Intangible Asset Global Shift

February 10th, 2017. Published under Fiduciary Responsibility, Intangible asset training for management teams., Intangibles as strategic assets. No Comments.

Michael D. Moberly February, 10, 2017 A business blog where attention span really matters!

Indeed, country economies have rapidly entered and connected to an era irreversibly intertwined, at all levels and functions, in which IA’s (intangible assets) are the overwhelmingly dominant ‘players and actors’ as sources of revenue, value, competitive advantage, and sustainability, all of which I believe, we are in the early stages.

This translates as most companies and businesses, irrespective of sector, are, whether recognized or not, have shifted economically away from reliance on – applications of tangible-physical assets to being irreversibly attached to – dominated by intangible – non-physical assets. In other words, the IA era which influenced growing percentages of business – company leadership and management teams to engage their IA’s (functionally, operationally, competitively, and monetarily), some for the first time, is now indeed, for many, a permanent component to c-suite agenda’s.

That is not to suggest dependence – reliance on (conventional) tangible – physical assets has been completely eliminated to the point of absence. Instead, it means business leadership are variously (fiduciarily) obliged to recognize that business competitiveness, value, and revenue generation, etc., require IA inputs to achieve desired outcomes.

Starting in the mid-to-late 1990’s, I had the good fortune, and perhaps good sense, while faculty engaged in security-asset protection studies at Southern Illinois University, to read-study early products (chapters) of a multi-year project undertaken by The Brookings Institution titled ‘Understanding Intangible Sources of Value’. The principle investigators-authors of the project, several of whom I engaged at the time in discussion for clarity and insight, were a strong troupe of forward looking-thinking professionals. Most, to my recollection, were not exclusively schooled in economics per se, but never-the-less, experienced and respected practitioners who clearly understood the impending prominence – dependence on IA’s. For me, that Brookings’ project remains a very insightful treatise, certainly equal to the fine work on IA’s developed-produced at prominent institutions in the UK and Sweden.

To be sure, IA’s, still prompts some debate in certain quarters, debate that is less about the existence and presence of IA’s, and their contributory role and value they consistently play in business operability, innovation, and transactions, etc., and more about how to report IA’s relative to convention and profession specific standards, practices, and statutes.

Arguably, the IA ‘sea change’ for business, grew out of various consternations that conventional financial statements and balance sheets largely dominated by ‘tangible assets’ and to the exclusion or, at the very least, minimization of IA’s. Among the key arguments of IA proponents, aspects of which remain today, is that continued adherence to conventional asset reporting and accounting, (that essentially excludes IA’s) is insufficient, insofar as painting a complete and accurate portrait of a company’s financial wealth, health, potential, and competitive standing. This argument is all-the-more-relevant now, given the economic fact that substantial percentages (80+%) of most company’s value, revenue, and competitive advantage derived directly from IA’s.

Companies and Management Teams Can Run, But They Can’t Hide From Intangible Assets!

January 2nd, 2017. Published under Fiduciary Responsibility, Intangible asset strategy, Intangible asset training for management teams.. No Comments.

Michael D. Moberly   January 2, 2017   ‘A business blog where attention span really matters’!

Let’s be clear, IA’s (intangible assets) are thoroughly and irreversibly embedded in business operability as enablers and sources of value, revenue, and competitive advantage which manifest as variations-collaborations of intellectual, relationship, and/or structural capital.

One perspective I hear voiced about IA’s with some frequency in routine encounters with company-business leadership and management teams is their over-dramatization of a perception that the introduction of IA’s to company operability requires substantial company-wide adjustments as preludes to execution.  Too, their perceptions are often conveyed with a sense of enormity, i.e., execution will entail significant outlays of time, resources, and managerial, operational, and even cultural change before returns may be realized.  Such perceptions, unfortunate as they are, will likely persist as long as business leadership and management teams approach ‘change’ to convention, past practice, or company culture, ala executing on their IA’s, through the traditional lens of (a.) how long will it take, (b.) how much will it cost, or worse, (c.) assuming their company neither produces nor possesses any IA’s that produce value, enable new sources of revenue or competitive advantage.

Aside from fiduciary responsibilities conveyed in Stone v. Ritter, which directed attention to the stewardship, oversight, and management of company’s IA’s, business leaders and management teams may act as dismissively as they wish with respect to whether they engage their IA’s or not!

My experiences suggest that when company leadership exhibits hesitancy and/or reluctance to engage their IA’s, outcomes can vary.  Yes, one is, their company may eventually ‘muddle through’.  But, when they are inevitably influenced-prompted by logic and competitiveness to engage their IA’s, such actions often manifest in crisis and/or urgency contexts.

Proceeding with IA execution, absent sufficient operational familiarity with IA’s will likely surface numerous disenchanting missteps, miscues, frustration, and minimal patience which influences an initial focus on near-term outcomes.  Such circumstances, in turn, minimize confidence in going forward, i.e., IA conversion to sources of revenue, value, and competitive advantage, in strategic contexts. Quality and thorough IA operational familiarity remains the most important step off point for execution.

It is true, some company leadership and management teams believe they can still run from their IA’s.  But, many more are finding it increasingly challenging to continue to hide from (ignore, dismiss) their IA’s!  After all, it is a globally universal economic fact that 80+% of most companies value, sources of revenue, and ‘building blocks’ for future wealth creation, competitiveness, sustainability, and profitability today, lie in – derive directly from IA’s.  No hiding or running from this, unless, that is, failure is an option!

Growing numbers of us are employed in sector-specific organizations in which growing percentages of company’s which are IA intensive and dependent.  More specifically, the contributory value many of us make to our  employer – company (as employees, individuals, professionals) manifest as forms-variants of intellectual, relationship, competitive, collaborative, creative, and/or structural capital, ala IA’s.  Of course, I am not suggesting people-employees are mere collections of exploitable IA’s, indeed, we are much more than that.  In comparison, it is reasonable to consider that many of the (personal, professional) returns one receives from their education, employment, skill sets, family, leisure, etc., are genuinely intangible.  Individually – collectively each serve as potential pathways to (personal) satisfaction, fulfillment, sense of dignity, and self-worth, etc., not terribly unlike a businesses very valuable reputation, brand, image, and goodwill, etc.

In business management and organizational behavior contexts, acquiring-possessing attributes such as these and having them manifest through work (product) should come as no surprise!  Shouldn’t the same be applied to company-business operation?

Through my lens as an IA strategist, risk specialist, and trainer, for every transaction, operation, or initiative a business or company undertakes and/or engages, there are (fiduciary) responsibilities to maximize, extract, and safeguard as much value and competitive advantage as possible from the IA’s in play!  This is important because it is an undisputed, irreversible, and globally universal economic fact that, for an overwhelming percentage of companies today, 80+% of their value, sources of revenue, and pathways for sustainable growth, wealth creation, competitiveness, and reputation, lie in – draw directly from collaborations of, usually existing-internal IA’s.

In other words, growing percentages of businesses-companies, irrespective of sector, size, revenue, or maturation, are now IA intensive and dependent. This means IA’s are integral to company operability and sustainability. For example, intellectual, structural, and relationship capital as types-categories of IA’s, can manifest as operation and/or transaction specific knowhow and efficiencies, which should generally be considered proprietary. As such, IA’s are now far more than mere tools to manage other (usually tangible-physical) assets.  Instead, IA’s can be standalone or collaborative commodities with varying cycles of contributory value, functionality, materiality, and risk attached.  (Adapted by Michael D. Moberly from the work by Anne Wells Branscomb.)

Methodology For Assessing IA’s Contributory Value To Companies!

December 30th, 2016. Published under Intangible Asset Value. No Comments.

Michael D. Moberly   December 31, 2016    ‘A business blog where attention span really matters’!

The methodology I developed to assess the contributory role and value of IA’s (intangible assets) is designed to influence – guide clients toward recognizing how-ways in which IA’s underwrite their company’s-businesses value, serve as starting points for generating revenue, competitiveness, and future wealth creation.  This methodology commences by identifying-examining, among other things…

  • centers or clusters of standalone, under-utilized, under-valued, or under-performing IA’s.
  • how or whether key IA’s are (collaboratively) effectively interwoven to favorably influence a particular project, initiative, or transaction.
  • how the IA’s collectively – collaboratively contribute to a company’s overall IA intensity and dependency.
  • the compatibility of its IA’s with the company’s mission (statement), strategic planning, and its cultural – structural capital.
  • the prevalence and speed which particular risks, threats, vulnerabilities, and liabilities manifest to adversely affect any-all IA’s in play.
  • evidence of IA losses, compromises, materiality changes, and presence of current and/or horizontal risks.
  • projected returns from its IA’s and contributions to the company’s competitive position within its market-sector.
  • IA’s contributions to producing synergies, efficiencies for the company.
  • how-ways which IA’s contribute to executing (new) market entry planning.
  • evidence of IA’s contribution to enterprise wide (IA intelligent) company culture.
  • how-ways which IA’s are incorporated into business continuity/contingency (organizational resilience) planning.
  • life, value, functionality, and risk cycles of IA’s in play.

Regardless of the venue which clients-companies prefer for the delivery of IA advisory services, I consistently draw their attention to this ‘contributory value’ process.  In large part, that’s because I believe this methodology reveals far more than conventional snap-shot-in-time portraits of IA assessment.  IA’s contributory value is the asset’s assessed relationship, connection, collaboration with other IA’s within a company.  After all, today, and for the foreseeable future, only 20+/-% of the stock price of S&P companies is explainable via conventional balance sheet – financial statement (book value).

The contributory value methodology framed above is executed with the view…

  • that IA’s can exist as standalone or integrated clusters-bundles of intellectual, structural, relationship capital, and
  • how those IA’s contribute to (current, future) projects, products, services, ventures, R&D, efficiencies, materiality, competitive advantages, and/or revenue streams, including foundations (or, building blocks) for company’s future wealth creation and sustainability.

The rationale for encouraging IA assessments – valuations be conducted using this ‘contributory value’ approach is to…

  • provide business leadership with the frequently overlooked aspects about the integral role IA’s play in a company or transaction.
  • develop descriptive paths (roadmaps) for company IA values, and materiality to be readily recognized, monitored, measured, safeguarded, and ultimately preserved, i.e., banked.
  • provide business leadership with much needed and practical insight to optimize IA’s in timely (bottom line) relevance.

Intangible Assets As Sources of Value, A Global Shift For Business!

December 30th, 2016. Published under Intangible asset training for management teams., Intangible Asset Value, Intangibles as strategic assets. No Comments.

Michael D. Moberly    December 30, 2016     ‘A business blog where attention span really matters’!

In the mid-to-late 1990’s, I had the good fortune and perhaps good sense, while faculty engaged in security-asset protection studies at Southern Illinois University, to read-study early products of a multi-year project undertaken by The Brookings Institution titled ‘Understanding Intangible Sources of Value’. This project was authored by a strong troupe of subject matter experts. In my judgment, ‘Understanding Intangibles’ remains a very insightful and illuminating treatise equal to the fine work on IA’s (intangible assets) developed-produced at prominent UK and Swedish institutions.

Then, as well as now, ‘Understanding Intangibles’ prompted debate and signaled change, away from tangible – physical assets to non-physical, intangible assets as the foundations to most company’s value and sources of revenue.  In no small part, this change grew out of recognition that conventional financial statements and balance sheets, with their traditional reporting-accounting of tangible assets, to the exclusion of IA’s (intangible assets), no longer captured – painted an inclusive portrait of company’s actual financial wealth or health.  That’s because growing percentages of companies globally, were engaging and benefitting from the ‘knowledge-technology era’ (which large segments of the world were immersed at the time).  This era was largely spear-headed by the infinite depth, breadth, and range of IA’s, broadly categorized as being comprised of intellectual, structural, and relationship capital.

From the ‘knowledge-technology era’  emerged a shift to – dominance of IA’s, and perhaps, not so coincidentally, influenced further sophistication, influence, and growth of the…

  • transformation of entire industry sectors, i.e., transportation, financial services, and telecommunications, etc., from regional and national, to global entities.
  • development and integration of new technologies and companion (efficient) work processes.
  • accessibility to globally coordinated and instantaneous (air, sea, land, and rail) supply and product-service distribution chains.
  • the ability for new companies to enter markets – industry sectors and secure rapid returns and competitive advantages by the prudent investment, acquisition, development, and monetization of strategic IA’s.
  • aggressive and predatorial market-sector entry tactics practiced on a global scale by ‘legacy free’ players and countries.

Collectively, these and other simultaneously occurring phenomenon intensified a global business investment and transaction environment, in which IA’s are consistently in play.  Similarly and inevitably, certain parallel demands on companies would surface. That is, businesses seeking strategically sustainable tracts would be obliged to be continually engaged in innovation, ala IA’s, as one requisite to remaining relevant, competitive, and financially sound coupled with the necessity to develop and introduce new products, services, create efficiencies, and add-on’s through increasingly higher levels (quality) of IA inputs.

Of the numerous positive-lucrative outcomes to this phenomenon, one is that business innovation, competitiveness, value, revenue, profitability, and sustainability were being acknowledged by the forward looking-thinking business leaders as injecting and commoditizing targeted and relevant IA’s, particularly intellectual, structural, relationship, and creative capital at the right place, at the right time!

A second positive-lucrative outcome to this phenomenon was that IA’s were being universally recognized as primary conduits-foundations to business innovation, competitiveness, value-adds, and creating new sources of revenue. The realities, pressures, and intensity of global competition continued to pivot on IA’s. Spearheading companies that were already (effectively, efficiently, successfully) engaging their IA’s, as well as those businesses on strategic paths to do so, would, in all likelihood, remain operationally sustainable, competitive, and profitable.

Importantly, investments in the development and utilization of relevant and innovative IA’s would provide resonate clarity to the economic fact – business operation reality that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and future wealth creation were being fueled, almost exclusively, by business decisions rooted in enhanced awareness and appreciation for the contributory role and value of IA’s.

The prominent work of Baruch Lev (NYU, Stearn School of Economics) in the IA arena cannot be understated as being a consistent and forward looking-thinking contributor.

To be sure, his work continues to impact-influence the intangibles community which, in many respects, I believe, is encapsulated in his remark…’if intangibles are so risky, their benefits so difficult to measure and secure, and their liquidity (tradability) so low, how did they become the most valuable assets most companies possess’?

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!

Convert Intangible Assets To Sources of Revenue and Competitive Advantage

December 28th, 2016. Published under Intangible Asset Value, Strategic Planning, Value Propositions. No Comments.

Michael D. Moberly   December 28, 2016   ‘A business blog where attention span really matters!

As an IA (intangible asset) strategist, risk specialist, trainer, and speaker, it is my passion to guide companies and clients to recognize the business imperative to develop, assess, safeguard, and exploit their IA’s and convert them to sources of revenue, value, and competitive advantage!

As an IA strategist, the primary emphasis much of my work, on behalf of businesses and client’s, is its focus on ‘the revenue and competitive advantage side’. I find many companies and management teams invariably contend, some dismissively, others receptive to engaging the nuanced challenges and difficulties regarding their IA’s.

In the (IA) conversion processes, challenges may also emerge over control, use, ownership, and origination of particular IA’s. The materialization of either can impede not only the conversion process, but also, the projected and profitable execution of new initiatives or transactions when IA’s are in play, or possibly even provoke a party to, quite literally walk away. In today’s go fast, go hard, go global work (process) environments, unraveling and resolving business challenges or disputes about the utilization and value of IA’s warrant rapid and multi-faceted attention linked to strategic outlook and planning.

I am not suggesting all business challenges derive from misunderstandings or misgivings about IA’s, or, for that matter, adversely affect IA’s in play. However, accepting the universal economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and future wealth creation today, lie in – derive directly from IA’s, it’s prudent to expect there will be more business challenges related to the manner-in-which key – in play IA’s are – can be developed, acquired, valued, monetized, safeguarded, and applied in every conceivable type of transaction.

Moreover, IA development, valuation, application, and safeguards are being realized-accepted as business operation norms, not to be cordoned off as the exclusive (do not touch) domains of legal counsel and/or accounting. This makes it all-the-more essential to have, at the ready, sufficient IA operational familiarity from which deliberate, lucrative, tactical, and competitive decisions will emerge rapidly, and at will. Collectively, IA operational familiarity will mitigate most potentialities for the materialization of risk, impediments, and/or adverse (uncompetitive, non-producing) outcomes to new initiatives or transactions.

Large percentages of business relationships and transactions today develop-advance on-the-basis-of ultra-valuable and competitive advantage IA’s being in play. As such, the stakes and outcomes are consistently high. It is here that I believe, respectful and genuinely collaborative IA strategists – specialists, as myself, are positioned to…

• provide counsel – guidance for identifying, unraveling, and assessing (IA dominated) circumstances, and

• develop lucrative-competitive strategies to benefit company’s and/or client’s, mitigate risks, and identify
opportunities for further exploitation of IA’s.

To be sure, paradigms, ala the globally universal (business) shift, wherein today, 80+% of most company’s value and sources of revenue arise from non-physical – intangible assets, and substantially less so from physical – tangible assets warrants, in my judgment, respectful training, ample proof of concept, examples of successful application, and indeed, leadership. Unless or until I am invited into a business or client mass to execute each, excuses by leadership to ignore or dismiss IA’s and their contributory role and value that’s rooted solely in convention or past practice, is indeed, short-sighted.

My sense of being professional, i.e., a consultant, risk specialist, trainer, and speaker regarding matters related to IA’s is…

• not founded solely on a conventional business model of maximizing numbers of engagements and calculating-differentiating costs and revenue.

• to serve as a learned venue to respectfully articulate and elevate businesses operational familiarity with their IA’s, which is being achieved through my 720+ long form posts at the ‘Business IP and Intangible Asset Blog’ I created in 2006, and the 70+ national and international presentations, seminars, and invited (small group) discussions.

• to avoid commencing any engagement by undemocratically assuming my experience, intellect, and work products exceeds or subordinates comparable qualities held by companies, firms, management teams, and clients.

• to emphasize – demonstrate IA development must strategically mesh with revenue generation, value creation, and competitive enhancement.

• to bring relevance and clarity to IA operability that is embedded with respectful guidance for applying IA’s strategically, profitably, and mitigate, as much as possible, the inevitable risks.

Intangible Asset Training Delivers Multipliers To Companies and Management Teams

November 12th, 2016. Published under Fiduciary Responsibility, Intangible asset training for management teams., Managing intangible assets. No Comments.

Michael D. Moberly November 12, 2016 ‘A blog where intangible assets meet business’!

1. Align IA development and use with a company’s strategic planning and core (business) mission and product/service lines.

2. Foster a company-wide IA culture that facilitates asset monitoring and more timely awareness of misappropriation, competitive advantage undermining, and asset value dilution.

3. Forge stronger relationships with legal counsel, auditors, and accountants on all matters related to intangibles and non-financials.

4. Strengthen convergence with knowledge management programs and balanced scorecard initiatives

5. Kick start company-wide strategic planning to achieve fuller utilization, accounting, and value from IA’s.

6. More efficient and effective use of legal counsel and IT resources…

7. Facilitate alignment of financial – risk management planning with asset monitoring, safeguards, and monitoring core strategic objectives that contribute to assessing performance of IA’s.

8. Bring consistency to business accounting and auditing by describing IA’s in revenue conversion – competitive advantage contexts.

9. Provide foundation for developing business continuity and contingency (organizational resilience) planning specific to IA’s to achieve quicker and more complete economic recovery following catastrophic events.

10. Elevate company’s stature and goodwill (reputation) among its customers, suppliers, and investors and gain attention of audiences well beyond a company’s traditional market space.

11. Identify ‘leverage points’ in negotiating IA insurance coverage and premiums…

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.

Effectively Addressing Insider Threat To Proprietary Information, A Strategy!

August 28th, 2016. Published under Insider Theft of IP and Intangible Assets. No Comments.

Michael D. Moberly August 28, 2016 ‘A blog where intangible assets and IP meet business’!

Among information asset protection/safeguard specialists, there is an anecdotally rooted adage referred to as the ’20-60-20 rule’ which caught my attention 25+ years ago and still carries a timely relevance along with absolute (fiduciary) obligation to address it as effectively as possible.

Admittedly, there is nothing particularly scientific or legally defensible about the 20-60-20 rule, other than to note it evolved from experienced mixtures of anecdotal guesstimates that lead to plausible characterization of the persistent challenges posed by ‘insiders’ in a continuum fashion…

Group 1 – 20% of the people we work with…are inherently honest and trustworthy and possess consistently high levels of (personal, professional) integrity. It’s unlikely these individuals would be receptive to any circumstance that could influence them to engage in unethical or dishonest behaviors, acts, or violations of a company’s security or information asset safeguard policies or practices.

Research administrators, TTO’s, and security practitioners would have little or no concern regarding these individuals engaging in misappropriation – theft of proprietary information, trade secrets, or monetized elements of intellectual property (IP) and other forms of intangible assets (IA’s).

Group 2 – 20% of the people we work with…function at the opposite end of the honesty – integrity continuum. For these individual’s, their thin-shallow veneer of honesty-integrity is very permeable to reveal inherent dishonesty and/or unethical persona and little sense of personal loyalty to their employer or a project in terms of information assets. Even more so perhaps with respect to complying with company policies or government laws/regulations related to obligations to safeguard proprietary information and trade secrets embedded in valuable IP and other forms of intangible assets (IA’s).

Too, individuals functioning-operating at the adverse end of the honesty-integrity continuum will like be more receptive to, if not already possess propensities – proclivities when certain opportunities avail or influencers are present, to engage in unethical – illegal acts, i.e., theft or compromise of valuable, mission critical, and competitive advantage information (intangible) assets.

Group 3 – then there’s the 60% of the people we work with…who are essentially ’in the middle’, that is, they do not (overtly) demonstrate any particular receptivity or proclivity to engage in dishonest, unethical, or illegal acts or behaviors that would purposefully put their employer’s proprietary information, trade secrets, or IP at risk or in jeopardy.

There is a frustrating nuance to individuals (subjectively) designated to lie in Group 3 however, which is anecdotal evidence suggests individuals functioning at the adverse fringe, i.e., closest to Group 2 on the continuum, recognize and likely acknowledge opportunities, rationales, and persistent overtures from external entities in the form of solicitation-elicitation to misappropriate or publicly leak their employers’ proprietary information assets.

This reality makes the 20-60-20 notion particularly worrisome…to information asset safeguard-protection specialists on many levels. One of which is that individuals may possess proclivities – propensities unknown – undetectable at the time of hire using conventional pre-employment screening and interview processes. In current parlance, they may be unwitting sleeper’s whose adverse proclivities may be awakened and/or influenced at some future point relative to how they interpret-assess…

• their employer’s reactions and sanctions imposed on colleagues who violated company information asset
safeguard practices and policies,’
• the degree, level, and consistency of employer monitoring of proprietary information asset safeguard
• the presence-persistence of external advances to engage in proprietary information compromise and the
potential lucrative outcomes for doing so.

I attribute one, rather practical, approach to addressing insider challenges to the always forward looking Esther Dyson, when she remarked, ’it’s not about counting the number of copies anymore, rather, it’s about developing relationships with employees and users’ (who have – can access the proprietary – competitive advantage information that necessitates safeguarding).

There is practical reality embedded in Ms. Dyson’s remark, at least in terms of ‘people we work with’ and their propensity – receptivity, at some point in their career, not just their first week of employment, but, after undergoing various ‘snap-shots-in-time’ pre-employment screenings, to engage in adverse acts! Too, there certainly is relevance to the hyper-competitive, aggressive, predatorial, and winner-take-all global business transaction environment. In that regard,

While most of my operational familiarity with ‘insiders’ is rooted in personal experiences, I respectfully attribute some of my current thinking and approaches for addressing this persistent challenge to the excellent work-research consistently produced by PERSEREC (Personnel Security Research Center, DoD) and Carnegie Mellon’s CERT unit.

Company Culture Due Diligence As Prelude To Finalizing Business Transaction

August 24th, 2016. Published under Due Diligence and Risk Assessments, Intangible asset focused company culture., Mergers and Acquisitions. No Comments.

Michael D. Moberly August 24, 2016 ‘A blog intersecting intangible assets and business’.

A company initiating, or even contemplating, a M&A (merger or acquisition) would be well served today if a ‘company culture assessment’ was included in their due diligence strategy!

The primary reason of course, as consistently conveyed at this blog, 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 directly evolve from IA’s (intangible assets), which company culture is a prime example. It’s correct to assume then, that a substantial factor in the rationale of the initiator evolves around acquiring and then merging specific IA’s which the target firm presumably has already developed, and exist in some specialized form of intellectual, structural, and/or relationship capital.

From an operational perspective, intellectual and structural capital constitutes the knowhow and processes which underlie – are embedded in the target company’s means for generating revenue, competitive advantages, and creating efficiencies, etc. So, in M&A transactions, acquiring full and unimpeded control and use of these contributory IA’s represents the critical step toward realizing-maximizing the projected (anticipated, desired) outcomes.

To the uninitiated, a target company’s operational culture may be overlooked, dismissed, or even deemed irrelevant to a transactions’ projected outcome. It’s unwise for due diligence teams to assume, that should a proposed M&A transaction or strategic alliance, etc., be executed, the relevant-targeted IA’s will be wholly transferable or remain fully operable. Hence the prudence for transaction – due diligent management teams to assess – determine whether the IA’s being sought can remain intact. In short, can embedded IA’s originating-developed in one company be transferrable and operationally replicable in another company.

More specifically, transaction management – due diligence teams would be well advised to objectively study-assess the targeted company’s operating culture in personnel and temperament contexts. An objective is to determine if those (company) culture factors can readily (and rapidly) integrate and bond with the initiating company, its employees, and stakeholders? Grant McCracken, a well-known and experienced personality in this arena suggests company cultures are internal versions of a company’s brand. That’s largely attributable to a broader recognition of the reality that company culture generally encompasses its mission, vision, and values.

Understanding in advance, how company culture can impact a business, e.g., “culture is a company’s last mile” (McCracken). If believed, and I do, it makes a very compelling case that a company’s culture is marketing’s proverbial – millennial ‘silver bullet’. Certainly, no disagreement here!

But, before embarking on a company culture assessment (Margaret Mehta) the target company should be distinguished on several cultural dimensions. In a perfect world, there should be no resistance to company culture assessment as an integral component to most any transaction’s due diligence. The key is that due diligence teams are operationally familiar with the characteristics and features of company’s culture as unique convergence of IA’s, i.e., intellectual, structural, and relationship capital.

The deep and necessary insight that a company culture assessment (due diligence) brings to transaction management and oversight, in essence, prescribes a strategic path how (culture) performance will be replicated. But, transaction management (due diligence) teams should also recognize that culture performance is also a measurement mechanism that drives employee behavior.

So, if there are particular aspects of a target company’s culture that appear undesirable, non-transferrable, or un-yielding to adaptation-replication and therefore impede a transactions projected milestones for success, this should be clarified. Obviously, I am a strong advocate of conducting company culture due diligence for most any business transaction while recognizing standing alone, culture alignment may not be the singular guarantee to a successful and profitable transaction outcome.

.This post was inspired and adapted by Michael D. Moberly from the fine work authored by Monica Mehta in a February 2009 piece in Profit and Profit Online.