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• MISSION:INTANGIBLE

Summer 2011

Reputational crises afflict large public companies with increasing frequency. Oxford Metrica calculates the probability at 85% over 5 years, a steady increase notwithstanding great pressures today on Board Directors to attend to the reputations of the corporations they oversee. These crises persist because there is a gap – really, a governance vacuum -- where board oversight ends and silo-driven corporate operations begins. Bridging that gap is a promising strategy for reputation protection.

The most obvious pressures are the risk oversight provisions of SEC 33-9089 and the Delaware Chancery court findings in Stone v. Ritter that board members may be held personally liable for losses from failing to oversee the assets that underpin reputation. Such losses now average 7% of market cap. Yet far more important incentives are the financial benefits from boosting reputational value and insuring reputational risk.

Consider the origins of a company’s reputation – operational processes (intangible assets). Successful processes that generate a favorable reputation include: creating an ethical work environment, driving innovation, assuring quality, upholding safety, promoting sustainability, and providing security against both physical and cyber threats. These actions, executed by the various corporate silos, create myriad cumulative impressions and intuitions that drive stakeholders actions…customers to be less sensitive to pricing, employees to turn over less frequently, vendors and creditors to provide better terms, equity investors to bid higher prices and regulators to be less punitive.

Boards foster conformance with successful reputation-building processes through their primary roles of selecting the chief executive, advising and consenting to corporate strategy, and risk management. As an example of the latter role, the board of Rolls-Royce gave a nod to Stone v Ritter and placed reputation front and center in their 2009 oversight priorities: preserve the resources upon which our continuing reputation, viability, and profitability are built.

Between the Board’s risk management mission and the corporate silos that execute the processes exists a sole executive – the chief executive. This individual, as many marketing professionals have suggested, embodies a company’s image and drives its reputation.

But is it reasonable to expect that he has the ability to drive a company forward while conveying the board’s desires into each of the silos that are invariably protected by their operational chief? And is it reasonable to expect him to have visibility into the operations of those silos? Consider how during almost every public airing of a reputational crisis, a ‘humbled’ CEO insisted he was “unaware” of the risky activity of a relatively remote business unit, subsidiary, or supplier. And what if the CEO is the precipitator? Consider the number of CEOs who have had to step down due to various alleged ethical improprieties.

The solution is to infuse the entire senior tier of corporate management – the executives overseeing the operational silos -- with the Board’s risk-management objectives. And the means for effecting that transfer of vision and values is dialogue. (Having a technology to provide an integrated holistic view of reputationally-relevant operations would be helpful too, but that is a product yet to be developed). Most board members have a history of corporate operations. Few operating executives have board experience. It therefore falls on the Directors to take the first step and expand the conversation on reputation risk management outside the boardroom to the senior executives who are empowered to effect the board’s wishes. And it falls upon this Society to continue providing the educational content that will motivate the respective parties, ever mindful of the gap, to bridge it.

Image credit: Photo by Peter Werner.

Listen Up

Programming calendar for the Mission Intangible Monthly Briefings

This free series of moderated conversations are fabulous educational events. We have a terrific line up with leading authorities addressing core issues on a broad range of intangible asset drivers of value. See the program list for 10H00 ET (effective 9 Sept) on the ~first Friday of each month below.

Our program moderator is the global brand strategist, Jonathan Salem Baskin.

Jonathan is a leading voice for truth and the centrality of behavior in the brand and marketing worlds. He is a columnist for Advertising Age, writes the award-winning blog Dim Bulb, speaks at events around the world, and is currently at work on his fourth book. Jonathan has 29 years of experience working with such brands as Apple, Blockbuster, Limited, and Nissan. He lives in Chicago, Illinois. You can read more about Jonathan here.

For those wishing to follow the Briefings with written materials, slides are available for download on the Society's events page in advance of each program, and we strongly encourage audience-sourced questions before and during the event. There is no cost to the slides or to participate in the broadcast, but we do ask attendees to register. Register now for the next Mission Intangible Monthly Briefing.

In addition, if you should miss an event, or if you would like to review an event, an archival set comprising the slide presentations and audio recordings are available for each of the prior events through the Society's store. Society members receive a substantial discount.  Learn More - Monthly Briefing

Briefing Friday 8 July at 12h00 ET

Program: Wine, Cheese, and Sports: Value of regional brands

In a program that has something for everyone, we ask our experts about the value of regions: assume sparkling wine not from Champagne or Yankees not from New York.

Joining in the conversation are Jodie Cohen-Tanugi, Project Manager- International Projects at the Ministry of Economy and Finance, France; and Robert Brandegee, Co-Founder at Little Earth Productions Inc., specializing in both in house boutique Fashion and licensed product for NFL, MLB, NHL as well as Elvis Presley Enterprises. Jonathan Salem Baskin, global brand strategist, speaker, and author, moderates. Learn more.

Briefing Friday 9 September at 10h00 ET

Program: The Blind Men and the Elephant: Intangible asset ecosystem (Alternative program title: You say Tomato, I say Tomahto: Speaking Intangiblese)

Intangible assets, intellectual property, intangible capital. There are as many definitions of intangibles as there are professionals working with them. At a recent intangibles conference in Washington DC, this diverse ecosystem was compared to the old poem about the blind men and the elephant, each of whom touch a different part of the animal and decide it is everything from a wall to a spear to a snake

Many intangibles professionals get stuck in a role not that different from the blind men, expert in one aspect of the whole but not that good at explaining how all the pieces fit together. On September 9, Mary Adams and Ken Jarboe will join us to discuss how to increase the power of your intangibles expertise by showing how your work fits into a larger intangibles ecosystem—to increase both your market reach and your market acceptance. Mary Adams is a principal of I-Capital Advisors and the co-author of Intangible Capital: Putting Knowledge to Work in the 21st Century Organization. Ken Jarboe is the President of the Athena Alliance, a Washington DC based economic think tank.  Jonathan Salem Baskin, global brand strategist, speaker, and author, moderates. Learn more.

Briefing Friday 14 October at 10h00 ET

Program: Monetizing the Wisdom of Crowds

Within crowds there is wisdom (really, although sometimes you have to dig). In a prior program, we saw how firms extracted wisdom from the collective behavior of crowds through information instruments such as decision markets. In our program 14 October at 10h00 ET, we learn how two firms extract value from among individuals within the crowd - not by digging, but by creating incentives that draw that value to the surface.

Featured are Cheryl Milone, CEO of Article One Partners, a firm which has made a name for itself as the premiere crowd sourcing, prior art locating company in the world with a virtual workforce of over 1 million; and Matt Johnston, Marketing Director for uTest, the world’s largest marketplace for software testing services through 40,000 quality assurance professionals located in more than 170 countries. Jonathan Salem Baskin, global brand strategist, speaker, and author, moderates. Learn more.

Briefing Friday 4 November at 10h00 ET

Program: Who Knows What?: Institutional Memory and the Role of the "Sideload"

How can modern organizations share vital information among individuals and across geographies? In a dynamic era of copious data and instant communication, how can we "sideload" institutional knowledge to deliver value and mitigate risk?

Tune in to find out. Our program features George Long, Chief Governance Counsel and Corporate Secretary, PNC Financial Services (NYSE:PNC), a $30 billion diversified financial services company and Dr. Urmi Ashar, formerly President, National Association of Corporate Directors, Three Rivers Chapter, a national 10,000-member organization created for and by directors, se'll find out. Jonathan Salem Baskin, global brand strategist, speaker, and author, moderates. Learn more.

Briefing Friday 2 December at 10h00 ET

Program: That's nothing--try it with a not-for-profit!

How do you measure value when it is not monetary? The old joke goes something like this: If a cannibal uses a fork and a knife, is that progress? More to the point, if an anti-poverty agency demonstrates that it serves more clients every month, is it doing a good job... or failing miserably?

Our program features two "reformed" experts from the world of hard financial metrics: Scott B. Leff, formerly COO and Director, Fayette Bank and Trust, and currently Associate Director, Bayer Center for Nonprofit Management at Robert Morris University; and Andreas Beck, formerly an asset manager with Federated Investors, and currently CFO of Beyond Spots and Dots, an advertising and media services company. Jonathan Salem Baskin, global brand strategist, speaker, and author, moderates. Learn more.

By the Numbers

Reputation is embedded in stock price. Reputation metrics exist to provide an independent measure. The Steel City Re Corporate Reputation Index is one such metric, and RepuStars® was created to demonstrate both the independence of the metric and its value as a leading indicator. Over a ten year period, RepuStars has outperformed its benchmark, the S&P500 composite index, by just under 1000%. Other period returns are shown below. RepuStars index values are updated weekly and posted on the Mission Intangible blog every Monday.

The Word

MISSION:INTANGIBLE, the Blog

In addition to the weekly financial metrics, the blog of the Society offers critical comments on intangible asset management, reputation, and finance matters appearing in today's headlines. This past quarter, themes addressed included innovation, executive compensation, creative accounting, supply chain hazards, risk communications, labor ethics, trust, and much more.

Companies recently reviewed include Borders, Inc., Coca Cola, Pepsi, News Corporation, St. Joe, Walmart, Baxter, Massey Energy, Avon, Amazon, Sony, Berkshire Hathaway and many more.  Learn More - Mission:Intangible

Recent IAM Magazine Articles from the Society

Intellectual Asset Management (IAM) magazine, a Globe White Page Ltd publication, is the media partner of the Society. IAM magazine publishes in each issue a contribution from the Society on a noteworthy intangible asset finance matter. And beginning with the January 2010 issue, we also added case studies on reputation management. Recent publications have covered the current status of IP markets, organizational management of IP and reputation, using insurances to manage patent risks, the intangible value of enterprise security, an analysis of the language barriers in the intellectual capital and intangible asset community, and a consensus vision for the future decade of intangibles. Learn More - IAM.

List Your Book With Us

The Society is pleased to call attention to books by our members; last year, we announced the first book from the Society titled (what else?), Mission: Intangible. Managing risk and reputation to create enterprise value.

If you are a Society Member and would like to list your book at no charge with the Society and feature it both on our website and in our store, including links to your preferred sales channel, please contact our publications Chair by clicking here. We take no commission on sales, so value this offer as yet one more intangible benefit of Society membership.

Ongoing IAFS Membership Drive

Reputation, intangible assets, intellectual capital, ESG, CRM, CSR, whatever. To the extent that anyone is talking about any of these, it is like the weather. Talk. No action. Unless they, like you, are a member of the Society. You're not, you say? Here's why you should be.

Through our community activities, educational programming, and outreach, members of the Intangible Asset Finance Society (IAFS) understand the implications and differences among reputation, intangible asset and intellectual capital and are preparing to do something about them. Here’s why: 

1. Thought Leadership on Financial Metrics. The IAFS is the only interdisciplinary Society of professionals in diverse fields such as communications, risk management, intellectual asset management, operations, and finance committed to the financial exploitation of intangible assets. Superior exploitation translates into enhanced pricing power; lower operating and credit costs; and higher net incomes and earnings multiples.

2. Risk Management and Value Preservation. A lost reputation can destroy a firm overnight. IAFS can keep you up to date with enterprise risk management strategies for ethics, innovation, quality, safety, environmental sustainability, and security, all bundled in the stakeholder friendly wrapper of "reputation" management.

3. Preferential Pricing. Society members receive preferential rates for IAFS products at our new store and discounted registration to various professional meetings. Visit the Society's current News page for conferences where you can monetize your relationship capital with IAFS.

To renew your membership through our on-line store, click here. To apply for membership, click here. 

Questions? Contact the Membership Chairman, David Gould, or the Executive Secretary, Nir Kossovsky. For contact information, click here.

Faced with such a cornucopia of value, how could you do anything but click here for a membership application form?

The IAFS Store

We have more than three years of action-packed Mission Intangible(R) Monthly Briefings available for sale and download at extraordinarily reasonable prices for Society members. Each Monthly Briefing package, comprising an audio file and slides, represents the work of leading edge practitioners in the emerging field of intangible asset financial management. We also offer books, including the Society's own publication, Mission: Intangible. Visit our store.

Linked-In IAFS Interest Group

Subtly signal to your colleagues that you know what it takes to create value in those assets that represent the bulk of a company's value today. Linked-In, the business networking website, hosts the IAFS icon that Society Members may wish to affix to their on-line bios. Like nearly 600 other forward-thinking executives, affirm your commitment to superior intangible asset financial stewardship by (click on the following phrase) joining the Linked-In group, Intangible Asset Finance Society - IAFS.

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