The Musings of Metis

Is Brand Restoration Insurance a Good Investment?

An interesting article was posted by FT.com last week where it discussed the advantages and disadvantages of brand restoration insurance offered by AON. The full article can be found here.

We will have read recently of a number of companies who may have benefitted from such insurance: BP and Toyota for example and the insurance is all very well for larger companies who can afford the premiums but what about smaller companies? The crux of the article lies in the following paragraph:

“Brand and reputation are the sum of the investment of management time and energy in the invention, manufacture, marketing and distribution of successful products and services. Reputation management may sustain and promote your brand in good times and crisis management may help salvage some of it when they turn bad. But bosses who neglect the building blocks of their company’s success will find in a crisis that they have no reputation to defend, no matter how much insurance or advice they have bought.”

Before companies invest large sums of money in insuring their brand and reputation, they must first have brand and reputation worth protecting. This occurs through a long term commitment and through consistency in approach and if properly managed as the company’s “most valuable asset”, the need for insurance may not be needed.

Is this insurance really needed, or has it been created as a consequence of a cut-throat, win-by- any-means marketplace? Is good housekeeping the better option? Perhaps the “insurance premium” might be better spent building the brand value inside the business with employees, partners and suppliers to secure the equity? Do you agree?

The Emerging Role of the CIPO

In a recent Webinar sponsored by IAM Magazine, "The Emerging Role of the CIPO (Chief Intellectual Property Officer)", thought leaders in IP, Ron Laurie, of Inflexion Point Strategy and Rob Sterne, of Sterne, Kessler, Goldstein & Fox concluded:

An increasing number of companies are managing IP as a strategic business asset and CIPOs will be the key executives for companies wishing to change from the perspective of IP as a cost centre to an IP as a profit centre model.

A key responsibility of CIPO’s is their relationship with the heads of strategic business units and their joint responsibility to assimilate the financial impact of IP on the unit’s value (including revenue) forecasts.

In posting comments on the Webinar on how to address these challenges on the IP Finance Blog, Neil Wilkof of Herzog, Fox and Neeman raised some critical challenges:

(i) The approach seems to have a patent-centric orientation, but what about trademarks, copyright and trade secrets?

(ii) The approach is focused on a large company environment but what about small and medium enterprises – can the structure be generalised?

(iii) IP could exist as both cost and profit centre – how do we account for both possibilities?

(iv) Where can we identify good practice that is operationally relevant and not phrased in headline terms?

In answer to these questions, Metis Partners suggest, in the first instance, all IP (extending to and including intellectual, relationship and structural capital) should be categorised, recorded and protected. This gives a solid foundation on which to identify the IP impact and engage those immediately responsible for its management in the strategic alignment process.

We agree, when big companies talk about IP assets they often really do mean patents, but patent poor SME’s can focus more on know-how, technical innovation or their investment in R&D as their “IP”. In both cases, and in answer also to question (iii) it’s crucial that companies align their IP with their business strategy – market intelligence is an asset in its own right – IP management offers competitive differentiation and agility in the market, protecting both market share and margins. There’s the common approach, and a strategy to use IP as a profit centre through exploitation in non-competing markets.

Finally, we humbly refer to our own approach, applied successfully across multiple sectors and companies, large and small whereby we break down IP from the business perspective into ten interlinked classes covering areas including IPR, Customer Relationships, Key Business Processes and Brand and Reputation. Defining the assets within in these business perspectives, makes it easier for business unit managers to a) accept, b) manage and c) develop the assets leading to increased revenue opportunities.