Michael D. Moberly July 6 2009
Is it possible, in today’s hyper-competitive and globally predatorial business environment for intangible asset intensive and dependant company’s to innovate, market new products and services, and execute transactions faster than competitors’ and adversary’s can undermine those initiatives or compromise those assets?
The short answer is yes. But, there are three important realities for management teams to recognize…
1. Any business advancement and/or transaction strategy that does not factor the speed and predatorial nature of today’s extraordinarily sophisticated data mining (scanning) technologies that enable business/competitor intelligence, information brokering, and economic (industrial) espionage operations, is short-sighted and will lead to (a.) elevated (unecessary) risk, (b.) lower probability for profitability and success, and (c.) unrecoverable loss of intangible assets.
2. Competitor/business intelligence operations are not directed soley to the Fortune 1000’s, rather they can and consistently do target (scan) every company, alliance, and transactions’ intangible assets whether its a large, small, or start-up firm.
3. The key reason for the elevated risk to information-based assets is that today 65+% of most company’s value, sources of revenue, innovation, and competitive advantages lie in intangible, not tangible, assets, e.g., proprietary know how, intellectual property, goodwill, image, brand, etc.
Thus, in today’s increasingly high stakes (one shot) global business arena, trying to stay ahead of the competition by assuming a company can move faster than its competitor’s and adversary’s can learn about, exploit, and undermine their (a.) innovation plans, (b.) transaction intentions, and (c.) commercialization capabilities, is increasingly risky.
Management teams’ that advocate such strategies often put forth two, potentially plausible, rationales:
1. It constitues a very realistic perspective about company’s inability today to effectively sustain control, use, ownership, and value of its intangible assets and intellectual property for indeterminate periods.
2. Any at risk assets will likely become obsolete, i.e., their usefulness, commerical value, and consumer demand will rapidly fade, therefore, any potential economic – competitive advantages illicitly gleaned by competitors – adversaries will be minimal.
From a fiduciary responsibility perspective however, either rationale more closely resembles ‘permissive neglect’ than realism or asset obsolescence!