationale for incorporating this language is that today’s business environment is global, increasingly competitive, predatorial, and aggressive, and dominated by knowledge-intangible asset intensive firms regardless of sector.

Professionally then, it seems obligatory for security products, i.e., how they are marketed, promoted, and ‘pitched’ reflect that irreversible and paradigm shifting economic fact – business-consumer reality, particularly as management teams, c-suites, and boards become more attuned to IA’s in fiduciary contexts and as fiduciary responsibilities.

Lodging sector management teams should be engaging their environment’s IA’s as integral to enterprise risk management practices. Real and sustainable value and competitive advantages can be embedded with lodging sector guests by training personnel to identify, unravel, and sustain control, use, ownership, and monitor (asset) value, materiality, and risks. This can be achieved by respectfully guiding them to recognize the IA’s relevance to a guests’ (lodging) experience.

On the other hand, most conventional security product presentations-pitches over dramatize the need for mitigating fear, uncertainty, and doubt (FUD) which a percentage of lodging guests will be inclined to dismiss as a matter of personal practice, the outcomes will likely be less than fully favorable.

However, when security product (system, service) vendors replace the conventional with a strong narrative (methodology) rooted in ‘forward looking’ focus of safeguarding the value and sources of revenue present in a prospective client’s lodging environment, i.e., their IA’s, the probability of experiencing a series of consistent successes increases substantially.

St. Louis’ Commute Time Is An Intangible Asset!

December 26th, 2015. Published under Investing in intangible assets., Measuring Performance, Value Propositions. No Comments.

Michael D. Moberly   December 26, 2015 – ‘A business blog where attention span really matters’!

Any decision maker today, on behalf of their business or organization is obliged to recognize IA’s (intangible assets) are just that, they are indeed intangible, i.e., intellectual, structural, competitive, and relationship capital. The individual and/or collaborative ways IA’s contribute to value, revenue, and competitiveness when effectively captured (exploited and utilized) are non-physical, thus not amenable to many of the conventional (human) senses.

It is here, I wish to convey an example which emerged earlier this week through a locally produced NPR (National Public Radio) program wherein a panel of city marketing specialists discussed findings of a recent study that measured, compared, and contrasted specific categories of what I refer to as ‘competitive economics’ among comparably sized U.S. cities, one of which of course is St. Louis. One aspect of this study calculated ‘average daily commute times’ (to-from work) among the respective cities.

This panel touted lower average commute times for St. Louis as constituting as an attractive – enticing differentiator to prospective companies and their labor force. Interestingly, the panelists articulated ‘commute time’, somewhat mistakenly in my view, in a tangible (physical) asset context. To be sure commute times are important, for some, more than others when narrowly conveyed in minutes of actual – daily windshield time.

One’s commute time is an intangible (asset), because it is quite personal, i.e., relative to each driver-passenger in an auto, bus, or light rail, and dependent on the presence-absence of countless variables which variously affect one’s perspective of specific commutes of which few can be (tangibly) mitigated aside from experience and familiarity with a locale, and inclination/willingness to execute alternatives. Otherwise, ‘average commute times’ are, in my view, akin to presumptive aspirations.

The point I wish to make here may be interpreted by some as being superfluous minutia which has little or no relevance to commute times. Oh, but it does! Any business management teams’ inability to distinguish tangible (physical) assets from intangible (non-physical) assets and dismissing – trivializing the latter’s contributory role and value is a sure path to missed opportunities.

Mr. Moberly is an intangible asset strategist and risk specialist and author of ‘Safeguarding Intangible Assets’ published by Elsevier in 2014.

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.

High Performance Company Culture Is A Valuable Intangible Asset

December 31st, 2013. Published under Company culture and reputation., Measuring Performance. No Comments.

Michael D. Moberly    December 31, 2013    ‘A blog where attention span matters’.

Congratulations to management teams globally who recognize the importance of achieving a high performing company culture.  It is a worthy and generally lucrative strategic goal and a valuable intangible asset, which in today’s increasingly competitive, aggressive, and globally predatorial business development and transaction environment are integral.

The underlying rationale for establishing a high performing company culture is rooted in the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for sustainable growth and profitability,  either lie in or directly evolve from internally produced or externally acquired intangible assets.

Of course, merely achieving a high performing company culture is insufficient standing alone.  It must be sustainable and strategic in orientation.  That is, the culture itself requires consistent monitoring, nurturing, assessment, and be sufficiently adaptive to accommodate business development and transaction circumstances companies encounter globally.

Actually achieving a high performance company culture however is variously dependent on factors such as…

  • a company’s industry sector.
  • the types of transactions a company typically engages, i.e., what works, what does not work.
  • the operating philosophy a company’s employees, and stakeholders have grown accustom, i.e., how things get done, how decisions get made.
  • a company’s (management team) receptivity to and operational familiarity with intangible assets in terms of
    • how it recognizes, develops, and utilizes its intellectual, structural, and relationship capital.
    • behaviors expressed through intellectual, structural, and relationship capital, i.e., what gets rewarded, how, and when.

While these and other factors will influence the outcome, of course, a key to building a high performance company culture is ensuring management teams have clearly defined…

  • where their company is headed strategically, which starts by identifying
  • specific destination points,
  • a time frame that it wishes (needs to, should) to arrive at those destination points, and
  • what resources are required and how those resources will be utilized to arrive at the destination points within the time frame.

The specifics of a high performing culture are generally nuanced to every company because they are based on what appears to work best and get a company to where it’s strategic plan intends for it to go within the parameters management teams have defined. I just don’t believe there is ‘one size fits all’ when it comes to culture building.

I believe, somewhat ‘tongue in cheek’, Torbin Rick, an internationally recognized management specialist poses some salient questions in his December 13th blog post, i.e., is company culture

  • the driving the strategy, or is it undermining it, or is
  • culture more important than strategy?

In support of his analysis, Rick identifies ten key elements in creating a high performance culture which he suggests will probably ‘fit’ most companies…

1.      Clearly defining what winning looks like…

This can be achieved by looking across the entire company, then defining what it looks like from various functional perspectives, i.e., sales, marketing, customer service, procurement, finance etc.

2.      Spelling out the “preferred culture”…

In much the same way that company leaders shape and communicate their company’s vision, a ‘preferred culture’ may consist of a set of guiding principles and/or (sought after) values.  However, the best, Rick suggests, go further by establishing ‘preferred behaviors’ that support the ‘preferred culture’.  This occurs by identifying and assessing particular aspects/facets of a company’s current culture that leaders are satisfied with, while also asking…

  • which additional preferred behaviors does the company need to create for their preferred culture?
  • what behaviors are actually being rewarded and which unacceptable behaviors are merely being tolerated here?
  • how does the company measure each of their preferred behaviors?

3.      Setting stretch targets…

In most instances, employees rise to the standard being set for them. The more a company and its management team expects, in most instances the more they will likely achieve. But there is a fine line, Rick points out between good stretch targets and bad ones.  The good ones of course can energize a company, while the bad ones can dampen morale on an enterprise wide basis.

4. Connecting to the big picture…

The majority of employees want to be a part of a compelling future, Rick adds, and want to know what is most important at work and what excellence actually looks like. For targets to be meaningful and effective in motivating employees must be connected to a company’s larger (strategic) goals.

Employees who don’t understand the role they play in company successes are more likely to become disengaged. No matter what level an employee is at, she should be able to articulate, with precision, how their efforts feed into their employers’ broader strategy.

5.      Developing an ownership mentality…

When employees understand the boundaries in which they can operate and maneuver, as well as where the company wants them to go, they will feel empowered with a freedom to decide and act, and most often make the right choices.

6.      Improving performance through transparency…

By sharing ‘numbers’ with employees, a company can improve its performance.  However, Rick points out, merely being open is seldom sufficient standing alone. A company also needs to be sure their employees are trained to understand financial statements and have sufficient insight into their own jobs to know how to favorably affect the numbers.  But, Rick says, focus on additional metrics besides the merely the financial ones. This will allow employees to be better able to relate to the results and will feel more included in the process as a whole.

7.      Increasing performance through employee engagement…

Employees who are engaged in their positions and understand the contributory role and value to their employer are inclined to put more effort into their job and have the desire – willingness to give more than is minimally required, hence a greater sense of personal committed and loyalty to the company.

8.      Storytelling is important…

Storytelling, Rick believes, can be a powerful tool when a company wants to drive performance improvement. Leaders must be able use stories to motivate their employees to achieve more than they thought possible.

9.      Communicating internally…

Internal communication is an important element of any change management process, i.e., creating a company culture and thus must be consistently engaged in the overall agenda.  In other words, Rick notes, these five questions should be asked…

  • have they heard the message?
  • do they believe it?
  • do they know what it means?
  • have they interpreted it for themselves?
  • have they internalized it?

10.  Taking the time to celebrate

Remember, Rick says, the power of small win insofar as business improvement – change management are concerned once, of course, they have been reached. Taking the time to ‘celebrate’ is important, Rick adds, because it acknowledges employees hard work, boosts their morale, and helps sustain momentum, i.e., if you want something to grow, pour champagne on it!

Don’t take high performance culture for granted…

High-performance organizations do not take their culture for granted. They plan it, monitor it and manage it so that it remains aligned with they want to achieve.

All is for not, Rick appropriately claims, if company management teams do not align the core foundation – mission of their company with its culture, after all, culture eats strategy for breakfast!

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 a reader elect to utilize all or a portion of my posts, full attribution is expected and 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.

Intangible Assets…What Management Teams Don’t Know Will Lead To Adverse Affects…

December 3rd, 2012. Published under Intangible asset training for management teams., Managing intangible assets, Measuring Performance. No Comments.

Michael D. Moberly    December 3, 2012

Let’s respectfully cut to the chase, c-suites, boards, and management teams not only need, but, it’s a fiduciary responsibility, to know more about – have an operational understanding of the intangible assets they develop, possess, and are embedded throughout their companies.

Professional and objective studies, papers, and articles, too numerous to mention here, collectively draw the same conclusion, which is, growing percentages (65+%) of most company’s value, sources, of revenue, and ‘building blocks’ for growth, profitability, and sustainability reside in intangible assets.  In my view, this means acquiring the operational know how to not just periodically, but routinely and consistently identify, nurture, monitor, safeguard, and exploit a companies’ intangible assets effectively, efficiently, and profitably is a very worthy and responsible use of time, but very few resources.

I am increasingly hard pressed to explain why this globally universal economic fact is not being acted on more consistently and ardently, particularly among U.S. firms.  Yes, we can acknowledge there exist numerous and real hurdles or impediments to operationalizing a company’s intangible assets.   One is, intangibles are seldom integrated in b-school curricula as correctly constituting distinguishable assets that warrant management, quantification, and exploitation to fit the bottom line.   We also can acknowledge that far too many, otherwise extraordinary business persons, remain predisposed to understate their relevance and contributory value by assuming intangible assets are merely synonymous with intellectual properties, i.e., patents, copyrights, trademarks.

It is true that part of my being perplexed, if not frustrated by these incongruities, is related to being a 20+ year advocate of utilizing intangible assets to enhance business’s profitability and sustainability, and competitive advantage.  It’s actually distressing to observe companies, led by otherwise experienced, successful, and highly educated management teams seriously understate, trivialize, or be inattentive to the relevance and contributory value of the intangible asset either they or their company have developed and instead, merely ‘lumping’ them together into the proverbial catchall of goodwill.  And please, avoid assuming intangible assets are merely a euphemism

Yes, developing, building, and sustaining goodwill, for any company is an important and necessary contributor, but, it is one of many intangibles that warrant effective managerial treatment that again, includes consistent oversight, monitoring, and stewardship to achieve the results which most are capable.

But, let’s be clear, this is not about changing canoes in midstream.  Nor is it about taking on additional (business) risk by engaging a company’s intangible assets.  The evidence is already there and it’s quite clear, and certainly, intangible assets are already in place, that is, they’re integral to and embedded in most every business environment and/or transaction I can conceive.  It’s merely a matter of recognizing what more a company can do, how additional competitive advantages can be achieved, solidified, and enhanced, efficiencies created, and of course, favorable effects on company sustainability, profitability, and stability.

Let’s go way back to 2004, when Accenture commissioned the Economist Intelligence Unit to conduct a survey regarding ‘asset’ management.  One hundred and twenty senior executives, representing globally operating companies, were asked to share their views on the management of strategic assets, both tangible and intangible.

Not surprisingly, 94 of the 120 executives (respondents) stated that ‘managing intangible assets, one of which is intellectual capital, is an important management issue’. While, at first blush, this may appear to be a favorable finding, especially to intangible asset advocates and business strategists like myself.  Fully, 95% of the respondents went on to state that (again, keep in mind, this survey was conducted in 2004) they ‘did not have a robust system in place to actually measure (monitor) the performance of (their company’s) intangible assets’.

Even more distressing, in my view, from an asset management and financial strategist’s perspective, was the revelation that a full third of the senior executives surveyed stated they ‘had no such system in place at all’. At the same time however, nearly half admitted they recognized that ‘stock markets actually rewarded companies that invested in (their own) intangible assets’!   For any savvy business person, that represents an irony and missed opportunity in any language.

To put at least a small positive spin on this survey, respondents should be acknowledged for admitting their companies lacked the means and/or systems in 2004 to measure – monitor intangible assets.

Hopefully I am making a respectful but very positive case throughout my Business IP and Intangible Asset Blog, that intangible assets should be front and center in terms of aiding management teams, c-suites, and boards to recognize…

  • what intangible assets really are.
  • the various types and categories.
  • how to unravel and approximate their contributory value…
    • relative to goodwill, reputation, brand, relationship, intellectual, and structural capital, etc.
    • as sources of revenue and ‘building blocks’ for future wealth creation, i.e.,
    • insofar as bringing greater tactical – strategic clarity to
    • how intangibles can be most effectively utilized
    • strategies to extract as much value as possible.

Two general and perhaps larger points are worthy of making irrespective of the survey.  The first is this; intangible assets are not the sole province of large, multi-national corporations. Rather, intangible assets are widely developed, possessed, and embedded in most every company, ranging from start-ups and spin-off’s to SME’s (small, medium enterprises) to mature, as well as, maturing firms.

In other words, intangible assets have little, if virtually nothing to do with a company’s size. It’s truly a case where size does not matter! Rather, it’s a matter of business decision makers recognizing what intangible assets their company possesses, produces, and/or has acquired and how they can be effectively and profitably (exploited) used.

The second point is that most issues today related to – affecting a company’s intangible assets have moved from merely being voluntary (I’ll do it if I have time) to truly constituting a fiduciary responsibility!

So, as most management teams, c-suites, and boards already know, whether they actually elect to act on that knowledge or not, is that the value, sources of revenue, and growth potential of most companies is increasingly embedded, not in physical or strictly financial assets that are reported on balance sheets and financial statements, but in intangible assets, i.e., brands, patents, franchises, reputation, R&D, intellectual, structural, and relationship capital and competitive advantages.

But, as the Accenture – Economist survey clearly revealed, few companies try to measure – monitor either the performance or returns from their intangible assets. Yet intangibles are certainly the clear and unequivocal underliers to most company’s profitability, sustainability, stability, and overall success.  Quoting Dr. Roya Ghafele a proponent of intangible asset specialist and prolific Oxford University-based author, balance sheets and financial statements that do not encompass intangible assets simply do not provide the whole picture of a company.

There appears to be growing enthusiasm, albeit, at times, excruciatingly slow, for better management, stewardship, oversight, and monitoring and measuring (the performance of) a company’s intangible assets.

With respect to my particular corner of the world of intangible asset use, enhancement, and strategy, the radar of accounting firms, IP law practices, and insurance companies should surely be picking up the scent for developing and offering new business services specifically related to clients’ intangible assets.

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

Please watch for Mike’s book ‘Intangible Assets: Security Managers Roadmap’ to be published soon!

 

 

IT Security: “A problem well understood, defined, and stated, is a problem half solved…”!

June 5th, 2012. Published under Intangible asset protection, Measuring Performance, Uncategorized. 1 Comment.

Michael D. Moberly    June 5, 2012

As Charles Kettering, the American inventor, engineer, businessman, holder of 186 patents, a founder of Delco, and head of GM’s research from 1920 to 1947, once put it, ‘a problem well stated is a problem half solved’.  In my view, Kettering’s remark surely finds relevance in IT security!                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  inThe  Companies globally, are experiencing an aggressive rise in cyber-attacks and cyber-initiated economic – industrial espionage.  Interestingly, the U.S. governments’ recent acknowledgement that it played a key role in launching ‘Stuxnet’ in 2010, believed to be the first sustained effort by one country to destroy another’s (i.e. Iran’s) nuclear program infrastructure through computer attacks, no doubt added some not-so-welcomed fuel to that persistent fire.

No prudent company management team, c-suite, board, stakeholder, or IT system administrator would argue against the merits or necessity of IT security, defensively speaking.  IT security has become, not just a fiduciary responsibility, but in a growing number of jurisdictions, a legal mandate.  One outcome of which is that seldom do I meet a member of a management team, CTO, or CIO, etc., who does not assume their company has a firm handle on what IT security means, and, therefore, what elements and aspects of (IT) system operations must be monitored and measured.

As many recognize, an outgrowth of any new professional domain, in this case, IT security, even though its been practiced for 20+ years, those involved, i.e., designers, manufacturers, vendors, and practitioners drift toward developing a specialized jargon or lexicon,   ‘IT security-ease’ undergoes routine renditions and updates examples of which relate to…

  • measuring system effectiveness
  • articulating a rationale for (additional) IT security expenditures
  • accounting for the actual outcomes of IT security, i.e., what’s being monitored, captured, and how its measured.

As a security generalist and intangible asset (protection) strategist and practitioner for 25+ years, I recognize that the word ‘security’ conjures a myriad of assessments particularly in the post-911 era in which our collective (security) consciousness has elevated considerably, both conceptually and practically.  But, in the sense of a person or company actually being more or less secure, the term ‘security’ prompts a range of interpretations, most of which are related to variables such as time, place/location, circumstance, transaction, and/or venue, etc.

On the surface, IT security may appear relatively easy to measure because presumably, codes and programs can be written, or products purchased to capture and monitor most, if not all activities that occur in or to an IT system. That said, a commonly held perspective with respect to IT security is that once ‘x’ security (system, device, product, or personnel) have been introduced and become operational, there will be a corresponding change in reducing risk and uncertainty to either the intangible or tangible assets which a company’s IT security system encompasses.   It remains to be seen, at this point, whether or precisely how this relates to ‘cloud computing’.

We do know the key to measuring-assessing general security outcomes, lies in large part on one’s adeptness at articulating (bringing preciseness and clarity to) user, recipient, and/or, stakeholder expectations.  In other words, what can we expect to observe following deployment of ‘x’, in this case, IT security products and/or services?  As Hubbard suggests many times in his book (How To Measure Anything: Finding The Value of Intangibles in Business) if one is fuzzy about what she expects to observe as an outcome, e.g., from an expenditure of IT security resources, it’s likely any subsequent (quantitative, qualitative) measurements will be equally fuzzy.

Here’s where Kettering’s ‘a problem well stated is a problem half solved’ statement is so relevant in my view.  For starters, it’s essential to define the terms ‘risk’ and ‘uncertainty’….

  • uncertainty is merely the lack of having complete certainty about, for example, a business transaction, partnership, and/or strategic alliance.
  • risk, on the other hand, is a state of uncertainty wherein multiple ‘uncertainties’ exist relative to, for example, an expenditure of resources, a particular transaction, new initiative, or even a new product launch.

Should any one of those uncertainties (risks) materialize, they will likely lead to some type or degree of loss or adverse (economic, competitive advantage) impact, largely on a company’s intangible assets.

Measuring uncertainty then, (in the case of IT security) constitutes measuring a set of probabilities that a CTO, CIO, and/or CFO perhaps has assigned to a set of possibilities. For example, following deployment of a particular or suite of IT security products and services, a CTO could state she ‘expects to observe a 60% reduction in the vulnerability, probability, and criticality that proprietary data and information held within the company’s IT system could be extracted and disseminated illicitly.

Measurement of risk, on the other hand, is a set of possibilities, each with quantifiable probabilities usually involving asset loss, value erosion, undermining competitive advtanges, etc., following  deployment – operationalization of IT security services and products.  In this instance, a CTO may announce that there remains a 15% probability that the company will experience theft of proprietary data and information by insiders.

So, a problem well understood, well defined, and well stated, is indeed, a problem half solved!

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 or comment at  314-440-3593 or m.moberly@kpstrat.com

Intangible Assets: Let’s Cut To The Chase, Company’s Simply Need To Know More About Managing, Measuring, and Monitoring…

June 4th, 2012. Published under Managing intangible assets, Measuring Performance. No Comments.

Michael D. Moberly    June 4, 2012

Going way, way back to 2004, Accenture commissioned the Economist Intelligence Unit to conduct a survey regarding ‘asset’ management.  More specifically, 120 senior executives representing globally operating companies were asked to share their views on the management of strategic assets, both tangible and intangible.

Not surprisingly, 94 of the 120 executives (respondents) stated that ‘managing intangible assets and/or intellectual capital was an important management issue’.  While, at first blush, this may appear to be a favorable finding, especially to those of us who are intangible asset advocates and strategists, 95% of the respondents went on to state that (again, keep in mind, this survey was conducted in 2004) they ‘did not have a robust system in place to actually measure the performance of (their company’s) intangible assets’.

Perhaps even more unfortunate in my view, from a managerial and financial perspective, was the revelation that a full third of the senior executives surveyed stated they ‘had no such system in place at all’.  At the same time however, nearly half admitted they recognized that ‘the stock market actually rewarded companies that invested in (their) intangible assets’.  Now that’s irony and missed opportunities!

In my view, the respondents’ should be applauded for admitting they lacked the means and/or systems within their companies’ (at least in 2004) to measure intangible assets , but a single clap of the hands would be sufficient in this case as it’s certainly time to reverse that trend.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     performance.

Emphasis now, should be placed up front, on aiding management teams, c-suites, and boards to achieve their respective fiduciary responsibilities, i.e.,

  • recognize precisely what intangible assets really are and how to unravel and approximate their contributory value…
    • relative to goodwill, reputation, brand, relationship, intellectual, and structural capital, etc.
    • as sources of revenue and ‘building blocks’ for future wealth creation, i.e.,
    • insofar as bringing greater tactical – strategic clarity to
      • how intangibles can be most effectively utilized
      • strategies to extract as much value as possible.

Two general and perhaps larger points are worthy of making irrespective of the survey.

The first is this; intangible assets are not the sole province of large, multi-national corporations. Rather, intangible assets are widely embedded in most every company, ranging from start-ups and spin-off’s to SME’s (small, medium enterprises) to mature, as well as, maturing firms. In other words, intangible assets have little, if virtually nothing to do with a company’s size. It’s truly a case where size does not matter!   Rather, it’s a matter of business decision makers recognizing what intangible assets their company possesses, produces, and/or has acquired and how they can be effectively and profitably (exploited) used.

The second point is that most issues today related to – affecting a company’s intangible assets have moved from merely being voluntary (I’ll do it if I have time) to truly constituting a fiduciary responsibility!

So, as most management teams, c-suites, and boards already know, whether they actually elect to act on that knowledge or not, is that the value, sources of revenue, and growth potential of most companies is increasingly embedded not in physical or strictly financial assets that are reported on balance sheets and financial statements, but in intangible assets, i.e., brands, patents, franchises, software, R&D, ideas, proprietary expertise, and competitive advantages.

But, as the Accenture – Economist survey clearly revealed, few companies try to measure either the performance or returns of their intangible assets. Yet intangibles are certainly the clear and unequivocal underliers to most company’s profitability and success.  Quoting Dr. Roya Ghafele a proponent of intangible asset specialist and prolific Oxford University-based author, balance sheets and financial statements that do not encompass intangible assets simply do not provide the whole picture of a company.

Based on my own experience however, there appears to be growing enthusiasm, albeit, at times, excruciatingly slow, for better management, stewardship, oversight, and monitoring and measuring (the performance of) a company’s intangible assets.

With respect to my particular corner of the world of intangible assets, the radar of accounting firms, IP law practices, and insurance companies should surely be picking up the scent for developing and offering new business services specifically related to clients’ intangible assets.

For the still skeptical or reluctant, I’m hopeful your time will permit examination and reflection of numerous other posts at this blog!

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 or comment at  314-440-3593 or m.moberly@kpstrat.com  

Intangible Assets: Companies Can’t Manage What They Don’t Measure!

March 16th, 2012. Published under Managing intangible assets, Measuring Performance. No Comments.

Michael D. Moberly    March 16, 2012

There’s probably little argument among business decision makers and management teams as to continued relevance of the adage ‘you can’t manage what you don’t measure’. In other words, unless you can measure something, you don’t know if there’s improvement or not and you’re unlikely to be able to manage for improvement if you’re unable to determine what’s getting better and what isn’t. (Adapted by Michael D. Moberly from AboutManagement.com ‘You Can’t Manage What You Don’t Measure’ by F. John Reh)

The above quote is widely attributed to Dr. W. Edward Deming. In point of fact, what Dr. Deming did say was a little different, i.e., ’running a company on visible figures’ (alone) constitutes one of the (his) ‘seven deadly diseases of management’. Deming realized that many important things that must be managed are not easily measured in an objective and replicable manner. (Adapted by Michael D. Moberly from ‘Management Thoughts’ by John Hunter)

While the premise of the phrase ‘you can’t manage what you can’t measure’ evolved as one of the lynchpins to many, if not most MBA academic programs, it’s remains unclear, at least too me, just how inclusive Dr. Deming intended his ‘running a company (only) on visible figures’ constitutes a managerial deadly disease. Was Dr. Deming referring only to tangible assets and data, which are certainly Deming hallmarks? Or, did he intend to include intangible assets, which, at the time, were hardly on many business decision makers’ or management guru’s radar screens?

I suspect, and most respectfully so, that Dr. Deming may, and I underscore may, have had little appreciation, at the time anyway, just how relevant that particular ‘managerial deadly disease’ would become in the 21st century when the much touted knowledge-based global economy would spark a such a significant shift.  That is, most company’s value, sources of revenue, and building blocks for growth and sustainability (65+%) evolve directly from intangible assets rather than the conventional tangible (physical) assets.

What ultimately matters is, there is no other time in company governance history when identifying, unraveling, assessing, managing, and monitoring the value and materiality of intangible assets is more necessary, more integral, or more essential to a company’s stability, growth, profitability, and sustainability. And, this applies to start-ups, small, medium, mature, and maturing companies, as well as, large corporations regardless of sector or industry.

Today, as business decision makers and management teams endeavor to continually position their companies to remain competitive through stewardship, oversight, and management, the ability to identify and assess asset value fluctuations, losses, materiality changes, and asset obsolescence are important virtues.

With respect to the latter point, I counsel companies is to avoid devoting time, money, and resources sustaining assets that have experienced significant compromise, obsolescence, and/or de-valuation, unless, of course such problems can be effectively mitigated, reversed and recouped.  That doesn’t necessarily mean the only remaining option is to summarily cast those aside for a zero return.  Rather, it means identifying ways those assets’ remaining value – use (potential) may still be leveraged, i.e., sell them, barter them, transfer them, license them, hold them, and/or explore ways to bundle them, perhaps with other assets, to extract as much value and competitive advantages as possible.

CFO’s: Financial and Strategic Competitive Advantages In Intangible Assets

January 10th, 2011. Published under CFO's, Measuring Performance. 1 Comment.

Michael D. Moberly  January 10, 2011

In today’s increasingly knowledge (intangible asset) based business economy, company’s that possess the inclination and ability to achieve long term and sustainable success must recognize that a key pillar to that success lies in (a.) developing, and (b.) sharing internally, information and data about the performance of the intangible assets they develop and possess.

But, this post is not about quick fixes or silver bullets though, as there’s nothing particularly new, nor necessarily quick, about…

– searching for competitive and financial advantages that can help put and keep a company on the leading (competitive and financial) edge of their industry and/or market space, or

– trying to better understand and develop practical and measurable ways to improve the financial and competitive health of a company.  

What may be new or innovative for some though, lies in the premise of a 2007 Deloitte survey which states (paraphrased) that…financial indicators coming from conventional balance sheets and financial statements alone, neither capture nor characterize a company’s (competitive, financial) strengths and weakenesses internally or within its value-supply chain.  

It’s simply imperative that more management teams and boards recognize that relying solely on conventional balance sheets and/or financial statements to supply the ‘complete picture’ and the necessary strategic perspective to compete effectively is inadequate, if it does not include intangibles.  In other words, competitive stagnation and missed opportunities can flow from a company’s exclusive reliance on conventional financial statements as the primary information source for their strategic planning and outlook.  

To spark dialogue with CFO’s, management teams, and boards to engage this perspective, I use several dialogue initiators.  One, is revisiting the adage attributed to Dr. Deming, ‘you can’t manage what you don’t measure’.  As we all know, value and revenue drive the markets and, by extension, most company’s destiny.  So, when 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth and future wealth creation evolve directly from intangible assets, as they do today, management teams and boards would be well served to devote the necessary time and energy to developing defensible approaches to measuring and managing (a.) which, and (b.) how intangible assets are performing in their company and relative to their competitors!

A second dialogue initiator I use, is discussing the actual content and rationale of my training for CFO’s and other members of a company management and leadership team.  The foundation of the training includes creating and elevating operational familiarity and (business) confidence about intangible assets.  Within that dialogue, attention is brought to…

1. what intangible assets are, what they aren’t, where they’re located, and how to assess their status and contributory value,

2. strategies for utilizing, measuring, and extracting value from intangibles, and 

3. what constitutes effective stewardship, oversight, and management of a company’s intangibles.

These dialogue initiators prompt most CFO’s and management teams to (a.) consider how they can become better positioned, from a business perspective, to actually deliver a more financially and competitive advantage healthy company, and (b.) become more favorably inclined to…

–  ask more questions and demand more answers about the performance of their company’s intangible assets, and

–  drill down far enough (companywide) to determine precisely what asset performance indicators their company should be measuring.

Admittedly, some of the existing intangible asset performance – measurement methods (tools) need some refinements to confidentally and objectively paint the complete picture of a company’s financial and competitive advantage health that’s so necessary today, e.g.,

1. the actual tools (techniques, formulas, measurement points, etc.) need more internal-external reliability and validity testing to become more defensible and mitigate skepticisms about their relevance and use.

2. overcoming the often repeated mis-perceptions that measuring intangibles is too time consuming and doesn’t deliver a timely return-on-investment. 

3. addressing the relevant concern that developing and sharing intangible asset metrics, internally, or otherwise, could potentially make a company more vulnerable – at risk to competitive advantage undermining and/or asset value erosion, etc., should competitors acquire that information.

Ultimately, in my view, it’s the CFO who, in most instances, should take the lead in stewarding, overseeing, and managing a company’s intangible assets.  But, that must be premised on:

1. getting the correct information/data to the CFO.

2. the CFO being receptive to and confident in that information/data, and

3. the CFO recognizing how to effectively utilize and execute on that information/data to achieve the desired results.

(This post was inspired by a 2007 survey/report produced by Deloitte titled ‘In The Dark II: What Many Boards and Executives Still Don’t Know About The Health Of Their Business’.)

The ‘Business IP and Intangible Asset Blog’ is researched and written by Michael D. Moberly, president and founder of Knowledge Protection Strategies – http://kpstrat.com.  The intent of Mr. Moberly’s blog is to provide insights and perspective to aid in a cross-disciplinary approach for identifying, assessing, valuing, protecting, utilizing, and extracting value from intangible assets.  Your comments regarding my blog posts are welcome at m.moberly@kpstrat.com

While visiting 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 about consulting, conducting an assessment, training program, or speaking engagement to your company or professional association at 314-440-3593.

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Knowing Your Company’s Intangibles and Non-Financials Will Improve Its Health!

December 21st, 2010. Published under Board oversight, Intangible asset strategy, Measuring Performance, Uncategorized. 1 Comment.

Michael D. Moberly December 21, 2010

This post is about explaining a persistent challenge that I routinely experience insofar as influencing management teams, boards, and investors to take some relatively straightforward, unintrusive, and inexpensive steps to improve the financial and competitive health of their companies.

Largely, that challenge, evolves around the importance, if not fiduciary responsibility, to put in place practices for the stewardship, oversight, and management of the intangible assets, or non-financial (value, revenue, competitive) drivers that company’s routinely produce and, in most instances, already possess but continue, for a variety of reasons, to be overlooked, dismissed, or neglected.

In 2004, and again in 2007, Deloitte produced two very relevant and much needed reports.  The first was a survey, conducted in cooperation with the Economist Intelligence Unit, titled ‘In The Dark: What Boards and Executives Don’t Know About the Health of Their Business’.  The second, published in 2007, was a follow-up report, similarly titled, but with one important caveat, ‘In The Dark: What Many Boards and Executives Still Don’t Know About the Health of Their Business’.

Both papers convincingly expressed the view, which I’m in total agreement, that conventional financial statements do not provide a complete or comprehensive picture of a company’s ‘soundness’.   Management team, board, and investor belief that conventional financial statements are the only, or even the best tool for demonstrating-conveying a company’s soundness, should certainly be questioned, particularly in the rapidly progressing knowledge-based (business) economy in which 65+% of most company’s value, sources of revenue, and ‘building blocks’ for future wealth creation lie in – evolve directly from intangible assets or non-financials.

There’s little doubt, continued (sole) reliance on the conventional, does influence management teams, boards, and investors alike, to be skeptical, dismissive, neglectful and, in some instances, utterly blind to the economic fact-reality that the underlying and/or foundational sources and drivers of most company’s value, revenue, and wealth creation is their non-financials or intangible assets.

Let there be no doubt though, conventional financial statements (balance sheet) emphasis on identifying whether or not financial targets have been achieved, remain necessary, no argument here, and something which this blog post is not advocating doing away with.

But, as both Deloitte reports unequivically conveyed in 2004 and 2007 respectively, its was a prudent business practice then, and it must be the foreseeable future, for management teams and boards to work diligently, and I might add, quickly, to strike a better balance between the oversight, stewardship, and management of financials and non-financials.  Lest this not be misconstrued, such action does not – need not entail paying less attention to one over the other.  Rather, it requires paying a more balanced attention to both!

So why is more ‘balance’ necessary?  The key reason in my view, which was also conveyed in the Deloitte reports, is that conventional-traditional financial measures are simply not designed to capture (describe) the many necessary (critical, essential) qualitative aspects that we now matter-of-factly know, are directly and consistely related to businesses success, i.e., those found in a company’s intangibles (non-financials) such as the quality and strength of a company’s relationships with constituencies up and down its respective value-supply chain.

It’s become a managerial ‘no brainer’ now that tracking/monitoring non-financial aspects of company performance, i.e., its intangibles, is not a time-resource luxury, rather a necessity and fiduciary imperative.

Fortunately, according to Deloitte, and which my own experiences certainly bear out, there are several factors which are now at work influencing (driving) boards and management teams to pay more attention to ‘monitoring key non-financial – intangible asset performance indicators’.  These include, among others:

1.  increasing global competition, irrespective of company size, sector, or maturity.

2.  the growing influence/importance of ‘relationship capital’, i.e., customers/clients relationships up and down a company’s value-supply chain.

3. management team and board heightened awareness of the real and foundational value of a company’s reputation and the attendant risks and potential for hard hitting and sometimes irreversible and almost instaneous company wide cascading effects that can occur if certain risks actually materialize.

4. rapid-accelerated product innovation-launch times (globally speaking) before real competitive advantage erosion and/or undermining will occur.

5. the globally boundaryless speed which information (assets) can spread-be disseminated through the Internet.

6. the increasing importance – influence of human capital, i.e., employees internally, as well as employees dispersed externally throughout the value-supply chain.

7. greater scrutiny by various global – virtual media forums and outlets on matters/issues other than solely a company’s financial performance.

8. increasing government regulatory agency emphasis (globally and country specific) on reporting, measuing/accounting businesses non-financial performance ala intangibles.

It would be most desireable if management teams, boards, and investors begin to regard the oversight, stewardship, and management of non-financial (intangible asset) metrics not merely as some altruistic endeavor, rather as an important, necessary, and prudent business practice integral to sustaining and enhancing their company’s value, revenue, profitability and competitiveness!

The ‘Business IP and Intangible Asset Blog’ is researched and written by Michael D. Moberly, president and founder of Knowledge Protection Strategies – http://kpstrat.com.  The intent of Mr. Moberly’s blog is to provide insights and perspective to aid in a cross-disciplinary approach for identifying, assessing, valuing, protecting, utilizing, and extracting value from intangible assets.  Your comments regarding my blog posts are welcome at m.moberly@kpstrat.com.

While visiting 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 about consulting, conducting an assessment, training program, or speaking engagement to your company or professional association at 314-440-3593.