Michael D. Moberly August 27, 2008
In the pre-Internet – knowledge economy era, company value and sources of revenue evolved, in large part, from the utilization of tangible (physical) assets (i.e., machinery, equipment, buildings, vehicles, etc.). Consequently and necessarily then, business continuity – contingency planning focused, almost exclusively, and rightfully so, on the recovery of those tangible assets and returning the company-institution to designated levels/states of operational normalcy.
Also, integrated throughout those (pre-Internet, knowledge economy era) continuity-contingency plans was the practice of ‘containment’ which essentially means having procedures and mechanisms in place to (a.) ‘contain’ (mitigate) the extent (criticality) of the damage/loss, and (b.) avoid subsequent (internal, external) ‘adverse cascading affects’ following a disastrous event.
The practice of ‘containment’ is still relevant in certain circumstances and for particular types of disasters in which tangible assets – infrastructure are at risk, and/or, for example, IT systems are targeted/attacked in which sophisticated ‘firewalls’ are erected to prevent/mitigate damage and loss of data and information.
But, beginning in the mid-to-late 1980’s though, a significant and now, most would agree, permanent shift began to evolve relative to the sources – foundations – drivers of company value, revenue, and future wealth creation. That is, tangible (physical) assets were no longer the dominant source of company value or revenue. Instead, intangible assets, i.e., intellectual property, proprietary know how, competitive advantages, brand, goodwill, image, etc., became most company’s dominant source of value and revenue. This phenomena ultimately – collectively formed what we now call the knowledge-based economy and today, 75+% of most company’s value, sources of revenue, and future wealth creation now lie in – are directly linked to intangible assets, not tangible assets!
The point to all of this is, the practice of ‘containment’ as constituting a foundation to business continuity-contingency planning, is no longer as relevant as it was previously. Instead, business continuity-contingency planning should be more focused on ‘sustaining (protecting, preserving) control, use, ownership, and value’ of a company’s intangible assets during and following a disastrous event. By focusing continuity-contingency planning more on sustaining intangible assets, it will facilitate a speedier, stronger, and more complete economic – competitive advantage – market share recovery. Not to be dismissive, and to be sure, aside from any loss of life which is paramount, in most instances, a company’s tangible – physical assets can be re-purchased, rebuilt, and/or replaced, but intangible assets, ala brand loyalty, competitive advantages, and market share, to cite just a few, are fragile and volatile and not nearly as easily or readily recoverable, resuscitated, revived, or rebuilt. Marketing studies clearly tell us that customers and clients will readily shift, if not abandon, brand loyalty in lieu of other products or services when one or the other is (temporarily) unavailable, or its quality becomes suspect following a disaster. And, to be sure, most competitors, and we must think globally now, will surely take advantage of – exploit any such opportunity!
Trying to ‘contain’ a company’s intangible assets following a disaster, absent an effective continuity-contingency plan that fully addresses intangible assets is, for the uninitiated, comparable to the title of former U.S. Senator Trent Lott’s book ‘Herding Cats’. Under those circumstances, achieving a speedy economic-competitive advantage recovery, following a disastrous event, will likely be decided more on the basis of ‘luck and good samaratanism’ versus the quality and execution of a continuity-contingency plan.
For example, for most intangible assets, once they’re compromised, including the intellectual – human capital underlying them, can literally be disseminated to economic – competitive adversaries and an army of other nefarious organizations globally. And once the asset is out of a company’s span of operational control, protection, and preservation, regardless of any conventional intellectual property protections that may have been issued, i.e., a patent, a trademark, a copyright, etc., the practice of ‘containment’ becomes almost irrelevant. So, what’s the consequence?, another company is lost to a city and its community!