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Winter 2011

We are closing the visibility gap! ! The sources of value in the knowledge economy are developing a voice that is increasingly being recognized outside the rarefied world of intangible assets. That voice is called “reputation.”

As the Three Rivers Chapter of the National Association of Corporate Directors explained earlier this month in a recap of their conference, “Importance of Reputational Risk,” “…reputation is an impression held by stakeholders that creates a future expectation and a present behavior. Those impressions arise from how well a company fosters an ethical environment, promotes innovation, conforms to standards of quality and meets expectations for safety, security and sustainability.”

In the Winter 2011 Newsletter:

In the Flow: Why “reputation” may be the key to mainstreaming intangible assets

Help Wanted: LESI asks for input on experience with valuation

Friends Indeed: AccountAbility and the National Association of Corporate Directors (TRC) join our growing list of corresponding organizations

Listen Up: Programming calendar for the Mission Intangible Monthly Briefings

The Word: Intellectual Asset Management magazine features regular contributions from members of the Society

Membership: The Society maintains a very large tent

In the Flow

Why “reputation” may be they key to mainstreaming intangible assets

This is a newsletter – not a manifesto. So cutting to the chase, “reputation” may be the key because it is being used in increasing frequency by the full range of corporate stakeholders. First, in the context of risk, when the political costs of the BP environmental spill threaten to overwhelm the company, Chairman Svanberg announced that "this has now become a matter of reputation." Other major names where crises and reputation appeared in tandem this past year include Massey Energy, Toyota, Goldman Sachs and Rolls-Royce.

Second, in the context of damages, Johnson and Johnson shareholders are suing the iconic firm because, they allege, lax corporate governance  allowed business operations to spin out of control (serial ethics, safety, and quality breaches) and have consequently harmed the company’s “hard earned reputation.” [Society member Cathy Reese who heads the Intangible Asset Corporate Governance Committee foreshadowed the J&J case in the June 2010 Mission Intangible Monthly Briefing with Risk Committee Chair Matthew Hogg.]

Third, in the context of value creation, the Steel City Re Corporate Reputation Index rankings have helped identify companies whose reputation-linked value appreciation outperformed the general market. Two composite equity indices, the RepuStars(TM) Composite Indices, have now returned over the past 9 years cumulatively levels that are about 10-times greater than the S&P500 composite index.

Fourth, the persistent sheer value of intangible assets relative to tangible book value makes it impossible to ignore, even if accountants have not figured out how to establish their value in the conventional sense. The markets assign value daily. Following the rule of thumb of market cap minus tangible book value, intangible assets account for between 70 and 80% of the median corporate value. There are few other management investments where excellence can deliver such impactful benefits.

Fifth and last, the ultimate proof of having arrived at mainstream thought is that the them of "reputation protection" has been incorporated into a Hollywood blockbuster, the People's Choice Awards winner, The Social Network, the movie that "documents" the origins of Facebook.

Help Wanted

LESI asks for input on experience with valuation

The Licensing Executives Society International IP Valuation Standards Committee is currently surveying IP valuation methodologies used in actual transactions involving intellectual property and intangible assets. The Committee is doing this on a global basis.

The purpose is not to establish accounting standards or legal standards; rather, the purpose is to understand how people involved in actual arm’s length transactions utilize valuation methodologies to establish values for their IP -- whether it is a license agreement, a sale, a joint venture or other transactions.

The results of the survey will be used as part of a presentation for the 2012 Global Technology Impact Forum. This will be a two day meeting with a concurrent “technology fair” in Geneva, Switzerland, January 24-25, 2012. The meeting will be hosted by LESI and attended by the Executive Director / Boards of relevant NGO’s or professional associations with a mission or agenda that includes “the business of intellectual property globally”.

Society members are invited to view GTI web-site for further details. More important, Society members are invited to fill out a linked questionnaire and matrix. The LESI Committee assures us that feedback on the survey from IAFS officers and members would be highly valuable. Download the questionnaire here. No literature found.

Please send the results back to LESI Committee co-chairman, Dwight Olson: dcolson@ix.netcom.com.

Friends Indeed

Two new societies join our growing list of corresponding organizations.

The Society is pleased to welcome as new corresponding organizations: AccountAbility and the National Association of Corporate Directors (TRC).

AccountAbility is a leading international organisation providing innovative solutions to the most critical challenges in corporate responsibility and sustainable development. Since 1995 we have been helping corporations, non-profits and governments embed ethical, environmental, social, and governance accountability into their organisational DNA. Its unique value proposition brings together leading-edge research, widely-recognised standards and strategic advisory services to deliver practical solutions for its clients.

NACD's mission is to advance exemplary board leadership -for directors, by directors. We deliver the knowledge and insight that board members need to confidently navigate complex business challenges and enhance shareowner value. Today, more than 10,000 directors and key executives rely on us to amplify the collective voice in setting a substantive policy agenda.

Listen Up

Programming calendar for the Mission Intangible Monthly Briefings

This 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: executive leadership, IP markets, and more. See the program list for the first Friday of each month below.

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 7 January at 12h00 EST

Program: Valuing intangibles: Two views direct from the front lines

Like weather, everyone talks about intangibles but no one does anything about them. Unless they are central to one’s profession.

In our program, Valuing intangibles: Two views direct from the front lines, we’ll review the dispatches. Our panelists are James Catty, Chairman, International Association of Consultants, Valuators and Analysts; and Gabe Fried, CEO, Streambank LLC., an asset-backed provider of liquidity. Mary Adams of I-Capital Advisors moderates. Learn more.

Briefing Friday 4 February at 12h00 EST

Program: Extreme IP Monetization: Are liquidity and liquidation new thermodynamic states?

Over the past few months, we’ve looked at IP monetization from the perspectives of market makers, economists, and valuation experts. In our next program, two more non-lawyer business operators share their view on options when IP monetization gets tough – really tough.

Joining in the conversation are Craig J. Hoffman of the Beige Group, a financial advisory firm, and formerly SVP of NexCen Brands, Inc. (NASDAQ:NEXC.PK); and Alexander Poltorak, Chairman and the CEO of General Patent Corporation (GPC), the oldest patent enforcement company in the world, and formerly CEO of Rapitech Systems, Inc., a computer technology company (NDAQ: RPSY). Mary Adams of I-Capital Advisors moderates. Learn more.

Briefing Friday 4 March at 12h00 EST

Program: Ethics? Hum a few bars to jog my memory

Oscar Wilde famously said, “I can resist everything but temptation.” Line executives face ethical challenges that corporate boards treat as no-brainers; corporate directors face ethical challenges that line executives and other stakeholders including regulators treat as no brainers. Why the intellectual divide between operations and governance, why are stakeholders so often disappointed, and what practical steps can leaders take to foster ethical conformance?

Joining in the conversation are Urmi Ashar, MD, MBA, President & CEO of the Three Rivers Chapter of the National Association of Corporate Directors; and Michael Greenberg, Ph.D, JD, Director, RAND Center for Corporate Ethics and Governance. Mary Adams of I-Capital Advisors moderates. Learn more.

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 a quantitative look at what is reputationally impactful and what is just noise, ethical investing, C-suite reputations, sustainability and credit, and much more.

Companies recently reviewed include Rolls-Royce (LON:RR), BP (NYSE:BP), SAP AG (NYSE:SAP), Oracle (NASD:ORCL), APPLE Inc. (NASD:AAPL), Unilever (NYSE:UL), HJ Heinz (NYSE:HNZ), Kellog (NYSE:K), TreeHouse Foods (NYSE:THS), GlaxoSmithKline (NYSE:GSK) Office Depot (NYSE:OD), and Hewlett-Packard (NYSE:HPQ) 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 201o issue, we also added case studies on reputation management. Recent publications have covered the intangible value of enterprise security, an analysis of the language barriers in the intellectual capital and intangible asset community, a consensus vision for the future decade of intangibles, zombie trademarks, patent assertion licensing and corporate defenses, the economic value of gender diversity, and intangible asset trends in China. Recent case studies on reputation have covered Zales, Toyota, Goldman Sachs, BP (cover story), the airline industry, and a one year retrospective of prior cases.

This year, we've also started calling 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.  Learn More - IAM

Ongoing IAFS Membership Drive

Reputation, intangible assets, intellectual capital, 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. The IAFS is the only interdisciplinary Society of professionals committed to the financial exploitation of intangible assets. That translates into enhanced pricing power; lower operating and credit costs; and higher net incomes and earnings multiples.

2. Risk Management. A lost reputation can destroy a firm overnight. IAFS can keep you up to date with risk management strategies for ethics, innovation, quality, safety, environmental sustainability, and security.

3. Preferential Pricing. Society members receive preferential rates for IAFS products at our new store and discounted registration to various professional meetings.

To renew your membership through our new 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

The Society's store offers archived recordings of each Mission:Intangible Monthly Briefing since late 2008. Each package, comprising an audio file and slides, represents the work of leading edge practitioners in the emerging field of intangible asset financial management. Society members receive a substantial discount on each download. 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 300 other forward-thinking executives, affirm your commitment to superior intangible asset financial stewardship by joining the Linked-In group, Intangible Asset Finance Society - IAFS.

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