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IP Strategy for Business IP Strategy for Business Document Transcript

  • TRAINING COURSE FOR ASIA AND THE PACIFIC REGION ON DOING BUSINESS WITH INTELLECTUAL PROPERTY (IP) Singapore October 13 – 21, 2002 Developing an IP Strategy and Integrating IP in Your Business Plans Session 8 Wednesday, October 15, 2003 9.00 – 10.30 Subash K Bijlani President Magnus Engineers Pvt Ltd Chandigarh, India
  • Developing an IP Strategy and Integrating IP in Your Business Plans Subash K Bijlani Introduction Global markets are becoming increasingly aggressive. The nature of competitive advantage is undergoing a major change. We define it differently today then we did two decades back. The emphasis has steadily moved from physical or tangible assets to intangible knowledge assets. Physical assets were traditionally responsible for the bulk of the value of a company, and gave competitive dominance in the market place, Of late, as a result of the information technologies revolution and global competitive pressures, intangible assets have become more valuable. Nearly 76 percent of the Fortune 100’s total market capitalization is represented by intangible assets, such as patents, copyrights, and trademarks. Over ten years ago Philip Morris in the US bought out Kraft for $12.9 billion. This was considered a fair price for this acquisition. But the tangible assets in this purchase were only $1.3 billion. 13/129, just 10 percent! The “other” assets were valued at $11.6 billion. We can variously call these intangible assets brand equity, goodwill or the creativity of an organisation’s people (in this case Kraft). This is a tough concept for many managers who devote most of their efforts in managing 13/129th of their businesses. Innovative ideas, rather than large warehouses and factories, are the main source of income for a large and growing proportion of enterprises worldwide. Even in sectors where traditional production techniques remain dominant, continuous innovation and endless creativity are becoming the keys to greater competitiveness in fiercely competitive markets, be it domestic or international. Intangible assets are therefore taking center. Intellectual Property has become a powerful tool to create wealth through knowledge. 1
  • Ten years ago, the Chairman of 3M said that 25% of its sales would be based on 3M’s innovation carried out during the last 5 years. He increased the challenge by changing this from 25 to 30 % and 5 years to 4 years. Technical staff at 3M are encouraged to spend 15% of their time working on ideas they hope will one day become new products for their company. They not only get time to pursue these ideas, they can also get money to buy equipment and even hire extra help Developing an IP Strategy and integrating IP in the companies business plans is an area of major concern. The shift from the industrial paradigm to knowledge paradigm has very far reaching consequences for businesses. It is redefining competition and has far reaching consequences (Annexure 1) for developing business strategy. The IP Advantage A company’s competitors try to identify and imitate the competencies that gives it an advantage. They may indeed surpass the company's superior performance. Other things being equal, the more rapidly competitors imitate a company's distinctive competencies, the less durable its competitive advantage will be and the more important it is that the company continually improve its competencies to stay one step ahead of the imitators The important question is: how quickly can rivals imitate a company's distinctive competencies? The easiest ‘competencies’ for prospective rivals to imitate tend to be those based on possession of tangible resources, such as buildings, plant, and equipment. They are visible to competitors and can often be purchased on the open market. Although Ford gained a competitive advantage over General Motors in the 1920s by being the first to adopt an assembly line manufacturing technology to produce automobiles, General Motors quickly imitated that innovation, surpassing Ford's distinctive competence in the process. A similar process has occured in the auto industry as companies have successfully imitated Toyota's production system, which gave it the competitive advantage during the 1970s and 1980s. Intangible resources, on the other hand, are more difficult to imitate. One crucial way of doing so is by legally protecting intangible assets and also acquiring and maintaining IP rights in particular for the following categories of intangible assets: 2
  • Main instruments for IP Protection Sl. Instrument Requirement Term of Grant Protection Against No. Manufacture, use or Novel, useful and 20 years from Patent for sale of claimed 1 inventive industrial date of invention features of product or method application process Industrially applicable 3 – 10 years Patent for utility 2 devices with novel shape depending on Object similarity model or construction country Between 1 and Patent for Original, ornamental 25 years 3 industrial design (non-functional) depending on Design similarity design reproducible industrially country and applicant’s desire New plant variety Patent for plant Similar to patent 4 produced asexually or Reproduction of plant varieties for invention through seeds Original literary, artistic or Life of author software work; registration plus 50 years, Copying the form of 5 Copyright and notice required if except for expression publicly distributed designs Original circuit design Reproduction and/or Protection of embedded in 10 years from importation of 6 mask works photographic mask or registration protected circuit equivalent layout Indefinite, Commercial use and Confusing 7 Trademark provided it is registration resemblance used Substantial know-how that Indefinite, as 8 Trade Secret is novel and kept long as kept Derived work confidential secret Another way to classify intellectual property is into four distinct types, each representing a different form of information translated into value. 3
  • I Recognition II Desirability Trademarks, logos for public Patents, secrets to let companies deliver identification. They carry the improved performance, new features, informational value of recognition. extended product life that boost their product’s competitiveness and desirability. III Form IV Emotional Connection Copyrights and related protection for Brands. They stretch margins to the extent literary and visual creations. They that they make an emotional connection add value by lending an inherent with customers. desirability to the form of a communication. This is particularly true of brand names as they symbolize a company's reputation. In the heavy earthmoving equipment industry the Caterpillar brand name is synonymous with high quality and superior after-sales service and support. St. Michael's brand name used by Marks & Spencer, quality and reasonably priced clothing. Customers display a preference for the products of such companies because the brand name is an important guarantee of high quality. Although competitors might like to imitate well-established brand names, IP protection laws prohibits them from doing so. Enterprise IP can also be used to create, strengthen, and augment brands and brand strategies. Consider, for example, rivals Coca-Cola and Pepsi. Coke topped Interbrand's list of the top 100 brands in 2001, with a brand value of 4
  • nearly $69 billion. How did Pepsi fare in the same listing? Its brand value was only $6.5 billion, less than one-tenth of Coke's. This enormous difference is a function of committed customers and brings real, tangible value. In fact, superior brand value preserves margins, reduces costs, assures superior deal flow, attracts better job applicants, and improves relationships with merchants and distributors. Marketing and technological know-how are also important intangible resources. Unlike brand names, however, company-specific marketing and technological know- how are relatively easy to imitate. In the case of marketing know-how, the movement of skilled marketing personnel between companies may facilitate the general dissemination of know-how. In the 1970s Ford was acknowledged as the best marketer among the big three US. auto companies. In 1979 it lost a lot of its marketing know-how to Chrysler when its most successful marketer, Lee Iacocca, joined Chrysler. Iacocca subsequently hired many of Ford's top marketing people to work with him at Chrysler. Successful marketing strategies are also easy to imitate because they are visible to competitors. Thus, Coca-Cola quickly imitated Diet Pepsi with its Diet Coke. Compaq Computer imitated Dell Computer's marketing strategy of selling personal computers through mail order. With regard to technological know-how the patent system makes technological know-how relatively immune to imitation. Patents give the inventor of a new product a 20-year exclusive production agreement. Pharmaceutical company Merck patented a cholesterol-reducing drug that is marketed under the brand name Mevacor. Approved by the Food and Drug Ad- ministration (FDA) in August 1987, Mevacor generated sales of $430 million in 1988 and annual sales of more than $1 billion in 1992. Whereas it is relatively easy to use the patent system to protect a chemical compound, this may not true of many other inventions. In electrical and computer engineering, for example, it is often possible to "invent around" patents. One study found that 60 percent of patented innovations were successfully invented around in four years. Clearly, competencies based on technological know-how can be short- lived. Resources 5
  • Value Distinctive Intellectual Property Rights Creation Competencies Capabilities A Model of IP Advantage From the point of view of providing a strategic competitive advantage, possession of IP also provides leverage in funds acquisition and licensing. IP Strategy The durability of a company's competitive advantage through a well thought out IP strategy is clearly important. The more rapidly competitors imitate a company's distinctive competencies, the less durable its competitive advantage will be. It is important that the company continually improve its competencies to stay one step ahead of the imitators. The strategic utilization of IP assets substantially enhances a company’s competitiveness. IP assets have to be acquired and maintained, audited and accounted for, valued, monitored closely, and managed to extract their full value. One crucial way of doing so is by legally protecting intangible assets and, where they meet the criteria for intellectual property protection, acquiring and maintaining IP rights. As the generation of returns from IP rights is a capital intensive and a long-term activity and given that decisions affecting IP are usually irreversible, the management of IP must be considered a strategic management activity. It should provide answers to questions such as: How do IPRs serve to gain and sustain competitive advantage? How do IPRs affect the structure of an industry? Which options do IPRs offer in the competition with other industry players? How do IPRs relate to incumbency advantage and entry barriers? How can IPRs help to gain vertical power along the value chain? And Which organizational design is necessary to accommodate an “IP Strategy”? 6
  • In approaching these concerns, the purpose of developing IP strategies, namely, to the business objectives, must be kept in mind. It is essential that we integrate our IP strategy with the company’s overall business and marketing plans. Determining the best strategies to protect will depends on particular business. An effective protection strategy may involve a range of IP protection options. Using a range of protective measures gives ‘layers of protection’ and strengthens market position. For instance: We may take out a patent on our product, register its design and develop a branding strategy based on a registered trade mark which will position the product so it retains market strength when the patent expires, or if it is decided the patent is no longer worth maintaining. We may decide that a patent is not worthwhile and that maintaining secrecy and using confidentiality agreements will provide enough time in which to develop brand recognition and loyalty or develop new products and services. Or we may focus on a trade mark to develop your position in the market. All options need to be explored and professional advice sought, keeping both domestic and export markets in mind. World Intellectual Property Organisation (WIPO) has listed some important steps to be considered while developing an IP strategy, 1. Check trademark databases to avoid using an existing trademark and protect trademarks before launching a new product or service with a new brand name. It is important to consider export markets when doing so and avoid using brand names that may have an undesirable meaning in a foreign language. 2. Identify patentable subject matter and make sure it is patented early enough to avoid losing the invention to competitors. 3. Make sure that patentable inventions are not shared with others or published before filing a patent application. In order to meet the patentability criteria inventions must be considered “new”. Early disclosure of an invention (e.g. through publication) will compromise the chances of the invention being considered new, and therefore patentable. 4. Make sure that trade secrets are kept within the enterprise and prepare, where appropriate, confidentiality agreements when negotiating and sharing information with business partners in order to protect trade secrets. 5. For export-oriented firms, make sure IP is protected in all potential export markets. In the case of patents, it is important to bear in mind that an enterprise generally has 12 months from the date of filing of a national application to file the same patent application in other countries. 6. Use your IP portfolio as leverage when seeking sources to finance your business(e.g. include IP assets, particularly patents, utility models and industrial designs, in your business plan as it may help to convince investors of the market opportunities open to your enterprise). 7
  • 7. Use patent information available in patent databases to develop your business strategies. 8. When conducting joint research with other enterprises or research institutes, make sure that there is sufficient clarity on who will own potential IP generated from the research project. 9. Monitor the market and make sure that your IP assets are not being infringed. If violation of your IP rights is detected it may be advisable to contact a lawyer 10. If you are unsure about how to best protect your company’s intangible assets, conducting an IP audit may be a good first step in order to identify all your company’s valuable information and to develop an IP strategy. On occasions, companies are unaware of the wealth of assets they possess in the form of information, creative ideas and know-how and may, therefore, not take adequate steps to protect them. While the checklist is not exhaustive, it is a very useful guide for the enterprises to try and integrate IP rights into their business strategy. IP Audit Virtually every business relies on a broad array of intellectual property assets — copyrights, trade secrets, trademarks, and software licenses. IP audits are not only needed by companies developing complex, industrial patents, or perhaps those that rely heavily on sophisticated trade secrets. Another point to note is that IP audits are not just valuation tools, designed exclusively to recalculate the monetary amounts assigned (or not assigned) to intangible assets. Many intangible assets do not appear on accounting balance sheets. and must be separately identified Tthis is only one of many times the IP audit should be used. The types of assets covered by the audit fall into three broad categories. Assets covered by IP Audit Assets created by the Assets acquired Assets used under a company without an express contract or license license Patents owned or in These include the development This may include the myriad of software Copyrighted materials use of competitor's licenses necessary for (advertising materials, trademarks in operation of PCs, handbooks, product advertising, incidental servers, networks, Web documentation, etc.); photocopying, e-mail, sites, Web hosting, employee data, client 8 offsite storage, disaster Trademarks, trade data (both data about recovery, equipment names, and service the company's clients licenses, etc. marks used in and data held on behalf conjunction with the of the clients).
  • These audits serve two discrete functions. The first is to properly manage the risk associated with creating and using intellectual property assets. The second area of the audit sometimes appears more rewarding. Here, the focus is on the property owned by the company that has not been exploited at all, or, at least, not to its full potential. A typical Sample IP Audit Questionnaire would include: 1. List all patents and pending patent applications, domestic and foreign. Verify that : all patents and patent applications are properly assigned; all maintenance fees have been paid, and future payments have been docketed; and prosecution of all pending patent applications is current. 2. Does the organization have a procedure for recording and disclosing new inventions? If ‘no’, institute invention disclosure procedure; if ‘yes’, obtain list of all disclosed inventions. 3. List all trademark and service mark registrations and pending applications for registration, domestic and foreign. Verify that : all registrations and applications for registration are in the name of the organization or have been property assigned; all affidavits of use and renewal applications have been filed; and prosecution of all pending applications is current. 9
  • 4. List all unregistered trademarks and service marks used by the organization. 5. Collect and catalog copies of all publications, including catalogues, advertising and promotional materials, shareholder reports, etc. Check for : unlisted trademarks and service marks; proper trademark and service mark usage; and proper copyright notices. 6. List all copyright registrations. Verify that all registrations are in the name of the organization or have been property assigned. 7. List all mask works. Verify that all mask works are registered in the name of the organization or have been property assigned. 8. List all registered designs. Verify that all design registration are in the name of the organization or have been property assigned. 9. Does the organization possess any information that provides a competitive advantage with respect to its competitors? If ‘yes’, verify that the information is marked ‘confidential’, that access to such information is restricted, and that it is otherwise properly protected. 10. Have all employees executed appropriate Invention Assignment and Confidentiality Agreements? If ‘no’, secure necessary agreements. 11. Are all consultants and independent contractors required to execute appropriate Invention Assignment and Confidentiality Agreements? If ‘no’, institute appropriate procedure. 12. Obtain copies of all licenses of intellectual property in which the organization is a licensor or licensee. 13. List all lawsuits pertaining to intellectual property in which the organization is or was a party. IP Management The characteristics of an IP Managing organisation are that it exhibits a broad awareness of the benefits of IP management throughout the organisation and collect sand utilises information to manage the exploitation of their IP. It integrates the task of managing IP into the overall management structure to provide leadership for IP management through ‘group of committed staff – perhaps have top down commitment expressed in the form of an IP Policy Suzuki’s Example The founders of Suzuki were very active inventors and designers – so from early on Suzuki employed a full time person for central management of IP rights. 10
  • Its patent section was founded in 1970. The name was changed to IP group in 1994. IP group centrally manages all matters relating to patents, utility model, design patents and trade marks. One patent advisor is appointed for every 10 to 20 staff in the R&D division. Total Nos. of advisors 150 whose job is to encourage inventions in the division. 2000 patent applications in a year ten years back Majority of these were used by Suzuki and only a few being licensed to other companies Cost of filing so many applications was huge Lesson learnt by Suzuki – it is more important to have one patent being used by one competitor than to have 100 patents being used only by Suzuki An Action check list • Identify all IP associated with your business and itemise them in your business plan. • Check that you really do own all IP used in your business or that you have the right to use it. • List registered IP and place a dollar value on identified assets. • List unregistered IP and give it a dollar value. • List other valuable assets such as client lists and corporate knowledge. • Identify key staff involved in developing, maintaining and protecting your IP and get them to sign agreements relating to confidentiality and competition. • Educate staff on the nature of IP, how to protect it and their responsibilities. • Consider ways you can use the IP system in your overall business strategy. Decide which markets (including overseas ones) you wish to pursue before going public. • Develop an infringement strategy. Consider insuring your IP against infringement and against your infringement of someone else's IP. 11
  • • Search the patent, trade mark and design databases, as well as other literature and the Internet to ensure your ideas are new and to avoid infringing the rights of others. You can also search for new business opportunities and keep a tab on what your competition is doing. • Maintain secrecy and be first to market. • Make effective trade marks the core of your brand and image building strategy. IP Policy A Formal written IP policy acts as a public expression of the organisation’s commitment to IP management. It provides a working document to guide the IP management practices and a continuity. The company is more likely to be successful in exploiting its IP if both there is a clear statement of what it is trying to accomplish. Sample IP Policy Contents Part I 1. Declaration of top management’s commitment to and senior and middle management’s involvement in IP management statement of policy. 2. Statement of objectives, separated into short and longer term goals. Part II 1. An action plan, specifying a time tabled program of work. 2. Costed resource requirements, including staffing complement, investment and training needs necessary to achieve the program. 3. Assigned responsibility and accountabili8ty for actions assigned, specifying individuals by name and position. 4. Description of and IP management committee’s responsibility, structure, membership and reporting mechanisms. 5. Named committee representative for each department and specification of internal and external lines of communication. 6. Statement of review procedure, defining milestones and mechanisms for assessing overall progress and value for money, as well as appraising the performance of individual members of staff. IP Valuation 12
  • The growing discrepancy between market value and book value is largely attributed to IP assets, They include assets such as brands, customer relationships, patents, trade marks and, of course, knowledge. The intangible assets of Coca Cola Company lie mainly in the brand names, and the established organization (the external and internal structures). The market value of a car manufacturer like Ford Motor consists largely of the tangible assets and the internal structure. Microsoft's huge intangible assets, of some $45 bn (April 1995), consist mainly of external structure, in the form of 35 million people who use 80 million copies of its "Windows" operating system. These customers can be seen as "captive", insofar as it is hard to switch from one operating system to another. They are therefore likely to buy Microsoft's software in the future. It was the enormous value of this external structure that led the US anti trust authorities to block Microsoft's proposed acquisition of the Intuit software company in 1995. Equity ( = Net Intangible Market Company Tangible Assets Value Assets) Microsoft $4.5 bn $44.6 bn $49.1 bn IBM $22.5 bn $31.5 bn $54.0 bn Ford Motor Co $21.4 bn $8.6 bn $30.0 bn McDonalds $6.2 bn $20.0 bn $26.2 bn Coca Cola $5.2 bn $73.4 bn $78.6 bn Market Values of some well-known companies consist more of intangible than tangible assets (April 1995). Traditional accounting methods have obvious weaknesses as they look backwards and at physical assets only. The visible finance is generally quite simple in a Knowledge Organisation. Short term debt, some long term loans and shareholders equity. Long term loans are often difficult to get since the banks tend to frown at the collateral (the few tangible assets). Intangible assets are not very liquid and unlike the fixed assets they are both owned and not owned by the company. The simulation model counts with three kinds of intangible assets, the Corporate Knowhow, the Corporate Image and the Competence of the Personnel. Their counterpart on the finance side is mostly an invisible equity. Since banks are unwilling to lend money to investments in intangible assets, most of the business development is self-financed. There is, therefore, a growing interest in measuring IP assets. Some of the reasons are: It more truly reflects the actual worth of the company Demands are growing for effective governance of intangibles, of which social and environmental reporting are already evident 13
  • "What gets measured, gets managed" - it therefore focuses on protecting and growing those assets that reflect value It supports a corporate goal of enhancing shareholder value It provides more useful information to existing and potential investors. It is therefore critical to identify all the IP assets of an enterprise and to obtain an objective valuation of the identified assets. Annexure 2 lists 12 of the techniques used in valuing IP assets. A Manager’s Check List Finally, in developing an IP strategy and integrating IP in your business plans, it is useful to have a ’Managers Check List’ to focus on IP assets. • The checklists and questions presented below are intended as a starting point for further investigation and assessment • Critical questions – A Starting Point for Assessment • An effective audit or assessment team could be assembled from staff. A good starting point is a critical questioning of the enterprise’s IP activity. Matching the Requirement • What is being done? • Why is it being done? • What is the value of intellectual assets? • What should be the value of intellectual assets? • Does your technical capacity lie idle for significant • periods of time? Maximizing the Efficiency • Could it be done the same way but more efficiently? • Are the principles for optimal exploitation being correctly addressed? • Why is there a difference? • Once the assessment begins many more questions will emerge • Begin by questioning each aspect of Intellectual Property Management IP Management Matching the Requirement • What is your IP strategy? Do you have one or does it need to be developed? • Does your IP strategy fit with your technical and business objectives? • Are you protected from potential IP attacks from your competitors? • What is your current patent portfolio worth? Which patents are most valuable? Which are no longer of value? Maximize Efficiency 14
  • • Are any of your patents being infringed? What can you do about it? • Are you prepared and able to protect your intellectual property? • What is the true value of the intellectual property of the company your are interested in merging with, buying or investing in? • Do you own your technology niche? Are you at risk of your competitors attacking your technology niche? Portfolio Management and Technology Licensing Matching the Requirement • Do you know the value of your patents • Are you doing enough to protect your innovations • How to defend against third-party assertions Maximize Efficiency • Are you supporting your licensing programs • Are you Implementing an intellectual property strategy to protect your market space • Are you aware of the undiscovered gems in your portfolio Intellectual Property Development and Strategy Matching the Requirement • Are you implementing an intellectual property strategy • Are you Developing an intellectual property portfolio • Are you Protecting your innovations Maximize Efficiency • Are you Maintaining your design freedom Are you Demonstrating company value for venture capital or other financing strategies. Conclusion Innovation and IP assets have become the root of sustainable competitive advantage in our technology-enabled age. Consequently, the nature, and with it, our understanding of intellectual property's role is expanding. A major driver of competitiveness is the decline in barriers to the free flow of goods, services and capital and the sweeping technology changes. To understand the full impact of economic, social, and technical change on intellectual property, it is necessary to consider how one can develop and implement an effective IP strategy to create market leadership. 15
  • IP assets can be leveraged to deliver tangible results in the form of sustained competitive advantage. Annexure 1 Some Strategy Implications of Knowledge Organization. Item Seen with an industrial Seen with a knowledge paradigm, or from an paradigm, or from a industrial perspective knowledge perspective People Cost generators or resources Revenue generators Managers' Power base Relative level in organization's Relative level of knowledge hierarchy Power struggle Physical labourers versus Knowledge workers versus capitalists managers Main task of Supervising subordinates Supporting colleagues management Information Control instrument Tool for communication, resource Production Physical labourers processing Knowledge workers converting physical resources to create knowledge into intangible 16
  • tangible products structures Information flow Via organizational hierarchy Via collegial networks Primary form of Tangible (money) Intangible (learning, new ideas, revenues new customers, R&D) Production bottlenecks Financial capital and human Time and knowledge skills Manifestation of Tangible products (hardware) Intangible structures (concepts production and software) Production flow Machine-driven, sequential Idea driven, chaotic Effect of size Economy of scale in production Economy of scope of networks process Customer relations One way via markets Interactive via personal networks Knowledge A tool or resource among The focus of business others Purpose of learning Application of new tools Creation of new assets Stock market values Driven by tangible assets Driven by intangible assets Economy Of diminishing returns Of both increasing and diminishing returns. Annexure 2 Technique to Sl. value intangible Comment No assets Relative Value In this approach, progress, not a quantitative target, is the 1 ultimate goal. Example: have 80% of employees involved with the customer in some meaningful way. Supplements traditional financial measures with three Balanced 2 additional perspectives -- customers, internal business Scorecard processes, and learning/growth. By observing and classifying the behaviors of "successful" Competency employees and calculating the market value of their output, 3 Models it's possible to assign a dollar value to the IP assets they create and use in their work. Subsystem Sometimes it's relatively easy to quantify success or 4 Performance progress in one IP component. Involves identifying companies that are recognized leaders 5 Benchmarking in leveraging their IP assets, determining how well they score on relevant criteria, and then comparing the 17
  • company's performance against that of the leaders. Example of a relevant criterion: leaders knowledge Gaps are systematically identified and well-defined processes used to close them. This approach centers on three questions. What would happen if the information we now use disappeared altogether? What would happen if we doubled the amount of 6 Business Worth key information available? How does the value of this information change after a day, a week, a year? Evaluation focuses on the cost of missing or underutilizing a business opportunity, avoiding or minimizing a threat. Measures how information enhances value in a given Business Process 7 business process, such as accounting, production, Auditing marketing, or ordering Treats capital spending as an expense, instead of an asset, 8 Knowledge Bank and treats a portion of salaries normally 100% expense as an asset, since it creates future cash flows. Methodology that measures the economic impact of a brand, Brand Equity or other intangible asset, on such things as pricing power, 9 Valuation. distribution reach, ability to launch new products as "line extensions." Calculated Compares a company's return on assets (ROA) with a 10 intangible value. published average ROA for the industry. A new type of lending that substitutes intangible "collateral" (peer group support, training, and the personal qualities of 11 Microlending. entrepreneurs) for tangible assets. Primarily used to spur economic development in poor areas. Suggested by SEC commissioner Steven Wallman, this method supplements traditional financial statements (which “Colorised” give a "black and white" picture) with additional information 12 Reporting. (which add "color"). Examples of "color" include Brand values, customer satisfaction measures, value of a trained work force. 18