An Advanced Business Curriculum for Safeguarding and Exploiting Companies’ Intangible Assets
Michael D. Moberly – Copyright 2018
In no other arena of business economics has the statement “knowledge is power”…(attributed to Sir Francis Bacon) proven more accurate than in today’s intangible asset intensive and dependent business environments.
Here, business operations, initiatives, projects, and transactions are routinely embedded with – premised on…the creation, development, and conversion of intangible assets, particularly, forms of intellectual, relationship, and structural capital, into sources of revenue, value, and competitive advantage.
But, to do so effectively and consistently…management teams must put risk mitigation safeguards in place (for their intangible assets) to sustain control, use, ownership, and value for each of asset in play and throughout their respective materiality and functionality (life) cycle.
It is here, where rationale meets reality…
First, it’s an irreversible economic fact that 80+% of most company’s…value, sources of revenue, competitive advantage, and sustainability today lie in – emerge directly from intangible (non-physical) assets.
This means, the primary sources – tools for company value, revenue, and competitive advantage have shifted…from tangible (physical) assets, e.g., property, equipment, inventory, etc., to intangible (non-physical) assets, e.g., intellectual, relationship, and structural capital, reputation, brand, goodwill, and perhaps intellectual properties, etc.
The advanced curriculum set forth here represents a culmination of these economic facts…25+ years of professional consulting, fulltime university teaching, continuous research, and writing blogs, books, papers and interacting with colleagues globally on a broad range of matters related to intangible assets.
This is where most of my consulting engagements, media appearances, writing, and research have focused…i.e., (a.) identifying, assessing, safeguarding, and mitigating risk to intangibles, (b.) conducting intangible asset pre-post transaction due diligence, and (c.) facilitating company and transaction cultures to recognize and enhance the contributory roles and value of intangible assets’, whenever, however, and where ever they are in play.
- The priorities of my work…research, and for this curriculum work in parallel, that is, all are designed to enhance (client) asset values, revenues, competitive advantages, and mitigate risks, which, should the latter materialize, undermine – erode the former and cascade throughout a company, adversely affecting other intangibles, i.e., reputation, brand, image, and goodwill, etc.
- My priorities for this curriculum…are not solely risk based, they also include conducting timely – relevant asset assessments and pre-post transaction due diligence, etc., to ensure asset stability, value, revenues, and competitive advantages remain as sustainable and lucrative as possible.
Collectively, these priorities translate to profitable and competitive business operations, projects, transactions, and an array of other initiatives…which are increasingly reliant-dependent on management team’s ability to effectively and consistently harness, develop, convert, and exploit key intangible assets into relevant forms of value, sources of revenue, competitive advantage, and (leverageable) market positions.
But, company’s knowledge and knowhow…i.e., its embedded intellectual, structural, and relationship capital, can deliver economic and competitive advantages only if or when the holder of such assets can sustain the necessary control, use, ownership, and monitor any fluctuations (materializing risks) affecting the assets’ contributory role and value throughout their respective functionality – life cycle.
This curriculum is timely, relevant, and forward looking because…
- I am, first and foremost, an intangible asset strategist, risk specialist, practitioner, researcher, educator, author, and speaker on all things intangible.
- the proactive character and strategies expressed throughout, collectively form a practical curriculum with real-time relevance for safeguarding and mitigating risks to company’s most valuable assets, i.e., intangibles.
- the curriculum is designed to produce outcomes which can readily execute to achieve more effective, profitable, and challenge free transactions when intangible assets are in play!
Please note however, this curriculum is most operable when…there is commonality of collaboration (within-throughout a business) with respect to intangible asset intensity, dependence, value, and risk. As such, this curriculum is applicable to management teams, boards, stakeholders, and other decision makers within a business, regardless of (industry) sector, products, services, annual sales, size, or location.
Reasons why business practitioners are obliged to engage their intangible assets through a curriculum as this include…
First, it is imperative, that businesses globally, recognize that 80+% of their value, sources of revenue, and ‘building blocks’ for growth, competitive advantage, and sustainability lie in – emerge directly from intangible assets, generally in the form of intellectual, structural, and relationship capital. This is an economic fact and business reality, not merely anecdotal conjecture.
Second, safeguarding (sustaining control, use, ownership and monitoring value and materiality of) companies intangible assets and mitigating risks to each, have become fiduciary responsibilities, not merely new business jargon or optional tasks that can be dismissed or pushed into the future, i.e., I’ll do it when I have time, when the resources become available, or when I see my competitors doing it.
Third, in today’s increasingly ‘flat world’ (Thomas L. Friedman) R&D and business transactions are routinely conceived, shaped, and driven by the interconnected, often collaborative flow of data, information, and intellectual and structural capital. This makes it all-the-more important there is expertise present to ensure key intangibles are consistently recognized, developed, positioned, and utilized (mined) for the economic and competitive advantage benefits which they may be capable of delivering.
- Just as important, it is prudent to have operational clarity and company-business unit culture that not only recognizes, appreciates, supports, and enables intangible assets to develop and be exploited, but, also contributes to monitoring the assets’ value and materiality.
Fourth, it’s important to recognize the time frames – windows which companies can realize the most value, revenue, and competitive advantages from their intangible asset dominated products and services, before either may erode, or their materiality diminish, e.g.,
- an abbreviated life, value, and functionality cycles changes to (lowering) market entry barriers due to influx of global competitors.
- the ease of and rapid profits gleaned from (intangible) asset theft, infringement, and product counterfeiting operations that enter and pollute legitimate supply chains globally.
- and, in numerous instances have become the more lucrative and favored option, than originating.
Fifth, it is prudent that the development, acquisition, utilization, and exploitation of intangible assets be transparently aligned with a company’s core mission, its strategic planning, and risk mitigation, and not merely characterized as products of intellectual property.
- The reason it’s important companies recognize and distinguish conventional forms of (registered) intellectual property, i.e., patents, trademarks, copyrights, etc.
- they no longer serve as standalone deterrents, safe harbors, nor consistent indicators of asset (company) value.
- they can advance a company’s standing (economically, competitively) only so long as a company is consistently prepared to challenge – dispute the origins, ownership, and use of their IP.
- and, un-safeguarded intangibles can be relatively easy prey (vulnerable) to global networks of legacy free players engaged in increasingly sophisticated and predatorial data mining and business/competitor intelligence operations and economic espionage.
Intangible asset value, revenue, and competitive advantages can rapidly go to zero…that is,
- Intangible asset intensive – dependent companies, and the various types of business initiatives and/or transactions each may engage,
- can best be shielded from economic – competitive advantage adversaries,
- not solely through legislative mandates or administrative rules which are often unenforceable on a global scale,
- especially given the volume, aggressivity, stealthy, and persistent nature of adversaries engaged in (asset) intelligence, theft, misappropriation, and/or infringement.
For these reasons, and others, it is prudent to recognize…when intangible assets safeguards are substantially breached, or specific risks materialize, the assets contributory role and value can rapidly go to zero!
So, substantive and sustainable risk mitigation are the products of…companies’ making genuine adjustments to their strategic thinking and planning regarding intangible assets. For starters, companies’ strategies should recognize and incorporate the necessity to distinguish and safeguard their key (intangible) assets’ relative to their…
- contributory role and value, and
- vulnerability, probability, and (cascading) criticality, should certain risks actually-materialize.
After all, the line between a company being consistently profitable, competitive, and sustainable…and fighting for its financial survival, is related to its ability to have effective asset safeguards in place to aid in…
- extracting-exploiting value from all things intangible, and
- harnessing and mitigating persistent and asymmetric risks.
It would be unlikely today…that any intangible asset intensive – dependent company, the numbers of which are expanding daily, could engage in any business activity or transaction in which their intangible assets would not be prominently in play.
- For experienced (global) business practitioners, it is certainly no secret that business (transaction) environments are increasingly predatorial, globally competitive, and winner-take-all!
These simultaneous and parallel realities to business operation…elevate the probability that asset vulnerabilities (risks) will be exploited, especially, if left unchecked, or worse, unanticipated or unrecognized risks materialize deloiver a complex array of business adversities, e.g., irreversible economic – competitive advantage undermining, asset value-competitive advantage erosion, or assets being wholly and un-recoverably lost.
Therefore, prudent business decision makers are obliged to…recognize that risks to their intangible assets can materialize rapidly, frequently, simultaneously, and asymmetrically, and variously cascade throughout an enterprise to produce long lasting (permanent, irreversible) adverse economic – competitive advantage effects.
For these reasons this curriculum incorporates global business perspectives…
Throughout this rationale…for developing an advanced intangible asset safeguard curriculum, I sought not to not conceive – characterize it solely through an American (western) perspective, rather, incorporate global business perspectives and contexts which I have acquired familiarity.
The reason, there is growing global universality to intangible assets…in terms of (a.) their direct application and relevance to profitable and competitive business operation, and (b.) their identification and necessity to unravel, assess, develop, and exploit lucratively and competitively.
That said, despite the global universality (of intangible assets) seldom do they readily convert to, or be framed in one-size-fits-all contexts…in terms of safeguards, risk mitigation, valuation, and exploitation, etc. Instead, experience plainly suggests that a large percentage of intangible asset intensive – dependent companies, irrespective of country of registration, industry sector, or boundary-less market space, frequently find intangibles with distinctive applicability, inter-connectedness, and utilization potential which compel nuanced strategies to achieve the most effective use, greatest value, and strongest competitive advantages.
To address some of these nuances…I advocate applying an approach which I refer to as, ’what fits best, tends to work best’. This translates to processes, procedures, and/or practices for identifying, unraveling, assessing, developing, safeguarding, exploiting, and mitigating risks to intangible assets that fit best for a company, i.e., time, circumstance, transaction, etc., and its culture, will usually work best for a company!
Reluctance, hesitancy, and indifference…
Insofar as (intangible asset) risk mitigation and safeguards, business decision makers and management teams who remain unconvinced, dismissive, or reluctant to engage (their company’s) intangibles, it’s important to point out that the…
- value intangible assets can potentially deliver.
- market share those assets can help capture.
- and, competitive advantages those assets can create
Will likely not be realized…instead, in-all-likelihood, will succumb to the growing array of risks that lead to (asset) dilution, undermining, and otherwise impair asset value, the ability to generate sources of revenue and/or create competitive advantages.
Collectively, these unforgiving and often irreversible realities…make it all-the-more reckless to characterize intangible assets merely in contexts of theoretical rhetoric, newly fashioned business jargon, or subservient to intellectual property, that will soon fade and give way to other business buzz words and concepts.
So, while it is true (an economic fact) that the global economy is now overwhelmingly derived from intangible assets…conceptually and practically, intangibles still largely remain in their early stages, some might even say, infancy. However, there is no denying the rising relevance and contributory roles and value of intangible assets to successful business operation.
It also remains variously true…unfortunately, that intangible assets still often fall under most conventional ‘mba’ radar. That is, there remain a significant percentage of prospective business practitioners, ala c-suites, boards, and stakeholders, who, for various reasons, convey little, if any operational familiarity or interest with the intangible asset side of a (their) business.
Decision maker – practitioner hesitancy and/or indifference to engage intangible assets…relative to the necessity to safeguard the assets, mitigate the myriad of risks, or exploit the assets for profit and competitive advantage, is often attributed to…
- self-deprecating perceptions that they – their company are somehow removed from – immune to the knowledge-based (global) economy. a
- assumptions that their company neither produce nor possess high levels of intellectual, structural, relationship capital which translate to substantial value and/or produce competitive advantages.
- a sense they are already doing more with less, and thus have neither the time, inclination, resources, or expertise necessary to identify and unravel their intangible assets, notwithstanding recognizing – exploiting them as sources of revenue, value, and competitive advantage.
So, ultimately, when intangible assets are dismissed…they, along with their intellectual property (patent, trademark, copyright) first cousins, become less valuable, less competitive, and more vulnerable to compromise, misappropriation, and infringement.
The primary deliverables, of this curriculum, among other things, serve to…
1.acknowledge the necessity (fiduciary responsibility) for their safeguarding, which, not-so-incidentally, are a prudent starting point for understanding intangible assets, recognizing their contributory roles and vale requisites to successfully and profitably operating intangible asset intensive – dependent businesses, e.g.,
2. focus squarely on the economic fact that 80+% of most company’s value, sources of revenue, sustainability, and ‘building blocks’ for growth lie in – directly evolved from intangible assets.
3. treat intangible asset risk mitigation, utilization, and stewardship as business decisions and fiduciary responsibilities, rather than separate legal processes or technology management issues.
4.demonstrate strategies to reduce intangibles’ vulnerability to theft, misappropriation, and infringement, especially when either can substantially erode or undermine assets’ contributory value, sources of revenue, and competitive advantages they produce.
5.identify and mitigate gaps and disconnects between (a.) conventional intellectual property enforcements-protections, (b.) computer/IT security, (c.) competitive intelligence and data mining, and (d.) economic espionage.
6.demonstrate business decision maker’s role in aligning a company’s intangible assets with (its) core business mission and strategic planning, i.e.,
- utilize intangibles commensurate with their value, functionality, materiality cycles.
- articulating and positioning intangibles to render companies more attractive to trade and investment opportunities.
This curriculum is relevant…
• to c-suites, i.e., CFO’s, CIO’s, CRO’s, CTO’s, CMO’s, CKO’s, CSO‘s, and IP counsel…
• to the growing numbers of knowledge intensive – intangible asset driven companies, institutions, and organizations engaged in highly competitive and time – asset sensitive R&D (business) environments…
• for professional and personal development in disciplines tangential to security and risk management and in which intangible assets play increasingly significant roles, e.g., marketing, public relations, HR, sales, financial services, strategic planning, accounting, information assurance, IT security, auditing, accounting, investment banking, venture capital, insurance, due diligence, continuity/contingency planning, and organizational resilience, engineering, security, logistics, serial entrepreneurs, and intellectual property insurance…
• by job function, e.g., merger and acquisition teams, due diligence teams, business unit heads, project leaders, product developers, systems development, strategic planning, process improvement, R&D administration…
• to forward looking – thinking graduate/undergraduate students who recognize the requisites for effectively managing knowledge intensive businesses and organizations requires the acquisition of strong skills, insights, and operational familiarity with intangible assets…
Adopting – executing this intangible asset curriculum, leads to…
- elevating leadership understanding and confidence in the contributory role and value of intangible assets and how and what they serve as foundations for business development and transaction outcomes!
- enhancing decision maker’s ability to align business transactions with targeted due diligence, risk assessment, and strategies for sustaining intangible asset value, ownership, and competitiveness!
- strengthening confidence in business transaction outcomes by enabling – facilitating more secure, competitive, and profitable utilization-exploitation of the intangible assets in play!
- recognizing applicability of intangible assets to organizations that operate in highly compressed (business transaction) environments which conventional business models are less relevant!
- elevating understanding of key strategies to mitigate vulnerability – probability – criticality of intangible asset risks which can impair, erode, and/or undermine the value and competitive advantages of intangibles’ in both pre and post transaction!
- identifying techniques’ for structuring strategic alliances, partnerships, and other types of business transactions that contribute to sustaining control, use, ownership, value, and materiality of intangibles throughout the arrangement!
- identifying techniques to mitigate risk to intangibles’ which, when materialized, can entangle and/or ensnare the assets in costly and time consuming legal disputes and challenges that disrupt a company’s strategic momentum, erode asset value, and/or undermine projected synergies and competitive advantages!
- demonstrating how companies can develop and foster ‘risk intelligent – organizationally resilient’ cultures that reflects the relevance, value, and competitiveness of intangible assets.
- providing practical, business insights that extend beyond conventional (IT, IP) audits or one-size-fits-all business valuation checklists to identify a range of events, behaviors, and circumstances which, if materialized, can impair, erode, and/or undermine the value of business transactions in which intangible assets are in play.
This curriculum produces numerous enterprise wide multipliers by…
- making intangible assets routine discussion-action items in c-suite – business leadership meetings that will add credibility and confidence to (decision) outcomes.
- strengthening the interface with (a.) IT-computer security practices, (b.) knowledge management programs, and (c.) balanced scorecard initiatives.
- serving as foundations for developing business continuity/contingency (organizational resilience) planning specifically to intangible assets, i.e., designed to achieve quicker and more complete economic – competitive advantage recovery following significant business disruptions and/or materialization of significant (reputation) risks.
- kick starting strategic planning to achieve fuller accounting, safeguards, utilization, and alignment of intangible assets relative to a company’s core business and types of transactions it frequently engages.
- leveraging intangible asset dominant transactions to elevate a company’s stature-reputation among its stakeholders and competitors to attract attention beyond a company’s traditional markets and spheres of influence.
- providing more efficient and prioritized use of IP counsel and allocation of IT and information security resources.
- enabling more timely and aggressive pursuit of intellectual property rights compromises, infringement, and/or misappropriation.
- safeguarding, preserving and monitoring the value of intangible assets in ways that do not impede the creation, flow, or dissemination of the assets.
This curriculum addresses-answers important questions, i.e., how company’s can…
• put in place relevant and specific systems, policies, and practices to…
o foster an organization wide culture that recognizes – respects the value of critical (core) intangible assets relative to attaching the necessary safeguards and value – competitive advantage preservation and monitoring components.
o elevate awareness, alertness, and accountability for identifying and communicating significant risks and challenges relative to the intangible assets, IP, and proprietary competitive advantages in play in business transactions in advance of irreversible ‘economic hemorrhaging’ may occur.
• designate a specific individual with the requisite training and subject matter expertise to protect and monitor the value of intangible assets, intellectual property, and (proprietary) competitive advantages in business transactions…
Contexts and venues which this intangible asset (operational familiarity) curriculum is necessary today, include…
1. Business Continuity, Contingency, and Organizational Resilience Planning, i.e., the ability to…
• Preserve control, use, and ownership over ‘mission critical’ essential intangible assets, i.e., value, competitive advantages, sources of revenue following a catastrophic event.
• Achieve quicker and more complete economic – competitive advantage recovery.
• Avoid delays that can complicate asset (economic, competitive advantage) retrieval and recovery.
• Alert decision makers to any (illegal) exploitation of intangibles during – following a catastrophic business event.
2. Intangible Asset (IP) Disputes, Risks, Challenges
• Unravel and analyze (procedures, policies, and practices) relative to the circumstances and assets being contested, challenged, or at risk.
• Focus on reasons why IP becomes entangled in unethical or illegal conduct, misplaced trust, operational miscues, and targeting by business intelligence – economic espionage sources.
• Contain further hemorrhaging of intangible assets, intellectual properties, and economic-competitive advantage features.
• Elevate probability for intangible asset economic recovery and re-building asset value.
3. Mergers, Acquisitions, New Ventures…
• Provide superior knowledge to principals about the status and stability of about-to-be-purchased –merged intangible assets relative to a deal’s terms, objectives, projected returns, and exit strategies.
• Examine nuances of transactions (country – company circumstances) to safeguard and preserve the value, control and use (ownership) of IP and intangible assets.
• Assess-monitor vulnerabilities, probabilities, criticalities and value-materiality changes (pre – post transaction).
4. Venture Capital Investments…
• Elevate confidence in invest – don’t invest and buy – don’t buy decision.
• Unravel underlying IP and intangible asset positions to determine whether they can sustain the desired – projected financial interests, projected returns, and exit strategies.
• Alert investors – principals to material risks-vulnerabilities to the contributory role and value of key intangible assets, which, if compromised, can undermine project (transaction) value.
• Leverage known-identified risks and vulnerabilities to the intangible assets in play when negotiating deal – transaction terms.
• Align post-investment (intangible asset) safeguards and value preservation with the exit strategy, asset development cycles, and commercialization initiatives.
• Position investors to hand-off (at exit) more valuable-competitive IP and intangible assets.
5. Early Stage Companies…
• Reduce vulnerability to costly – time consuming disputes and challenges that can undermine project-R&D momentum, erode future profitability and competitive advantages.
• Close gaps-disconnects in conventional IP enforcements – protections.
• Reduce vulnerability to premature (intentional) disclosure of proprietary intangibles.
• Bring economic clarity to innovation processes by aligning value – competitive advantage safeguards and value preservation with R&D testing stages and/or commercialization plans.
6. Corporate – University Research Partnerships…
• Safeguard and preserve investments in R&D by monitoring key intangible assets produced and projected as addendums to conventional peer review – technology transfer processes.
• Unravel and monitor a project’s key (intangible asset) components to reduce vulnerability to embellishment, premature disclosure, legal entanglements, and undermining.
• Expand research risk mitigation beyond conventional IP protections to include the life-value-functionality-materiality cycle(s) of the key intangible assets.
• Align asset safeguards, value preservation, and monitoring with R&D commercialization initiatives and to counter-mitigate the inevitable business-competitor intelligence and economic espionage campaigns.
Michael D. Moberly July 16, 2018 St. Louis email@example.com ‘The Intangible Asset Blog’ (http://kpstrat.com/blog) where attention span and action really matter!