Why would you keep secrets? There is one form of an intangible asset within companies which by definition must be kept secret. A trade secret is a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information which is not generally known or reasonably ascertainable by others, and by which a business can obtain an economic advantage over competitors or customers. The scope of trade secrets is virtually unlimited. A trade secret continues for as long as the information is maintained as a secret.
Keeping it secret – easier said than done
Deciding to keep such assets secret is however easier said than done. It may seem like a very good idea and there may be common agreement to keep such assets secret, but it is often extremely difficult to do so in practice. Firstly, Human Nature. Some people just find it difficult to keep a secret. One sometimes hears people say
“I’ve been sitting on a really awesome secret the past couple of days, and I have to say, it’s killing me that I can’t tell anyone.”
Keeping something secret requires both self-control and the ability to make choices, but withholding information creates stress for some people and can leave them feeling alone and alienated from those that don’t know. This can evoke a lot of anxiety which makes it more difficult to think clearly, and for people who find it hard to manage those feelings or who are very anxious, keeping a secret can be almost impossible. Some research has shown that blabbing secrets may have less to do with a person’s need to share salacious gossip and more to do with how their brain works.
Openness
Openness is an overarching concept or philosophy that is characterized by an emphasis on transparency and free, unrestricted access to knowledge and information, as well as collaborative or cooperative management and decision-making rather than a central authority. Openness can be said to be the opposite of secrecy. Many companies are embracing this spirit of openness.
Traditionally, internal innovation was the paradigm under which most firms operated, with most innovative companies keeping their discoveries highly secret and no attempt made to assimilate information from outside their own research and development laboratories. This was driven by the belief that: “the smart people in our fieldwork for us”. However, in recent years the world has seen major advances in technology and society which have facilitated the diffusion of information. Companies have also begun to realize that “not all the smart people work for us and that we need to work with smart people inside and outside our company”. Such collaboration can take many forms, from working with universities, cooperating closely with key suppliers and vendors, collaborating with application developers, content providers, technology house and design houses, plus working with various communities including ‘open’ communities, innovation networks, standardization bodies as well as customers and end-users. It can also involve working with start-ups and venture capital-funded entities, as some of the smallest companies can achieve great things with limited funding.
Digitization
The business world is going digital. This of course means different things to different companies. Fundamentally, digitization means converting data from analog formats into digital formats, but it means much more than this. Companies are moving to paperless environments converting their papers and files into digital formats. Key business applications are being computerized. Companies are taking their manual or offline activities or processes and converting them to online, networked, computer-supported processes.
Regardless of what digitization means to a particular company, it generally promotes easy discovery, access, and use of information.
Organizational loyalty
Organizational loyalty is a general term and denotes a person’s commitment and attachment to the place they work. Long gone are the days when an employee joined a company after leaving school and stayed with that company until retiring. These days, people expect to move around across numerous companies over their working careers.
The generation of young millennials now in the workplace has a different set of expectations compared to older generations about their careers. In a nomadic world, one of the casualties is a decreasing sense of loyalty to a particular organization. If loyalty is defined as being faithful to a company, then there seems to be a certain amount of disloyalty in the workplace these days.
The recent global recession has also harmed such loyalty as loyalty is a two-way street.
Cybercrime
Cyber attacks are crimes in which the computer system of the company is the target. Cyber attacks consist of computer viruses (including worms and Trojan horses), denial of service attacks, and electronic vandalism or sabotage. Cyber theft comprises crimes in which a computer is used to steal money or other things of value. Cyber theft includes embezzlement, fraud, theft of intellectual property, and theft of personal or financial data. Other computer security incidents encompass spyware, adware, hacking, phishing, spoofing, pinging, port scanning, and theft of other information, regardless of whether the breach was successful.
This is a growing problem for all companies. Cybercrime is one of the greatest threats facing any company, and has enormous implications for its security, prosperity, and safety. The range of threats and the challenges they present for companies is expanding just as rapidly as technology evolves.
No process in place to manage such secrets
Many companies lack a robust fit for purpose process to manage such secrets. A process is an interrelated set of activities designed to transform inputs into outputs, which should accomplish your pre-defined business objectives. Processes produce an output of value, they very often span across organizational and functional boundaries and they exist whether you choose to document them or not.
A process can be seen as an agreement to do certain things in a certain way and the larger your organization, the greater the need for agreements on ways of working. Processes are the memory of your organization, and without them, a lot of effort can be wasted by starting every procedure and process from scratch each time and possibly repeating the same mistakes.
A lack of senior management support for trade secrets
A lack of top management support has been identified as one of the factors that lead to the failure of many projects or processes or initiatives within organizations. This very much applies to trade secret asset management.
Senior management may not truly believe in trade secrets. Little or no budget may be allocated. Senior management will not run interference when things go wrong or the person tasked to manage trade secrets runs into trouble. Most initiatives with any impact require cross-functional cooperation and this applies to trade secret asset management. It is much harder to get that cooperation without the managers of other functions being on board. Senior management may not be enabling that support.
Final thoughts
Trade secrets can be some of the most important assets in the intellectual property portfolio of an organization. They are at least on a par with other forms of intellectual property such as patents and trademarks. Some would argue that trade secrets are the crown jewels of any intellectual property portfolio. However, they are fragile and only are of value if kept secret. Companies need to understand and appreciate that deciding to keep something as a trade secret is not the end but rather the beginning of an interesting journey and that there are several challenges to be overcome.
Deciding to keep something secret is relatively easy. Doing so is an entirely different ball game.
Donal O’Connell, IPEG consultant