Archive for 'Reputation risk.'

Banking The Equity In Intangible Assets

December 29th, 2016. Published under Intangible asset training for management teams., Reputation risk.. No Comments.

Michael D. Moberly December 29, 2016 ‘A business blog where attention span really matters’!

Business leaders and management teams are obliged, now, perhaps more than ever, to acknowledge the prudence of ‘banking’ (monitoring, preserving) the equity held within their company’s IA’s. That equity, ultimately manifests, aside from value and potential sources of revenue, etc., as reputation, image, goodwill, and relationship capital. Seldom, if ever, does IA ‘equity’ materialize very rapidly. Instead, it evolves over periods of time as consumers-customers-clients attach favorable and long term relationships with/to a particular product, service, or, in some instances, a specific employee, ala IA.

There are some companies and their management teams, of course, who, for a variety of reasons and rationales, have yet to distinguish or associate these attributes (assets), intangible as they are, as contributing to, or even being sources of value and revenue. Other business leaders, based on my experiences, remain dismissive of IA’s, particularly in the context of reputation and generating customer-client-consumer ‘equity’ that is capable of being saved or banked. Again, my engagement experiences coupled with volumes of client centered research bear out the perspective that business leadership who remain dismissive of their company’s IA’s and their ‘equity’ potential, will likely experience unnecessary challenges to profitably operate and compete in IA intensive and dependent environments, now common to the ‘go fast, go hard, go global’ space.

Another consequence to business leadership’s dismissive approach to the necessity for – practice of ‘banking’ IA equity, is that they will be hard pressed to develop a comprehensive portrait of their company’s real financial – competitive advantage health. In other words, the ‘portrait’ they will likely receive from conventional accounting will be incomplete at best, if it does not fully address-include IA’s. In addition, on the transaction side, if IA development, safeguards, value, competitiveness, and equity are not routine discussion and/or action items on c-suite agendas, this too will contribute to understating IA’s contributory role and value to business transactions, particularly (again) for IA intensive and dependent firms, which a growing percentage clearly are.

Collectively, these circumstances frequently elevate company-business propensity to the materialization of risk which can adversely affect companies in many different ways, one being reputation, e.g.,

• dilute value of the key IA’s, ala reputation, image, and goodwill which are routinely in play, and
• undermine anticipated-projected synergies and competitive advantages, by
• making key (in play) IA ‘s substantially more fragile and vulnerable to risk.

Each circumstance represents an example of where-when the respectful guidance and services of an experienced IA strategist and risk specialist can favorably intervene to reduce the probability, vulnerability, and criticality of adverse events-risks materializing.

Such risk circumstances highlight the over-arching premise that management teams, boards, and even stakeholders have (fiduciary level) obligations (ala Stone v. Ritter) to routinely and objectively ask; is this company effectively positioned to develop and sustain current skill sets and experience to…

• identify, unravel, assess, develop, bundle, utilize, and extract as much value and competitive advantage as
possible from its IA’s under its control.
• safeguard and monitor IA value and identify and mitigate risks which, if-when materialized, will
adversely affect assets’ contributory role – value, and sources of revenue.

It’s reasonable for business leadership to consider then, if these purposefully acquired skill sets are not be regularly practiced, little else may matter, because IA value, competitive advantages, sources of revenue, and IA’s underlying equity that’s in play, can very rapidly erode, be undermined, compromised, or worse, the asset’s value, and by extension, its equity, go to zero!

Reputation Risk, Once Materialized, Is Not A Public Relations Challenge!

October 25th, 2016. Published under Reputation risk., Systemic Risk. No Comments.

Michael D. Moberly October 23, 2016 ‘A blog where intangible assets and IP meet business’!

I am consistently frustrated when allegations surface about another service (sector) company is alleged to have engaged in predatory practices toward consumers (their own) customers, i.e., prey to schemes which, at best, are sleazy and unethical. My frustrations heighten as audacious, grandiose, and lawyerly responses emerge to accommodate news cycles globally. My initial assessment (reaction) to most of the now, unfortunately, all-too-common ‘gotcha’ responses by c-suite executive is they seem to carry a subtext of condescension, i.e., the alleged acts occurred years previous and we (the company) have addressed them. Often the subtext is, the alleged acts were part of a business unit, or perhaps company-wide culture whose prey was consumer – customer gullibility. Through these lens, distinguishing right from wrong are not malleable social constructs, rather, easily defined absolutes!

Frustration also lies in organization leadership who, once brought (subpoenaed) before the public eye, frequently assert little, if any, personal knowledge of specifics, but, endeavor to characterize them as originating in a ‘rogue’ component of the larger organization. Well, of course they did, that is, until the evidentiary quicksand (truth) eventually forces them to describe it otherwise.

Another troubling aspect is that organizations frequently (initially) treat these types of allegations as mere public relations challenges which can be rapidly repaired – remediated with focused-grouped print and media ad buys. And, of course, the not-so-subtle perception such ad buy’s wish to convey is, the alleged misdeeds do not, and never have, represented the (operating) mission-principles of this organization, and oh, by the way, before judging us too harshly, consider all the nice things (contributions, donations, etc.) this organization has done – is doing in your community. Yes, in many instances that’s probably true, but, shouldn’t it prompt us to wonder the circumstances in which those contributions – donations originated? It wasn’t that many years ago when, the realities of apartheid could no longer be subjugated – forsaken to profits by numerous U.S. companies and institutions, i.e., divestiture!

Hopefully, organizations that find themselves adversely mired in uncorrected misdeeds will realize they are more than mere PR challenges that presume to have specific starting and ending points to a public rehabilitation. Instead, there is the materialization of indeterminate qualitative and quantitative reputation risk that will surely manifest as customers, clients, and consumers find it in their interest to wholly withdraw or minimize their relationships with culturally tainted companies. The lessons are many here, perhaps the most significant is, there are fewer organization practices, behaviors, and/or events, which, when-if they go awry, can or should be dealt with as mere amelioration of the public.

Reputation Risk Avoid Response Translate As Cover Up

May 7th, 2016. Published under Due Diligence and Risk Assessments, Reputation risk.. No Comments.

Michael D. Moberly May 7, 2016 ‘A blog where attention span really matters’!

Once acts, events, or behaviors, perceived as adverse or illegal materialize, and are captured and distributed on social media, and intensified through photographic characterizations that convey indefensible aggressiveness, hostility, and confrontational demeanors by authorities…well, these are Dr. Nir Kossovsky’s prime ingredients for a hard to refute reputation risk.

The originating incident represented in this post occurred in November, 2011, sparked by an order from University of California-Davis administrators for their campus police department to remove ‘Occupy Wall Street’ (movement) protesters encamped on university property.

As if the manner in which that order was executed, i.e., the accompanying behaviors-demeanors exhibited by university police were not enough, in mid-April 2016, Sam Stanton and Diana Lambert, reporters for the Sacramento Bee (newspaper) learned and wrote that senior University of California-Davis officials, already operating under extremely tight economic constraints (placed on the entire UC system), had spent at least $175,000, following the 2011 incident to hire outside consultants to engage in an “online branding campaign designed to clean up the negative attention UC-Davis, and its Chancellor, Dr. Linda Katehi had received.”

It is not my intent here to re-litigate – second-guess the event and the actions of university police. That’s for others to interpret-decide ala reading the independent investigation chaired by Cruz Reynoso, a former associate justice of the California Supreme Court along with a separate, independent fact-finding document assembled by Kroll, a consulting firm that specializes in investigations.

The point I wish to make here is that the university’s resourcing for ‘an online branding campaign designed to clean up the negative attention UC-Davis, and its Chancellor had received” was misplaced, likely produced little, if any measurable return, and online activities for this purpose variously discount – are dismissive of intellectual memory.

To be sure, I am not suggesting an outcome of this incident, however needless and botched it was, would necessarily translate as stifling student applications to attend UC-Davis. Similarly, being reasonably well versed in reputation risk matters and their mitigation, I am hard pressed to embrace the premise that ‘online clean-up of negative’ – adverse publicity, standing alone, will measurably mitigate or reverse reputation risks which have already materialized.

Reputation, is a variously delicate intangible asset with relevance to every company, organization, institution, and individual. After all, reputation is perhaps the most complex of intangible assets which for the most part derives from perceptions, experiences, and observations of others. Respecting the expanding reliance on various social media as people’s primary means (source) for receiving – conveying information, I remain, at this point, unconvinced that the act of erasing or favorably modifying – re-writing existing (on-line) information in open source, is a viable path or perhaps even ethical practice for trying to re-attach or re-affirm reputation in which risk has materialized.

Orthopaedic Surgeon Reputation Risk

January 18th, 2016. Published under Intangible asset training for management teams., Intangibles as strategic assets, Reputation risk.. No Comments.

 Michael D. Moberly   January 18, 2016   ‘A business blog where attention span really matters’.

Numerous RR (reputation risk) presentations that I have observed are quite conventional in their design and essentially become nuanced (confirmatory) explanations – highlights of what an audience is likely to already know and/or have experienced and routinely focus on reputation risks emanating from online platforms.

To be sure, this post departs from and expands those conventions by focusing exclusively on (orthopedic) surgeons’ reputation risk through an IA (intangible asset) lens, e.g.,

  • addressing reputation value as driven by interwoven and collaborative sets of IA’s, i.e., primarily intellectual, relationship, and structural capital.
  • recognizing and examining reputation and any attendant influencing triggers and vulnerabilities to achieve effective levels of resilience, durability, and enduring reputation risk mitigation strategies.

This post respectfully invites orthopedic surgeons, practice managers, and team members to examine, in a preventative and mitigation context, surgeon ‘reputation’ as an IA while recognizing…

…substantial percentages, perhaps 80+%, of most practice’s value, their sources of  revenue,  sustainability, and competitiveness evolve directly from interwoven and collaborative clusters of IA’s, the most valuable, but also most fragile-vulnerable being, reputation!

As an IA strategist and risk specialist, I distinguish orthopedic surgeon’s reputation as a critically essential and competitive asset which can develop sustainable value through respectful oversight, stewardship, and leverage. In my experience, most any initiative to sustain the value of orthopedic surgeon’s reputation, i.e., by mitigating its endemic – persistent risks, is substantially more likely to be achieved if done so having acquired an appreciation for reputation’s operable – triggering (intangible) features and elements, e.g., by…

  • recognizing the asymmetric rationales – circumstances in which reputation risks are likely to materialize.
  • recognizing and mitigating the initial-principle risk triggering emotions, circumstances, and demeanors which can rapidly materialize to undermine surgeon reputation and depreciate its competitive-attractive value.
  • introducing practical, efficient, and respectful pre and post op engagements with patients and their significant others.
  • demonstrating how reputation and goodwill can accrue and become ‘banked’ to strengthen practice/reputation value and mitigate the impact of (reputation) risks should they materialize.

It would indeed be an overstatement, in my judgment, to suggest every surgeon’s professional reputation is consistently at risk, thus, this is not merely a gratuitous or self-serving exploitation of reputation risk. Let’s be clear, I am not associated with nor do I represent another service provider that offers generic, one-size-fits-all strategies for mitigating or addressing reputation risk.

Nor do I speciously cast dispersions on orthopedic surgeon practices or resort to the conventional ‘FUDI’ approach to seek attention, i.e. fear, uncertainty, doubt, or inevitability as rationale to extort adoption.

Instead, this will describe orthopedic surgeon’s reputation and that of their practice as being interwoven with and reinforced by honed sets of personal capital, i.e., intellectual, structural, relationship, training, creative skill and technique, and affiliation.

The IA aspects/components to a surgeon’s reputation are seldom, if ever, addressed in conventional medical school or residency curricula, so reputation risk relevance, speed of materialization and probable adverse affects are frequently underestimated or passively dismissed.

The practice of orthopedic surgery is indeed, an IA intensive and dependant profession (business)!

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 View Mr. Moberly’s videos on YouTube at ‘safeguarding intangible assets’ or his CNN and CNBC videos at his webpage http://kpstrat.com

Iran Agreement’s Intangible Assets

July 20th, 2015. Published under Managing intangible assets, Reputation risk.. No Comments.

Michael D. Moberly   July 20, 2015    A blog where attention span really matter!

To no one’s surprise, the endless stream of opinions regarding the agreement reached last week to restrict (mitigate) Iran’s nuclear arms potential fit very well, at least initially, on a straight continuum with three markers, i.e., yea, in principle, and nay.

I suspect for many global citizens, their opinion of the agreement are not exclusively about whether they believe it is good or bad, rather, it’s about how large and how probable they sense the threat (posed by a nuclearized Iran) actually is. That ‘sense’ is a very personalized IA (intangible asset). Respectfully, the presence, absence, and strength of such personalized intangibles may likely be influenced by a citizen’s proximity to Tehran.

The inevitable suspected violations and the way the agreement has been structured will surely influence more to publicly assess the agreement, i.e., good or bad, probably on a daily – weekly basis versus strategic points of agreement’s 10-15 year life cycle.

The agreement is necessarily complex with many moving parts that must be in sync attitudinally, behaviorally, and definitionally. Professor Stephen Carter, Yale University School of Law suggests, (a.) the number and complexity of those moving parts can be likened to a Rubic’s Cube, or (b.) akin to a Rube Goldberg machine, i.e., a contraption that is deliberately over-engineered or overdone to perform a very simple task in a very complicated fashion.

Too, with that level of complexity, my hope is that when there are challenges, they will not be so large or politicized to undermine or cause the entire agreement to collapse. This is something every business decision maker who has engaged in a merger, acquisition, new product-service launch, buy-sell agreement, or strategic alliance understands well, i.e., how opponents to a deal will interpret suspicions – infractions as being individually or collectively significant to warrant it’s termination.

Professor Carter also suggests when one party to an agreement assumes the other party will attempt to cheat in some manner and at some point, this prompts other questions, but not solely whether the deal was good or bad, rather, were the interim (intangible) gains, i.e., psychological, attitudinal, emotional, etc., derived from an imperfect agreement sufficient insofar as mitigating or delaying what may have been otherwise inevitable. Of course, I am not talking about nuclear Armageddon.

In other words, Carter asks, were those potential (intangible) gains from having an agreement in place for a period of time, greater than the costs of not ever negotiating or producing an agreement in the first place?

Should most aspects of the agreement be adhered to by the parties, Professor Carter suggests that when one looks back on any agreement, be it business, trade, or nuclear, from the time of its signing to its potential termination, the global citizens represented by the negotiating parties were likely happier and felt safer than if the agreement had not been executed. Again, some powerful intangible assets at play here!

Reputation Risks: What Influences Consumers and Stakeholders To React?

June 5th, 2015. Published under Reputation risk.. No Comments.

Michael D. Moberly   June 5, 2015   ‘A blog where attention span really matters’!

‘I really don’t know’ is my answer to this question. And, I should note that I am variously dubious of most who, for whatever reason, deem it necessary to say otherwise. That said, I trust my candid response does not deter further reading.

My rationale is, there are numerous sociological, psychological, economic, personal convenience and availability of equal or greater alternatives that play varying roles in how, why, or if consumers – stakeholders will react and if so, whether such reactions may be felt economically, in supply chains, or as diminution of competitive advantages.

I am writing this post in the early morning of June 4th. During the late afternoon of June 3d, a proposed class action lawsuit was filed in a Manhattan federal court by four former employees of CVS who presumably held loss prevention positions. They claimed their superiors had ordered them to track minority customers which, as most know, translate as requisites to racial profiling which they voiced objections.

What prompted me to write about this specific event, among others of equal or greater import, is that NPR (Morning Edition) presented a 3 minute and 3 second segment about the CVS lawsuit which I then read about it in greater detail at Reuters.com where the story originated.

The lawsuit (Simpson v. CVS Pharmacy Inc, U.S. District Court for the Southern District of New York, No. 15-cv-4261) included the possibility that these plaintiffs may soon be filing a companion complaint with the EEOC. Should this occur, it would presumably allow plaintiffs to add more claims to their ‘federal’ case. I do not know whether CVS acquired a ‘heads up’ to the filing of this suit, but I suspect, with confidence, they did. Regardless, Carolyn Castel, a spokesperson for the Rhode Island based CVS Health Corporation, said ‘CVS was shocked by the lawsuit and would fight the claims’.

While I cannot presume to speak for CVS customers and stakeholders, I have come to be receptive to the ageless adage ‘if-where there is smoke there is usually fire’. My receptivity to this adage is embedded in multiple years of serving in various administrative capacities which, when adverse rumors, accusations, or innuendos came to my attention, I accepted a responsibility to engage each in a discreet follow-up to assess their voracity.

One can make the case that there are fewer business risks, when they may materialize, e.g., allegations that carry even the slightest adverse messaging can manifest as genuine reputation risks.

I, like numerous colleagues in the intangibles arena, listen to and/or read about the same company – management missteps and miscues in media (news) outlets charged with securing 24×7 content, which I suspect can render them receptive to portraying ‘news’ events in contexts with potential linkage to other events or imageries.

Ironically though, I seldom hear events which are clear predicates to potentially significant (company) reputation risk, not being characterized in the mainstream and/or social media conveyances as such. This, I remain particularly curious.

Media accounts are uncharacteristically absent language-narrative that reports the potential for reputation risk to arise even though growing numbers of adverse events that materialize produce some level of reputation risk fallout to the victim – targeted company before there has been a rebuttal or rational discussion as to its merits or truthfulness.

I am not suggesting the media standing alone are the instigators or precipitators of reputation risk to private sector firms but, to be sure, media characterizations do play a role in terms of how events are characterized for viewers, readers, and listeners, i.e., consumers and stakeholders.

Questions unanswered…

 

St. Louis, Reputation Risk Keeps On Giving!

February 18th, 2015. Published under Reputation risk., Systemic Risk. No Comments.

Michael D. Moberly – February 19, 2015   ‘A blog where attention span really matters’!

St. Louis’ reputation clearly at risk… Make no mistake, reputation is a company or cities’ most prized and valuable intangible asset, but it comes with risk. In the past six months alone, we have witnessed numerous examples of corporate and individual reputations’ plummeting due to systemic and (company) culture risks surfacing as well as prominent and/or celebrated individuals engaging in behaviors – actions that were not merely risky, but criminal.  In either circumstance, the outcomes are often similar, with either losing, sometimes irreversibly, revenue, goodwill, and image.

Now, with DoJ’s pending suit against the Ferguson Police Department, preceded by St. Louis native Michael Gerson’s skillful, but stinging characterization of St. Louis’ reputation on PBS’ NewsHour recently, this city’s reputation, once again, lies at the mercy of a global audience. The recent incident that unfurled on the parking lot of a Berkley gas station prompted Ms. Woodruff (co-managing editor of PBS’ NewsHour) to raise the relevant, but perhaps disparaging question to Mr. Gerson and Mr. Shields, ”what’s going on in St. Louis”?

Impending sightseeing tours… It should come as no surprise then, not unlike New Orleans’ lower 9th Ward, following Hurricane Katrina, that St. Louis sightseeing tours will likely, if they haven’t already, include, visits to the Shaw neighborhood, the communities of Ferguson and Berkley, and Clayton’s Justice Center each of which was the origin of countless hours of live video feeds globally. Do you, like I, wonder who will write the narrative for these sure to come ‘sight seeing’ tours?

Reputation nosedive, irreversible, permanent, or salvageable… To bestow absolutely no disrespect to any of the tragic events that have occurred, or the words that have been spoken, and the hurt that is now unforgettably embedded since mid-August, 2014, our city’s reputation has taken a decided nosedive.

Materialization of reputation risks like this are humanly, emotionally, and intellectually quick, with the economic and competitive advantage consequences moving at a somewhat slower pace insofar as being fully felt. But, perhaps the latter will be one motivator that brings committed people to the table.

Precisely how the adverse reputation St. Louis has acquired is subject to some qualification. That is, how citizens of St. Louis, outside observers, visitors, and prospective businesses wishing to expand or relocate in greater St. Louis are variously dependent on how they personally understand the origins and reasons that collectively contributed to this city’s current reputational state. Obviously, merely returning to its former state, absent viable, relatively quick, permanent, and sustainable change would be a devastating blow to reputation re-builds.

Reconciliation… Experience suggests the answers to these critical questions are inseparable from the emotional trauma following the death of loved ones to their families, friends, and supporters. Deeply rooted emotional wounds of this magnitude take time to reach some point of psychological and emotional reconciliation, should it ever occur. In 2015, I would not forecast that to commence absent viable, acceptable, and trustworthy options being on the table for near term financing, execution, and follow-through.

Make no mistake… But, make no mistake, the city of St. Louis, many of its citizens, and to be sure, its businesses, large and small, have and will continue to receive both subtle and direct questions about conducting business with firms in a city with a globally tarnished civil rights reputation. That includes businesses with prospects of locating in St. Louis. The latter of course is difficult to quantify, but let there be no doubt, such issues have already been on the agenda in numerous boardrooms and c-suites across America, as well they should!

Not in my backyard… All this leaves me genuinely puzzled by the opposition to Reverend Larry Rice’s downtown shelter for homeless and how this issue is being addressed by a coalition of downtown businesses. Admittedly, my familiarity with this issue is far from that of an insider. I did however, observe a Rice shelter opponent being interviewed locally who, quite naively, in my judgment, note Rice’ shelters’ coded capacity vs. actual occupancy was the reason why existing downtown businesses are leaving and prospective businesses are electing to situate elsewhere. Through my lens as mitigating reputation risk, I am quite confident opposition of this type can only exacerbate St. Louis’ endeavor to recoup its reputation. There are always suitable and viable options, providing of course, decision makers are genuinely willing to look for them.

As always, reader comments are respected and encouraged.

Reputational Risks For Entire Countries…?

February 9th, 2015. Published under Reputation risk.. No Comments.

Michael D. Moberly   February 9, 2015   ‘A blog where attention span really matters’!

I have written frequently about ‘reputation risk’ in my blog, primarily at the company/corporate level, i.e., what it is, contributing factors, how companies‘ shoot themselves in their foot’, the various ways it can adversely affect companies, how to monitor it, and strategies to try to mitigate – recover from it once it materializes.

But, admittedly, I had not given much thought to sovereign countries experiencing reputational risks other than what I would experience through the lens of my own travels or the generic ‘country reports’ produced by the U.S. State Department, Office of U.S. Trade Representative, and the Central Intelligence Agency.

Both New York Times columnist David Brooks and Syndicated Columnist, Mark Shields concurred on last Friday’s PBS NewsHour, which I respectfully paraphrase here, much attention this past week, as well it should, was riveted on revulsion to the immolation of the Jordanian pilot, something which Brooks believes the U.S. should avoid an overreaction, but nevertheless prompted many to examine the Obama administration’s strategy for dealing with terrorists, particularly IS.  These are acts of terror, they constitute taunts and provocations designed to make people feel afraid and helpless and they are insults to a sense of humanity. But, Brooks cautioned not to overreact because that gives IS power’.

The U.S. (administration) should remind itself, Brooks suggests, of its mission for democracy, absent that, doing what resources, prudence, and politics will allow to contribute to the Middle East becoming more receptive to pluralism and democracy is all the more challenging with any moral high ground being at risk. Then, it is no longer about morality, rather about barbarism, which IS appears to want to be in charge of, with the West responding, Brooks argues.

The U.S. does need to do what it can however, each option embedded with complexities and trade-offs beyond most imagination. But, the things the U.S. and other allied countries are doing now, Brooks believes, appear insufficient, but should include…

  • degrading IS, which it is occurring with the bombing campaigns in Iraq and a few towns in Syria which Brooks translates as IS will forever have a refuge for wreaking havoc in Iraq and Syria.
  • the U.S. recognizing it should not involve itself in on-going battles’ over its status and its capabilities vs. their status and their capabilities, i.e., they kill one of us, the U.S. or the Jordanians will kill two of them. This constitutes a descent into barbarism.

Both Brooks and Shields hope that particular act will serve as recognition that will cannot be imported! In other words, the will to degrade and defeat IS must come from within.

But, if the U.S. becomes so offended by IS acts that it meld into a de facto ally of yesterdays’ adversary, that’s not a circumstance any country in the West should covet, but, as Brooks points out, when the U.S. appears to be switching between the two, that becomes a recipe for long-term reputational disaster!

As always, reader comments are respected and encouraged.

Intangible Assets and Counterfeit Apparel

January 13th, 2015. Published under Product counterfeiting., Reputation risk.. No Comments.

Michael D. Moberly   January 13, 2015   ‘A blog where attention span really matters’!

Here I contrast consumer’s expectation of sporting contest authenticity to growing consumer receptivity for purchasing counterfeit apparel and accessories. My views were inspired by a Frank DeFord commentary on National Public Radio and Dr. Dan Ariely’s book titled, ‘The Honest Truth About Dishonesty: How We Lie To Everyone, Especially Ourselves’ whom I have spoken.

Mr. DeFord says most sports fans care about and expect player and contest authenticity. They want contests to be genuine battles’ of player and coach tactics, wit, skills, preparation, training, and physical and mental ability and stamina, i.e., the intangible assets embedded in our sports psyche.

Growing percentages of sporting event consumers do not consistently exhibit preference for authenticity with respect to seeking-purchasing counterfeit (sports) apparel, i.e., indifference.

Dr. Dan Ariely’s research (Duke University) describes social-psychological principles that influence consumer receptivity to buying apparel and associated accessories which they know to be counterfeit prior to purchase which he designed various (human) experiments that focus on the forces that are at work, i.e.,

  • external signaling – the way we broadcast to others who we are by what we wear.
  • self-signaling – despite what we tend to think, we don’t have a clear notion of who we are but, generally hold a privileged view of our preferences and character.

The inference being, when we knowingly purchase counterfeit apparel one may act differently than those who purchase authentic apparel. For example, one’s conventional moral constraints are likely to loosen when we knowingly purchase, accessorize, and wear counterfeit goods. Once those moral constraints loosen, Ariely suggests, we become more receptive to the ‘oh, what the hell’ effect with many consumer rationalizations. For me, this begs the question, which is more powerful – influential, the…

  • negative self-signaling emanating from wearing counterfeit apparel?, or
  • positive self-signaling that comes with wearing genuine – authentic apparel?

Ariely also points to the potency and value of external signaling which can be substantially diluted as more legitimate – authentic supply chains become variously polluted with counterfeits.

Based on my own experience, the value of external signaling, as an intangible asset becomes even more diminished and/or undermined as the ‘quality’ of counterfeit apparel elevates and becomes difficult for consumers to distinguish from authentic branded/manufactured products.

Again, self-signaling and external signaling are clear examples of intangible assets whose value is connected to consumer preference via the proprietary intellectual and structural capital and trademarked logos, etc., embedded in authentic (licensed) apparel.

Presumed consumer preference for authenticity is slowing evaporating, to the point that buyer concern whether apparel is counterfeit is becomes secondary to cost, an aspect which is particularly troublesome for me. Too, I see nothing on the horizon that suggest otherwise. The cause of course will be a reflection (consequence) of changes in consumer attitudes about external signaling and self-signaling.

Having devoted a significant percentage of my professional career to safeguarding intangible assets, the increasingly efficient global product counterfeiting industry has already ‘geared up’ to accommodate consumers whose inclinations are changing. Ultimately, apparel designers and manufacturers must recognize that the positive effects derived from external and self-signaling represent the ‘intangible asset glue’ that hold company value, revenue, reputation, and brand, etc., together!

As always, reader comments are welcome and respected, and please read and submit a review of Mike’s newest book ‘Safeguarding Intangible Assets’ http://safeguarding-intangibles.com/

 

 

 

Reputation Risk Management Using OPSEC

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

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

What is OPSEC…

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

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

OPSEC’s purpose…

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

OPSEC’s relevance to reputation risk…

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

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

OPSEC principles are readily translatable to the private sector…

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

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

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

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

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

Business rationale for incorporating OPSEC in your company…

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

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

OPSEC is a practical, discreet, and intuitive process…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OPSEC in practice…

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

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

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

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

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

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

OPSEC’s key to success…

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

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

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

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

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

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

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

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

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

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

OPSEC advocate and intangible asset strategist and risk specialist…

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

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

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

OPSEC, more art than science…

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

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

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

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

OPSEC, increasing receptivity and confidence…

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

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

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

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

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

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

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