Sunday, 30 June 2013

Are You Aware of Your Differentiating Assets?

A week ago I had the pleasure of being invited to a private talk with Sir Jonathan Evans, former Director-General of MI5, on the theme of Digital Security. While many of the topics of the evening were quite pertinent to so many of the recent news events, there was one item in particular that really stood out. Evans stated that one of his missions was to try and reach out far and wide to government ministries, universities and corporations and ask:
“Are your important assets understood and secured from theft and sabotage?”
How many people and companies have properly asked themselves this question? How many can actually explain why those assets are important, and to whom? Do they differentiate you or your firm from the rest of the market? How many target the acquisition of those assets and then know once they have them? To take it even further, how many can articulate whether or not those assets that they have are effectively exploited?
These are questions that apply not only to businesses, but also to each and every one of us in our private lives as well. Let’s step through and explore a little more.


The first place to start is to look around at your assets. Assets are those things that have qualities or capabilities that can be somehow exploited to provide value. Assets can be physical (like tools, vehicles, property), financial (monetary instruments and credit), human (not only headcount, but also skills and culture), intellectual (which is not just things like patents, but also includes knowledge as well as data that has the ability to provide knowledge and indicators), and relational (these are usually things like commercial relationships or standing contracts that might allow for preferential or enhanced access and treatment not ordinarily available to others).
Most people and firms will go to some lengths to put in measures to secure physical assets. This is the reason for elaborate locks, alarm systems and guards. They may not do the best job of securing and tracking these and thus experience lossage, sometimes with severe consequences. Similar measures are often used for financial assets, which unless you are working with billions in financial instruments or are large enough to have your own Treasury Department, might be mostly outsourced to banks who are also simultaneously putting some of it to use for investment returns.
Human, intellectual, and relational assets, however, are far more elusive. Many companies only pay lip service to the value of their people. In some industries and areas people may be fungible enough that losing people has relatively low impact. However, as competition and innovation become ever faster and more knowledge dependent, losing staff becomes ever more costly. Often there are important skills and relationships that go into really making a product that are neither visible nor necessarily easily transferable to other staff. Understanding these dynamics, and putting in sensible safeguards to build staff loyalty and prevent poaching is important. For most companies, the best people are often the first to leave when conditions deteriorate.
Intellectual assets are even trickier. They are often invisible even to those within an organization. Theft through unauthorized analyzing or copying by external parties rarely leave any trace, even though the theft of such assets can have a significant impact. However, intellectual assets are even more vulnerable to two bigger scourges: tampering and neglect.
It is rather easy to tamper with intellectual assets. Whether it be tweaking source code, fiddling with configurations, or twiddling with data without some form of tracking you are tampering and may not even realize it. Most tampering may be inconsequential, but occasionally unexpected mayhem may ensue, especially if the tampering is malicious. Tampering can not only cause vital systems to fail, but when it affects data and metrics can cause incorrect conclusions to be made that lead to disastrous actions being taken. Troops can be sent the wrong way. Investment firms can dump or buy assets that cause market instability and damage the firm. Companies can dump or damage their products, services and supply chains. The FDA has even warned recently that many medical devices and hospital networks can be tampered with, flooding patients with insulin or causing pacemakers to dysfunction.
Few properly think about and assess the dangers of tampering, with even fewer putting safeguards in place to minimize the risk of it happening. This doesn't mean that one needs to develop a high level of paranoia about everything, but there is value in understanding how exposed your assets are to tampering.
Lack of awareness and neglect are potentially even more harmful. Data and assets are lost all the time, often disappearing through faulty storage, handling and backup. Many people know that NASA has lost large amounts of data from the early space programs, including the Apollo lunar missions, due to an inability to recover data stored on the 7-track reel-to-reel tapes used at the time. While that is an extreme case, I have run into many companies who have lost source code to critical systems due to general mishandling and improper source code control systems. In several instances I have personally witnessed, this has cost companies millions and severely hamstrung the business. I have also seen many cases where lost knowledge of systems, software, and even test harnesses built long ago have caused huge amounts of mayhem when they have later needed to be updated or replaced. It has been suggested that this may be part of the cause for the embarrassing mainframe outages at RBS/NatWest where people were locked out of their bank accounts for days on end.
Awareness of your assets and capabilities will help with ensuring that neglect does not become built in. It takes a great deal of effort to build in this sort of awareness, especially in large and well-established businesses. However, there are ways to gather and audit that can be put in place to first understand the size of the problem, then steadily fix it over time.


For both companies as well as individuals, both the understanding and being savvy with utilizing your assets is what differentiates you from your competitors. This is why it is important to both understand as well as protect and enhance them constantly.
I have seen many businesses outsource large chunks of their business to outside firms. For non-core and undifferentiated parts of the business this often makes sense. However, I have seen large numbers of firms also outsource core, near-core, and differentiating parts of their businesses, only leaving the executive suite and some minor elements of sales and marketing within the business. Without careful oversight this can be extremely dangerous. I have seen cases where companies have become so dependent upon one outsourcer for a key piece of the business that losing them would mean that the business would stop, perhaps catastrophically. I have also seen where the business ultimately ends up in competitive situations with the outsourcer and are incapable of competing cost effectively. Outsourcing Research and Development means that without very careful shepherding you risk becoming beholden to the outsourcer for innovative progress. Outsourcing customer service and support can potentially risk losing control over the level of quality of contact with the customer, potentially harming both reputation as well as future sales. The quality of these services are often differentiators to your customer in the marketplace.
Businesses need to think through what are their differentiators, and whether they are effectively protecting and enhancing them.

Awareness and Exploitation

It is key to be aware of your assets, not only what and where they are but also whether they are understood and secured from theft and sabotage. As they are not always obvious or visible, it often requires regular effort to ensure that they are accounted for and used effectively. Both individuals as well as businesses should regularly take stock of what they have, and determine whether and how they are used to effectively differentiate you from the rest of the market.

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