Intangible Assets Are Targets of Competitor/Business Intelligence and Data Mining

Michael D. Moberly   March 20, 2012

I’ve never met a business decision maker yet who doesn’t claim to have engaged in competitor (business) intelligence. Such statements are often prefaced or followed by some blend of rationalizing the relevance – importance of competitor intelligence that range from (a.) everybody does it, to (b.) you’re foolish if you don’t.

While there is scant data that goes to the accuracy of those positions, my many years of work and research in this arena leads me to being confident that a significant percentage of businesses regularly, if not consistently, engage in some form of, or their own version of competitive-business intelligence collection and analysis.

When I use the word ‘businesses’ here, I’m not referring only to the Fortune 500’s, but literally to thousands of SME’s (small, medium enterprises) and SMM’s (small, medium multinationals) as well.  And, while their collection techniques and analysis may not be quite as sophisticated, analytical, or strategically oriented as those conducted by large corporations or the countless private (independent) competitive intelligence firms operating globally, they still usually provide SME and SMM decision makers with useable insights (reasonable prognostications) about the plans, intentions, and capabilities of their competitors.  In other words, what they’re doing now, what they have already done, or, are about to do!

The product of competitve/business intelligence initiatives can, and often is, applied in either a defensive or offensive mode.  Simply stated, the product can be used to (a.) undermine, (b.) erode, (c.) stifle, and/or otherwise (d.) maneuver ahead of a competitors’ initiatives, competitive advantages, market position, or strategic planning.

In my judgment, there are two starting points for any company management team that wishes to counter or mitigate the very real and generally adverse effects of sophisticated and persistent competitor/business intelligence and/or data mining operations:

  • The first is to fully understand and identify each intangible asset and its contributory value. This begins by recognizing that intangible assets comprise 65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability.
  • The second is recognizing that competitive advantages are intangible assets, and it’s those assets which are really being targeted for analysis and understanding.

True, some companies actually mount well intended initiatives to try to counter and/or mitigate the effects of persistent competitive intelligence. On numerous occasions though, I have been the recipient of arrogantly phrased and dismissive statements from management team members who readily acknowledge the challenges of operating in today’s increasingly competitive and globally predatorial business (transaction) environment.  But, such statements are often offered in conjunction with a brazen assumption that a (their) company can innovate, market new products and services, and execute transactions faster than competitive and economic adversaries can undermine those initiatives or compromise the (intangible) assets that are in play.

The short answer to such assertions lies in three realities which every management team needs to recognize:

1.  Any business advancement and/or transaction strategy that does not factor the speed and predatorial nature of today’s extraordinarilsophisticated data mining (scanning) technologies that enable – facilitate business/competitor intelligence, information brokering, and economic (industrial) espionage operations to function faster and at earlier stages is short-sighted and will inevitably lead to:

    • elevated (unnecessary) risk
    • lower probability for transaction success, and
    • unrecoverable loss of intangible assets value.

2. Competitor/business intelligence (and data mining) operations are not directed solely to the Fortune 1000?s.  Rather they can and  consistently target (scan) every company’s innovation, strategic alliances, and transactions, etc.

3.  The key reason for the elevated risk is that steadily rising percentages of company value, sources of revenue, innovation, and competitive advantages lie in intellectual capital, proprietary know how, reputation, goodwill, image, and brand, etc., all of which are intangible assets.

Thus, in today’s increasingly high stakes global business arena, trying to stay ahead of industry – sector competitors by assuming one company can move faster than their economic – competitive advantage adversaries can learn about, undermine, and/or counter innovation, transactions, and/or commercialization capabilities represents an increasingly risky position.

Management teams’ that continue to advocate – make such assertions often adopt the position – rationale, particularly in the technology sector, that most of their ‘at risk’ or targeted assets will quickly become obsolete, i.e., their functionality, commercial value, and consumer demand is increasingly abbreviated anyway, therefore, any potential economic – competitive advantage  illicitly gleaned through competitive intelligence data mining, or economic espionage will be short lived and ultimately have minimal adverse impact on the victim company.

Such assertions run parallel, in my view, to the challenges companies face insofar as the necessity – fiduciary responsibilities to sustain control, use, ownership, and monitor the value and materiality of its intangible assets throughout their respective functionality – life – value cycle.

So, from a fiduciary responsibility perspective such rationales closely resemble permissive neglect, in my view.

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